Cybertelecom Federal Internet Law & Policy An Educational Project

Interconnection Rights and Obligations

Derived from Connecting the Globe V. Competition in Telecommunications Services, FCC 1999

The key to competition within telecommunications services is the ability of networks to interconnect. Interconnection allows communications to occur across networks, linking competitors so customers of different networks can communicate with one another (See History of Universal Service, competition at the end of the Bell patent era let to towns having multiple competing telephone networks that did not interconnect; the solution, according to AT&T was "One Nation, One Network, Universal Service").

For competition to be successful at maximizing consumer benefits and innovation in the telecommunications market, carriers that compete for customers must also provide competitors with access to those customers. Shared access to customers occurs through interconnection, and access to all customers is necessary both for successful entry and for continued competition. If the incumbent, with the vast majority of customers, does not interconnect with new entrants, it is unlikely that the new entrants will remain economically viable.

A regulatory framework is needed to aid in the transition from a monopoly environment to a competitive environment because a monopoly or dominant provider has a strategic interest to keep out or minimize competitors in its market. As a result, the monopoly or dominant provider has a strong incentive to limit interconnection. Therefore, a regulator that is independent of any operator and of inappropriate political influence should adopt rules that give new entrants bargaining strength equal to the incumbent's.

The price of interconnection (or transport and termination), for example, could serve as a significant barrier to entry for new networks. An incumbent monopolist has an incentive to demand a high price to terminate calls originating on a new entrant's network and pay nothing for calls originating on its own network. In the United States, transport and termination charges are reciprocal and based on the long run incremental cost of providing the transport and termination on the incumbent's network.

Thus, the primary purpose of mandated interconnection is to foster a competitive environment that is fair to all competitors. Because the incumbent service provider has the vast majority of customers, a new entrant must be able to interconnect in order to provide full access to its customers. Without the ability to interconnect, new entrants would be severely restricted in their ability to compete with the incumbent.

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Authority: Telecommunications Act of 1996, Section 251 & 252. See In re Implementation of the Local Competition Provision in the Telecommunications Act of 1996, CC Docket No. 96-98, FCC 96-325 (released August 8, 1996) petition for review pending sub. nom., Iowa Utilities Board et. al v. FCC, No. 96-3321 and consolidated cases (8th Cir. filed Sept. 6, 1996)

Section 271

Section 271 of the Act prohibits a Bell operating company or its affiliate from entering the in-region, interLATA market unless and until the BOC demonstrates that its local market is open to competition by satisfying a checklist of market-opening and other requirements set forth in the statute.

Broadband Plan Recommendations

• Recommendation 4.10 The FCC should clarify interconnection rights and obligations and encourage the shift to IP-to-IP interconnection where efficient.

All Carriers

Note: Commercial wireless carriers are considered telecommunications carriers but not Local Exchange Carriers. First Order, ¶ 1004. Therefore, commercial wireless carriers have the obligations stated above as carriers (Section 251(a) of the Telecommunications Act) and have rights under Section 251(b) & (c). Notes:  See First Order, ¶ 993 ("These carriers meet the definition of 'telecommunications carriers' because they are providers of telecommunications services as defined in the 1996 Act and are thus entitled to the benefits of section 251(c), which include the right to request interconnection and obtain access to unbundled elements at any technically feasible point in an incumbent LEC's network."); 47 U.S.C. Sec. 153(26) ("The term 'local exchange carrier' means any person that is engaged in the provision of telephone exchange service or exchange access. Such term does not include a person insofar as such person is engaged in the provision of a commercial mobile service under section 332(c) of this title, except to the extent that the Commission finds that such service should be included in the definition of such terms."); Commission Adopts Rules to Implement Local Competition Provisions of Telecommunications Act of 1996, FCC NEWSReport No. D.C. 96-75 (August 1, 1996) ("In this order, the Commission applied sections 251 and 252 to LEC-CMRS interconnection. The Commission acknowledges that section 332 is also a basis for jurisdiction over LEC-CMRS interconnection, but declined to define the precise extent to that jurisdiction at this time."); First Order, para. 1023; 47 U.S.C. Sec. 332(c)(1)(B) ("Upon reasonable request of any person providing commercial mobile service, the Commission shall order a common carrier to establish physical connections with such service pursuant to the provisions of section 201 of this title. Except to the extent that the Commission is required to respond to such a request, this subparagraph shall not be construed as a limitation or expansion of the Commission's authority to order interconnection pursuant to this chapter.")

Local Exchange Carriers (including CLECs)

Incumbent Local Exchange Carriers / Regional Bell Operating Companies