Bill-and-keep and the economics of interconnection in next-generation networks

  • Authors:

  • Moya Dodd;Astrid Jung;Bridger Mitchell;Paul Paterson;Paul Reynolds

  • Affiliations:

  • Gilbert+Tobin in association with King and Wood, 2 Park Street, Sydney NSW 2000, Australia;Independent consultant, Kurzer Weg 13, 93055 Regensburg, Germany;CRA International, 5335 College Avenue, Suite 26, Oakland, California 94618-2804, USA;Concept Economics, Level 7, 107 Pitt Street, Sydney NSW 2000, Australia;Competition Economists Group, 20 Garrick Street, London WC2E 9BT, UK

  • Venue:
  • Telecommunications Policy
  • Year:
  • 2009

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Abstract

As telecommunications networks are being transformed into all-IP, next-generation networks (NGNs), interconnection is attracting renewed regulatory debate. Next-generation features suggest that interconnection regimes developed for the internet or for traditional telephony networks are unlikely to be suitable in most NGN contexts. Efficient NGN interconnection will take advantage of NGNs' technical possibilities (e.g., session control), facilitate their operational requirements (e.g., quality-of-service differentiation) and accommodate their service versatility. We discuss the application of alternative interconnection charging models (with a particular focus on bill-and-keep) by applying the main lessons from the interconnection literature in a framework designed for the practical needs of regulators. We show that in NGNs - as well as in other networks - there is no single interconnection charging model that maximizes economic efficiency in all circumstances. Finally, we discuss the implications for regulatory policy towards NGN interconnection.