Electronics Telecommunications

A model for calculating interconnection costs in by Paul Noumba Um, Laurent Gille, Lucile Simon, Christophe

By Paul Noumba Um, Laurent Gille, Lucile Simon, Christophe Rudelle

This guidebook and its linked CD-ROM, supply Sub-Saharan Africa-regulators and operators with a valid regulatory instrument permitting the choice of exact interconnection expenses, hence facilitating the payment of long and dear interconnection disputes among mounted and cellular operators. the associated fee version belongs to the kin of "Bottom-Up" versions, which calculate interconnection rate incurred through a good operator utilizing the longer term Incremental expense (LRIC) technique. The proposed expense version takes under consideration so much gains characterizing the advance level of telecommunications networks in Sub-Saharan Africa (small dimension of fastened community, significance of rural telephony, over the top reliance on microwave expertise, explosive call for for cellular carrier, and susceptible regulatory capacity).

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Additional info for A model for calculating interconnection costs in telecommunications

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To sum up, the model computation modules are provided in the following 21 sheets structured as follows: • A menu sheet for the user navigation. • Twelve sheets forming the core piece of the model described afterwards. • Four sheets specific to mobile networks (whose results appear on the general results sheet). • One sheet on the sensitivity of the model to some parameters. • Three specific management sheets (two sheets for the publication of fixed and mobile reports and a • The model then aggregates network elements costs.

Usually, in deciding to produce A, the firm expects that revenues generated by A should exceed the incremental cost incurred and provide an earning income to capital above the cost of capital. Nonetheless, incremental costs, as we have just strictly defined, are difficult to use in pricing access to a service or network element, to the extent that they only cover part of the costs. Given that A also uses other network’s resources and is partly responsible for joint costs incurred by the firm, it is necessary to allocate to A a portion of these joint costs.

In checking the cost structure of regulated services, the regulator must pay specific attention to the squeeze that could materialize as a result of undue cross-subsidization of competitively provided services by noncompetitively provided ones. The regulator should also ensure that interconnection services, which are wholesale services, are priced below corresponding retail services. As discussed earlier, the incremental cost methodology distinguishes directly attributable from nonattributable costs.

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