Book: A Model for Calculating Interconnection Costs in Telecommunications
Publisher: World Bank Publications
The liberalization of the telecommunications markets in Sub-Saharan Africa led to increased competition on the provision and pricing of communication services. But, due to the lack of appropriate regulatory tools, newly established regulators are poorly equipped to arbitrate increasing interconnection disputes between competing operators. This guidebook and its associated CD-ROM, including the cost model, were prepared to provide Sub-Saharan Africa regulators and operators with a sound regulatory tool allowing the determination of accurate interconnection costs, thus facilitating the settlement of lengthy and costly interconnection disputes between fixed and mobile operators. The cost model belongs to the family of ‘Bottom-Up" models, which calculate interconnection cost incurred by an efficient operator using the Long Run Incremental Cost (LRIC) methodology. The proposed cost model takes into account most features characterizing the development stage of telecommunications networks in Sub-Saharan Africa (small size of fixed network, importance of rural telephony, excessive reliance on microwave technology, explosive demand for mobile service, and weak regulatory capacity). A Model for Calculating Interconnection Costs in Telecommunications offers telecom regulators and operators not only a decision support tool but also a stimulant to enhance an understanding of the logic of regulating a sector open to competition.This guidebook provides a sound methodology to help regulators and telecommunications operators adopt a tariff regime and deal with interconnection disputes on the basis of a rigorous cost model.Furthermore, it demonstrates the World Bank Group commitment to assist governments in developing the proper enabling environments and effective regulatory institutions, and hence, contribute effectively in mitigating the regulatory risk as perceived by potential investors. Helping newly established regulatory agencies develop their capacity has been underscored as a key pillar of the new World Bank Group Information and Communication Technologies (ICT) strategy (www.worldbank.org/ict).About the AuthorsPaul Noumba Um is lead infrastructure specialist, World Bank Institute (WBI),The World Bank Group. Previously, he was regional coordinator for Africa in the policy division of the Communications and Information Technology department.Laurent Gille is head of the department of economics and social science at École Nationale Supérieure des Télécommunications (ENST) Paris, 46 Rue Barrault, Paris 75013 France. Previously, he was head of the regulation group in BIPE SA.Lucile Simon and Christophe Rudelle are consultants with BIPA SA – L’Atrium, 6 place Abel Gance, Boulogne Billancourt, 92652 France.