Dennis Weller

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Policies for Next-Generation Interconnection

• Dennis Weller
• Chief Economist, Verizon
• NARUC
• 15 February 2008

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Traffic Flows Among 20,000 Autonomous Networks on
the Internet
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STM-1 IP Transit Prices in London
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When Worlds Collide..Interconnection

• Traditional Telephone
• Obligation to Interconnect
• Heavily regulated by FCC and States
• Declining market
• Arbitrage, bad incentives

• Internet
• No obligation to Interconnect
• No regulation
• No arbitrage
• Growing market
• Market incentives to invest, create value

VoIP
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Parallel Worlds Without CollisionNew (IP) and
Old (Circuit-switched)

• Companies will operate in both spaces for the
  next few years
• Old world rules maintained in old space perhaps
  with some reform
• New world operates well we should not allow
  old-world regulation to invade
• Where do you draw the line? At the interface
• Old interface, old rules
• New interface, new rules

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Options for Interconnection

• Circuit-switched (TDM) interface
• Existing obligations apply
• Questions about jurisdiction, compensation
• IP interface
• Internet model
• Voluntary, commercial agreement
• IP interface with application management
• Voluntary, commercial agreement
• Many possible applications not just voice
• New market, still developing
• Questions about interoperability, routing,
  packaging, intermediation