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December 30, 2003
Interconnection dispute may be first of many
From the Barbados Advocate:
Mon Dec 29 2003
By Nicholas Cox
The interconnection dispute between Cable & Wireless and Barbados’ new cellular providers is not unique to this country. Several other Caribbean countries have encountered this problem when attempting to deregulate their markets. Moreover, interconnection disputes have become so common worldwide that the issue has been addressed by International Telecommunication Union (ITU).
The ITU is an impartial international organisation which works with governments and the private sector to co-ordinate the function of telecommunications networks and services, and works to advance the wider development of communications technology.
In the recently published “Key findings from ITU Interconnection Dispute Settlement Mini Case Studies”, several points that were relevant to Barbados’ dispute were addressed.
It appears that based on the experiences of other countries, that the recent settlement is only the first step in what could be a long journey, as other disputes emerge.
The ITU document states, “Interconnection disputes may arise as a simple product of resistance to market liberalisation. Operators that dominate their markets may refuse the physical and logical connection with other networks. They may also charge prices that are so far above costs that other operators cannot provide services on a competitive basis.” One of the underlying problems of interconnection disputes related to the rapid advancement of cellular use in many countries. This was the case in India, “The extraordinary growth of mobile services is posing a challenge to fixed line operators. Frequently, regulators are finding that interconnection arrangements established early in the life of the mobile sector cannot keep pace with the dramatic changes in market share – as mobile penetration overtakes fixed line services.”
It goes on to say, “Revenue sharing contracts or interconnection pricing among operators may quickly stop reflecting commercial reality, fuelling the likelihood of disputes. Robust but flexible dispute regulation systems are crucial to ensure that the market can accommodate such underlying sector changes.”
The report then gave several examples on how regulators were drawing on external resources when they had inadequate resources to come up with effective solutions.
These included: using data from other markets to benchmark information when not available locally; employing external consultants; encouraging the use of arbitrators; and attempting to implement self- regulatory structures which would anticipate issues that will arise in disputes.
It was noted that some of the countries studied used international benchmarks to determine to build their cost models.
However, “Relying on international benchmark data raises the twin problems of how to choose the data and how to apply it to the home market, since the competitive conditions of the benchmark countries may be quite different.” Differences in the cost of labour as well as other variables might add to this problem.
Furthermore, as other conflicts emerge, the costs involved with dispute resolution were likely to become significant; therefore, other methods of arbitration might become necessary.
The ITU report noted, “Parties are less likely to engage in potentially expensive frivolous proceedings if they are likely to bear their costs.” It continued, “Some regulators take the view that since dispute resolution is part of the legislative mandate their expenses are to be borne from the regulator’s allocated budget.”
The habit of involving non-officials in dispute resolution had become more frequent in countries like Jordan, the report stated. This was because it was expected to reduce the burden on the regulatory authority. The importance of dispute prevention was then stressed, and the pursuit of each actor’s interests in an open and constructive manner was offered as a way to achieve this. The final suggestion of the report was that consensus building was a useful manner in reaching decisions.
