Interconnection: A Major Regulatory Challenge

1
Interconnection A Major Regulatory Challenge
Asia Pacific Policy and Regulatory Forum Brunei,
Darussalam, May 19, 2004

• KATHLEEN G. HECETA
• Deputy Commissioner
• National Telecommunications Commission
• Republic of the Philippines

2
OUTLINE

• Interconnection key issues
• Philippine Telecommunications Framework
• Philippines Law on Interconnection
• Basic foundation for the Interconnection Rules
• General Principles for Interconnection
• Negotiation, Mediation and Approval/Disapproval
• Other Provisions

3
Interconnection key issues

• Legal Framework and Procedural Issues
• Technical and Operational Issues
• Commercial issues

4
Philippine Telecommunications Framework (2002)
5
Philippines Law on Interconnection

• The National Telecommunications Commission is the
  principal administrator of RA 7925 Public
  Telecommunications Act of the Philippines.

6
RA 7925 Public Telecommunications Act of the
Philippines

• This Law provides telecom policies and
  objectives, which include among others, the
  Mandate for interconnection
• Provide a fair and reasonable interconnection of
  facilities of authorized public network operators
  and other providers of telecommunications
  services

7
Contmandate for interconnection

• Create appropriate modalities of interconnection
• Establish reasonable and fair level of charges
  by
• Make provision for the cross subsidy to
  unprofitable local exchange service areas to
  promote teledensity
• Provide the most extensive access to basic
  telecommunications service
• Affordable rates to the public

8
Basic foundation for the Interconnection Rules

• The vital role of telecommunications in nation
  building and economic development and to attain
  universal service.
• A general framework for interconnection is to
  provide end-to-end interoperability of services
  for users and access.
• A guarantee for transparency, access to
  information, non-discrimination and equality of
  access.
• The Philippines has effectively liberalized the
  telecommunications services and a commitment to
  healthy and sustainable competition.
• The Philippines telecommunications environment is
  changing at an unprecedented rate driven by
  technological advancements, expansion of market
  boundaries, and development of new business
  practices.

9
General Principles for Interconnection

• Interconnection should enable subscribers or
  customers of two (2) PTEs to communicate with
  each other (any to any)
• Interconnection should be across interfaces of
  sufficient functionality (end to end
  interoperability)
• Interconnection should directly follow the
  principle of fair compensation, compliance on
  commercial obligation (timely settlement,
  including payment) and service usage of
  interconnect facilities (no irregular and/or
  illegal traffic access or bypass)

10
Cont General Principles for Interconnection

• PTEs have equal responsibility to interconnect
  and ensure that interconnection is carried out in
  a swift and efficient manner (equal
  responsibility)
• Interconnection must be satisfied in a timely
  fashion.(interconnection request)
• Interconnection shall be prompt, efficient and
  seamless to the subscriber or consumer of both
  the interconnecting PTEs (prompt, efficient and
  seamless)
• Interconnection agreements must satisfy
  government policies and its commitments or
  obligations under international agreements.
  (international commitments)

11
Interconnection is characterized as follows

• It is mandatory.
• Interconnection must be ensured at any
  technically feasible point in the network under
• non-discriminatory terms, conditions (including
  technical standards and specifications) and
  charges and of a quality no less favorable than
  that provided for its own services or for like
  services of non-affiliated service suppliers or
  for its subsidiaries or other affiliates.
• Provided in a timely fashion, on terms and
  conditions and cost based charges that are
  transparent, reasonable, having regard to
  economic feasibility, and sufficiently unbundled
  so that no one pays for network components that
  it does not require for the service to be
  provided.

12
Cont Interconnection is characterized as follows

• Interconnection must result into a universally
  accessible and fully integrated
  telecommunications network for the benefit of the
  public.
• The rules must set parameters for interconnection
  which include, among others, cases involving
  PTEs within the same calling areas, PTEs
  operating in two different local calling areas
  of IGFs and IXCs parties obligation to
  subscribers, major suppliers and rules to govern
  cases of disconnection, disruption or
  discontinuance or barring which impede access by
  its subscribers or customers, etc.
• The interconnection agreement must define terms
  to have a common understanding on what is being
  negotiated provide for minimum requirements and
  set parameters.

