NTC starts consultations on interconnection fees

The National Telecommunications Commission (NTC) will start public consultations today (Wednesday) on the proposed implementing rules and regulations that will require public telecommunications entities (PTEs) – both mobile and fixed telephony – to move towards cost-based interconnection charges.

The NTC is tasked to establish a specific cost methodology in the form of wholesale pricing principles and guidelines for PTEs to provide telecommunications services at cost-based prices that are "transparent, reasonable, and having regard for economic feasibility."

In another development, the commission has allocated among trunk radio operators 47 new pairs of frequencies in the 800 megahertz bandwidth.

The frequencies were allocated as follows: Nextel, 15 pairs; Smarnet 14, TNRI 13, ICC (BayanTel), five. The NTC decided not to allocate three pairs for future use.

NTC Commissioner Eliseo Rio clarified that these are standard bands and that separate allocations were made for 83 pairs of extended band. Among those which got the extended bandwidth were Contel, 56; Worldwide, 21; and Liberty, six. These three earlier expressed interest in the standard band but decided to just apply for the extended band which would require additional equipment.

Meanwhile, according to the proposed IRR on cost-based pricing, interconnection charges currently vary among PTEs and are agreed upon bilaterally. These interconnection agreements are at present just revenue sharing or unit charge arrangements that are not necessarily reflection of cost.

Upon effectively of the new MC, all PTEs shall renegotiate their present interconnection agreements to implement the transition to cost-based interconnect charges.

The transition towards cost-based pricing is divided into four phases. During the first phase which begins upon effectivity of the MC and for a period of one year, an independent analyst chosen by the PTE working group will help the industry determine a uniform cost reflective of interconnect charging which can be applied between all PTEs.

PTEs shall perform analysis needed to convert their current wholesale structures into that required by the IRR. All PTEs shall submit the wholesale charges to the NTC for approval 30 days before the end of Phase 1 and the approved charges shall apply during phase two.

During the second phase which begins on year two, the NTC shall develop principles and structures on long-run incremental cost (LRIC) cost-based interconnect charge. During the later part of this phase, the PTEs shall perform analysis to define cost-based interconnect charges for approval by the NTC and for implementation during phase 3.

For phase 3 which begin Jan. 1, 2003 and end on Dec. 31, 2005, the PTEs shall submit every year their adjusted cost-reflective interconnect charges to the NTC while for phase 4 of the last phase which will begin on Jan. 1, 2006, all PTEs are required to submit their cost-based access and interconnect charges every year which is subject to certain adjustments as provided for under the IRR.

Meanwhile, the proposed IRR also provides certain basis for the cost-based charges that will be NTC starts… From Page 24 determined by the PTEs.

For instance, at a particular point of interconnecton, the origination terminate charge offered by one PTE to another should be the same where they utilize the same infrastructure and functionality.

Where PTEs with local loop infrastructure at a particular POI offers a wholesale volume discount to other interconnected PTEs, the same shall be offered to all other competing PTEs seeking interconnection at the same point irrespective of whether the PTEs have competing local loop infrastructure in the same area or not.

All PTEs shall report their internal access and interconnect costs separately by product or service using the same charging levels applied to external competitors. Theymust not charge themselves less than what they charge to their next biggest customer or PTE.

Also, standard interconnect agreements should not include clauses which unreasonably restrict the interconnected IXC or IGF from either terminating the contract or directing traffic to another local exchange carrier in the same or another area.