Interconnection

In telecommunications, interconnection is the physical linking of a carrier's network with equipment or facilities not belonging to that network. The term may refer to a connection between a carrier's facilities and the equipment belonging to its customer, or to a connection between two (or more) carriers.

In United States regulatory law, interconnection is specifically defined (47 C.F.R. 51.5) as "the linking of two networks for the mutual exchange of traffic."

One of the primary tools used by regulators to introduce competition in telecommunications markets has been to impose interconnection requirements on dominant carriers. The FCC's "Carterfone" decision in 1968 required the Bell System companies to permit interconnection by radio-telephone operators, and was the first in a series of landmark cases that led to the transformation of the long distance telephone industry from a monopoly to a competitive business.

Outside of the US, Interconnection or "Interconnect regimes" also take into account the associated commercial arrangements. As an example of the use of commercial arrangements, the focus by the EU has been on "encouraging" incumbents to offer bundles of network features that will enable competitors to provide services that compete directly with the incumbent. Further the interconnect regime decided upon by the regulator has a major impact on the development/rate of growth of market segments. According to Source8 (an EU based consultancy) two examples from the UK of this are the decision about revenue sharing on local rate numbers was a contributory factor in the explosive growth in dial internet and the asynchronous reciprocity that exists between fixed and mobile termination rates.

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References

Link to US Code of Federal Regulations 47 CFR 51.5

http://a257.g.akamaitech.net/7/257/2422/13nov20061500/edocket.access.gpo.gov/cfr_2006/octqtr/47cfr51.5.htm