The interconnection prices in telecomunications: from theory to practice

This paper evaluates the main measures that have been used to regulate the interconnection prices in the telecommunication sector. We show that many of the regulations that are applying the vast majority of countries have very little theoretical support, and we identify the restrictions that prevent a more efficient intervention in the sector. In order to conduct this research, we firstly review the results of the theoretical literature on one and two-ways interconnections and we explain the problems that the national regulatory agencies have had when introducing the lessons of the academic contributions in their regulations. Secondly, we analyse the cost orientated interconnection prices, which are at present the regulatory practices most widely used. We evaluate the efficiency of some versions of this mechanism and explain the efforts that are being made to improve it.