A model for calculating interconnection costs in telecommunications

Lucile Simon, Christophe Rudelle, Laurent Gille, Paul Noumba Um, Paul Noumba Um9780821356715, 0-8213-5671-2

This guidebook and its associated CD-ROM, provide Sub-Saharan Africa-regulators and operators with a sound regulatory tool allowing the determination of accurate interconnection costs, thus facilitating the settlement of lengthy and costly interconnection disputes between fixed and mobile operators. The cost model belongs to the family of “Bottom-Up” models, which calculate interconnection cost incurred by an efficient operator using the Long Run Incremental Cost (LRIC) methodology. The proposed cost model takes into account most features characterizing the development stage of telecommunications networks in Sub-Saharan Africa (small size of fixed network, importance of rural telephony, excessive reliance on microwave technology, explosive demand for mobile service, and weak regulatory capacity).

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Table of contents :
Team DDU……Page 1
Contents……Page 7
Foreword……Page 10
Acronyms and Abbreviations……Page 11
About the Authors……Page 12
1.Introduction……Page 13
Preliminary Results Provided by the Cost Model……Page 14
The Limits of the Model……Page 16
Cost Modeling Principles……Page 18
User Guide……Page 20
The Model……Page 21
Essential Facilities……Page 23
Cost Determination Methodologies……Page 26
Economic Criteria for Assessing Costs……Page 28
The LRIC Concept……Page 30
Advantages and Drawbacks of LRIC……Page 33
Definition of Interconnection Services……Page 34
Definition of the Increment……Page 35
The Average Size of an African Telecommunications Network……Page 37
Nodes and Links……Page 38
Transit……Page 39
An Efficient Approach……Page 41
The Model Structure……Page 42
Applications of the Cost Model……Page 44
5. User Guide……Page 46
Demand Assumptions……Page 47
Main Technical Assumptions……Page 50
Main Assumptions on Routing Factors……Page 53
Main Cost Allocation Assumptions……Page 54
Assumptions for the Mobile Network……Page 57
The Results……Page 59
Testing the Sensitivity of the Results……Page 61
Managing the Model……Page 63
Basic Principles……Page 64
Capacities (Capa Sheet)……Page 65
Infrastructure Capacities (Capa Infra Sheet)……Page 66
Costs……Page 69
Cost of the Mobile Network (Costs Mob Sheet)……Page 70
Total Costs of the Mobile Network (Tot Mob Sheet)……Page 71
Appendix 1: Economic Cost Approach……Page 72
Appendix 2: Capital Cost Approach……Page 75
Appendix 3: Radio Concentrator Solutions……Page 78
Bibliography……Page 79