Jensen proposes strategies for reduced interconnection rates

Independent consultant based in South Africa, Mr. Mike Jensen has proposed strategies for minimising current disparities in interconnection rates, mostly in the developing countries.

Mr. Jensen in a recent paper prepared for the Association for Progressive Communications (APC) on ‘Interconnection Costs’ said that much needed to be done by developing countries and their partners, which could have greater effect on the cost of bandwidth.

He noted that there are two types of interconnection, especially nowadays that most interconnections are viable through the Internet rather than the traditional circuit switches system, namely, peering and transit.

He also said that internet backbones interconnect under this two different arrangements, avail peering plans to agree to exchange traffic with each other at no cost, but not for a third party.

While on other hand, transit arrangement, he said, means one backbone has to pay another for interconnection.

According to him, the interlinked strategies consist of accelerating the restructuring of the communications sector, supporting the establishment of a national and international internet exchange ports, as well as building local demand for both national and international backbones.

Mr. Jensen said, that increased competition above all strategies stand better chance in telecom and Internet sectors for minimising the costs of connectivity.

Pointing out that the biggest cost of circuit is not the Internet Protocol (IP) transit fees or foreign end of the link, but the local and international charges by the monopoly telecom service providers.

“Elimination of monopolies or duopolies and generally increasing national and international competition in communication services would have the biggest impact in reducing the largest cost component of bandwidth charges,” he said.

Mr. Jensen further said that additionally, this would fuel investment in the much needed national and international backbones.

“… Only once competition has reduced infrastructure access charges to cost-related tariffs could peering and transit issues be addressed,” he asserted.

He suggested that government involvement in fostering the development of competitive backbone provision, especially by providing ducting for cable along all routes of transportation such as roads, railways and electricity networks is essential.

“Participation by government in using open access models (non-discriminatory) is seen as a particularly viable approach to building infrastructure,” he said.

Mr. Jensen also warned that by ensuring that public monopolies are not simply replaced with private monopolies is additional vital step required.

On sector reform, he said, would enable competitive local market for bandwidth to guarantee that benefits of increased competition in the international market are passed on to the end-users.

Adding, however, that effective competition and anti-trust laws would usually be needed for this, which would not only prevent anti-competitive consolidation among Internet backbone providers, but to ensure incumbent operators including mobile operators do not abuse their dominant positions.