13
Negotiation, Mediation and Approval/Disapproval
14
Negotiations

• PTEs are allowed, on their own initiative, to
  negotiate and enter into an interconnection
  agreement
• Subjected to technical, commercial and
  operational rules
• In cases of Refusal to Negotiate / Failed
  Negotiation
• the Commission may, upon the complaint of any
  interested party or upon its own initiative,
  intervene and assume jurisdiction and direct
  physical interconnection of the networks under
  such terms and conditions it may find appropriate

15
Mediation

• The Commission may, in the interest of public
  service, at its own initiative and at any stage
  in the negotiation, intervene in the negotiation
  and mediate between the parties.

16
Approval/Disapproval by the Commission

• Any interconnection agreement entered into by
  parties shall be submitted to the Commission for
  approval within ten (10) days from execution
  thereof.

17
Reasons for Disapproval By the Commission

• A provision or part thereof is contrary to law,
  rules and regulations, public morals and safety.
• The agreement is not consistent with national
  security, public interest, convenience and
  necessity.
• The agreement discriminates against a PTE that is
  not a party to the agreement.
• The compensation scheme or interconnection rates
  or charges agreed upon are unreasonable, not cost
  based and/or discriminatory.
• Other just and valid grounds.

18
Other Provisions
19
Compulsory Arbitration / Provisional
Interconnection

• Compulsory arbitration
• may be initiated motu propio against the parties
  or by any formal petition should there be a
  failure to reach an agreement within ninety (90)
  days.
• Provisional interconnection
• Immediately after notice for arbitration, the
  Commission can assume jurisdiction and cause the
  immediate provisional interconnection of the
  parties networks and declare the terms and
  conditions, commercial or technical or otherwise.

20
Measurement of calls and collection of charges

• Parties shall measure both outgoing and incoming
  calls from their respective networks
• Each party undertakes the billing and collection
  of payment for all outgoing paid calls made by
  its own subscriber or customer, and if agreed
  upon by them, incoming collect calls made by a
  subscriber of customer of another party.
• The party who fails to submit the data shall have
  the right to contest or dispute the reconciled
  data within three (3) months from the transaction
  month failure to do so shall bar him from
  disputing it.

21
Cost of Interconnect facilities

• Unless otherwise agreed upon, the parties shall
  jointly and equally provide and share the costs
  of the interconnect facilities
• provided that in an interconnection between and
  IXC and LEC with less that five thousand (5000)
  total system wide exchange line capacity and does
  not offer or provide any telecom services, except
  VAS, the IXC shall shoulder the cost of
  interconnection

22
Efficient Provisioning of Capacity

• Interconnection shall be effected for sufficient
  capacity and in sufficient number to meet all
  reasonable traffic demands for conveyance of
  messages between the systems of the PTEs
  involved, implemented within a reasonable time
  frame.
• In consultation with the industry, the Commission
  shall develop codes of practice to be used in
  forecasting, ordering and provisioning of
  interconnection capacity.

23
Guidelines to Govern Interconnect Service Charging

• As a matter of principle, the rules must promote
  efficient and sustainable competition for the
  benefit of the public and the economic and
  efficient network use
• It must respect the principles of objectivity,
  transparency, reciprocity and non-discrimination
• All charges for interconnect services shall be
  transparent and unbundled
• Specific charges for interconnect services shall
  be based on the long run incremental costs of
  providing the services. This rule shall not
  apply until such time that the Commission
  prescribes a specific cost methodology

24
Implementation

• The parties shall maintain and operate their
  facilities in accordance with their respective
  obligations in the interconnection agreement
  approved or in accordance with the mandate of the
  Commissions applicable technical standards
  (Service Performance and Technical Standards,
  etc.)

25
End of Presentation

• Thank you very much!