Interconnection Key In The Age Of Competition

New Delhi: | Updated: Jan 22 2003, 05:30am hrs
In the backdrop of the war between cellular mobile service operators and basic players wherein the customers were the ultimate sufferers, one needs to understand what the noise over interconnection is all about.

What is interconnection Why is it required in the first place International Data Corporation (IDC) India head of Internet, communications and convergence research V Shekhar Avasthy explains that if one was to look at the fundamental aspect of interconnection from a customers perspective, this is what drives the concept: every time s/he places a call, its within his rights to expect that his telecom service provider is able to complete the call for him, though depending on the type of call he places he might be charged differentially by the telco.

Principles Of Interconnect

Prior to NTP 99, direct interconnection among service providers was not a policy. Which means prior to 2002, it was necessary for any two networks to be connected via the incumbent operator, ie, Bharat Sanchar Nigam Limited and the Mahanagar Telephone Nigam Limited. For interconnection, the principles that have been emphasised by the Trai include:
Interconnection principles regarding pricing, timeliness, point of interconnection, and quality of interconnection should be based on a no less favourable standard in comparison to another operator (including the conditions implicitly or explicitly provided to ones own operations) - interconnection charges should be cost based - these costs should be those caused by constructing the link with, and through the use of, the network of the interconnecting service provider;
The interconnecting service provider must be allowed access to unbundled elements of the network that it requires, and not be charged for facilities that it does not require;
For any particular interconnection service, the same interconnection charge should apply to any service provider irrespective of service provided;
All interconnection service providers should be allowed to charge an interconnection price.
Source: Trai

In strictly technical terms, points of interconnect can exist at many levels, even within a single operator and within a city, he says. Every time a call is routed through various levels of exchanges, he goes through points of interconnect. In every phone call that a customer makes, the call is connected to the terminal exchange or central office, which in turn connects him to a tandem exchange. A tandem exchange is a transit exchange in a local area system while in long distance calls, trunk automated exchanges are the transit exchanges.

Thus if a subscriber were to call from locality A to locality B within Delhi, his call would first go to the local MTNL office, then to the tandem exchange, which in turn will divert to the local exchange of locality B. Thus, the call travels through one point of interconnection which is the tandem exchange. Similarly when a national long distance call is placed between two cities, the call, after being connected to a local exchange, can take various combination of routes, explains Mr Avasthy. From the local exchange it could be connected to the tandem exchange of Delhi, which in turn would connect it to the trunk exchange which then routes it to the tandem exchange of the destination city but this might levels. Thus, in this case there are around three levels of interconnection. But depending on the infrastructure, any call could travel through any number of interconnection points, he points out.

Looking at interconnection from a geographical perspective, one can find levels of interconnection at city level, at state level for long distance calls and at a national level for international calls.

Another way to look at interconnection would be in a multi-operator, single service environment. Suppose for example, there is more than one fixed line service providers. Then if a subscriber of one service provider were to place a call for another subscriber, who belongs to another network, then the call needs to go through a point of interconnect between the two networks. One can also apply the same logic to cellular service providers.

Then comes the multi-service, multi-operator scenario. In India for example, we now have many cellular players, many basic players (including those who provide wireless in local loop-mobile services), many national long distance service providers and many international long distance network service providers.

All these services require laying of different networks, huge investments in terms of acquiring operating licences, says Mr Avasthy. Thus, in such a scenario, it becomes important to ensure interconnectivity between all these networks in order to provide all round access to the subscribers.

Based on this, interconnection is also something that benefits service providers. In a multi-operator environment, interconnection is a crucial regulatory issue for telecommunications policy.

No new entrant into the market will be able to compete effectively unless it is able to interconnect its network with the facilities of the incumbent operator either directly or indirectly via the network of another competitor. New telephones will be virtually useless unless new entrants can enable their subscribers to communicate with the large number of subscribers of the incumbents.

Then whats the fight all about, why is interconnection such a contentious issue Mr Avasthy explains that the fight is to ensure a bigger share of the revenue coming from each call.

Because all the networks that are used in a call take a predetermined share from the revenue as per the revenue sharing agreements. In certain areas, the revenue share is determined by the regulator where as in others, the market conditions decide. Its all about the bargaining power of any operator, says Mr Avasthy, which depends on the number of subscribers, the size and extent of network, level of competition, regulatory environment, commercial interest that the destination has, among other things.