Cost-based access pricing in the brazilian telecommunications sector

The opening of the fixed telephony, mobile and data communications markets to competition, in conjunction with the subsequent reduction and elimination of entry barriers have allowed new telecommunications operators to launch their operations and develop. While traditional telecommunications business models required large amounts of money to be raised up-front in order to finance huge investment in network infrastructure, new business models are based on new entrants obtaining access to incumbents’ “essential facilities” through interconnection and access agreements. In this paper, we analyze the costing methodologies adopted for pricing interconnection and access services in Brazil, and the regulatory challenges associated with setting cost-based access prices in telecommunications networks taking into account the technological uncertainty, demand uncertainty and the move to a full-service broadband (IP) network.