Efficient Interconnection Charges and Capacity-Based Pricing

32 Pages Posted: 8 Feb 2009

See all articles by Mark Kennet

Mark Kennet

LECOM Associates, Inc.

Eric Kodjo Ralph

affiliation not provided to SSRN

Multiple version iconThere are 3 versions of this paper

Date Written: February 8, 2009

Abstract

Capacity-based interconnection (CBI) prices vary exactly with the costs a network provider incurs when supplying an interconnecting party. That is, they equal incremental costs, rather than being averaged over any output measure. We argue such prices (1) are as practicable and more efficient than per minute rates based on long run incremental cost, (2) are more efficient than bill and keep, and (3) with mark-ups for cost recovery, are a practical and relatively efficient means of pricing wholesale interconnection services, being well-suited to both circuit and packet-based networks. [A shorter version of this paper was subsequently published in Journal of International Economics and Economic Policy.]

Keywords: Capacity-based interconnection, bill-and-keep, long run incremental cost pricing, call termination

JEL Classification: L51, L96

Suggested Citation

Kennet, D. Mark and Ralph, Eric Kodjo, Efficient Interconnection Charges and Capacity-Based Pricing (February 8, 2009). Available at SSRN: https://ssrn.com/abstract=1339608 or http://dx.doi.org/10.2139/ssrn.1339608

D. Mark Kennet

LECOM Associates, Inc. ( email )

Rechov Tamar 17
Kiriat Tivon, 36530
Israel
+972 4 953 4164 (Phone)

Eric Kodjo Ralph (Contact Author)

affiliation not provided to SSRN

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