Interconnection Payments in Telecommunications: A Competitive Market Approach

Abstract

In this paper, we first discuss the concept of "Bill-and-Keep" whereby the party that receives a call pays for receiving the call. We explore if this outcome is efficient and consistent with competitive markets. Following the discussion of Bill-and-Keep we offer an explanation of why the flow of traffic has been imbalanced between incumbent local exchange carriers (ILECs) and competitive local exchange carriers (CLECs). We explain that this outcome is the natural outcome of the barriers to entry created by the incumbents in their refusal to provide collocation to internet service providers (ISPs).