Network Interconnection

This chapter describes the setting in which network interconnection must take place: a market comprised of a regulated monopoly which is being opened to competition. It then turns to delineating the various types of interconnection required, sometimes described as being divided into various types of “one-way” and “two-way” interconnection. It also explains the economist's approach to determining “efficient” interconnection rates and whether such rates can emerge from unregulated markets. It concludes with a guide to how regulators might proceed to establish simple, straightforward interconnection regimes that promote economic efficiency and competition in a “second best” manner, given the distortions created by regulation and the clumsiness of the regulatory process.