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Interconnecting the Network of Networks

Interconnecting the Network of Networks

by Eli M. Noam

ISBN-10: 0262140721

ISBN-13: 9780262140720

Pub. Date: 06/04/2001

Publisher: MIT Press

This book describes the transformation of telecommunications from national network monopolies to a new system, the "network of networks," and the glue that holds it together, interconnection. By their very nature, monopoly-owned networks provided a small number of standardized, nationwide services. Over the past two decades, however, new forces in the world economy


This book describes the transformation of telecommunications from national network monopolies to a new system, the "network of networks," and the glue that holds it together, interconnection. By their very nature, monopoly-owned networks provided a small number of standardized, nationwide services. Over the past two decades, however, new forces in the world economy began to unravel this traditional system. The driving force behind the change was the shift toward an information-based economy. Especially for large organizations, the price, control, security, and reliability of telecommunications became variables requiring organized attention. Thus, monopoly began to give way to the "network of networks," the foundation of today's telecommunications and Internet infrastructure.

Taking a broad, multidisciplinary perspective Eli Noam discusses the importance and history of interconnection policy, as well as recent policy reforms both within the United States and around the globe. Other important topics he discusses include interconnection prices, the unbundling of interconnection, and the technology of interconnection. He concludes with an examination of social and policy issues, including the free flow of content, universal service and privacy protection, and the future of telecommunications.

Product Details

MIT Press
Publication date:
Edition description:
New Edition
Product dimensions:
6.25(w) x 9.25(h) x 1.00(d)
Age Range:
18 Years

Table of Contents

1Interconnection as the Key to the Network of Networks
1.1Breakdown of the Centralized Network and Emergence of the Network of Networks1
Concept of Network6
Breakup of Networks7
1.2Why Regulate Interconnection?10
Antimonopoly Rationale11
Transaction Cost Rationale13
1.3Regulation of Interconnection and Unbundling in a Competitive Market14
1.4Consequence of Interconnection on the Network System16
2Interconnection as Tool for the Creation of Monopoly17
2.1Period of No Agreements in the United States17
2.2Period of Contracted Agreements18
2.3Road to Regulated Interconnection18
2.4Establishment of a Regulatory System21
2.5Early History of Interconnection in Europe22
United Kingdom23
3Interconnection Policy as Tool to Establish Competition and Control Markets27
3.1Reciprocity and Symmetry27
3.2United States: The Regulatory Bodies30
3.3Equipment Interconnection: The Beginning of Interconnection as a Tool for Competition32
3.4Long-Distance Interconnection and the Demise of the Bell System35
3.5U.S. System of Access Charges38
Exchange Network Facilities for Interstate Access39
Equal Access, 1984 to 199440
Interconnection Regime after the 1996 Telecommunications Act43
3.6Mobile Interconnection46
3.7Local Competition and Interconnection48
Local Interconnection--Virtual or Physical Collocation49
Local Interconnection--The FCC52
3.8The 1996 Telecommunications Act54
3.9Cable Television Interconnection58
3.10Internet Interconnection63
4Pricing of Interconnection and Access69
4.1Unregulated Pricing of Interconnection69
4.2Regulated Pricing of Interconnection75
Zero-Charge (Bill-and-Keep) and Lump-Sum Payments76
Average Cost Pricing78
Fully Distributed Cost Pricing, Two-Part Tariffs, and Capacity Pricing78
Price Caps80
Ramsey Pricing (Optimal Price Discrimination)80
Wholesale Pricing81
Efficient Component Pricing86
Marginal Cost Pricing94
4.3Costs of Interconnection104
4.4Arbitrage Model Pricing: Third-Party Neutrality111
5Interconnection around the World117
5.1International Interconnection117
Traditional ITU System117
Submarine Cables120
Accounting Rate System121
European Commission128
5.2Open Network Provision in Europe129
5.3World Trade Organization Agreement134
5.4United Kingdom138
Mercury Interconnection139
Duopoly Review and the Access Deficit Contribution Debate140
Cost Separation and Unbundling141
Long-Distance Competition without Definite Interconnection Rules, 1985 to 1991150
Interconnection Reforms150
Designated Facility Rule151
Holding Company System and LRIC152
5.13New Zealand162
5.14Concluding Observations167
6Unbundling the Network169
6.1Why Unbundling?169
6.2Open Network Architecture174
ONA Unbundling179
Unbundling under the 1996 Telecommunications Act182
7Interconnection and Technology185
7.1Physical Interconnection185
Technical Interconnection: An Introduction185
Interconnection of Telephone Networks187
Interconnection of Cellular Mobile Networks189
Interconnection of Data Networks190
Network Management and Control194
7.3Service Quality202
7.4Numbering and Portability204
Telephone Numbering204
Number Portability206
8Interconnection and the Flow of Content211
8.1Legal Regimes for Information Flow211
8.2Evolution of Common Carriage213
Common Carrier Determination214
Unreasonable Discrimination214
Common Carriage and Interconnection: What Does the Future Hold?215
8.3Impending Doom of Common Carriage217
Media Conduits as Private Carriage217
Private Contract Carriage219
8.4A Mixed System?223
8.5Third-Party Neutrality as a Substitute for Common Carriage225
8.6Interconnection Status of Cable Television227
8.7Access to Telco High-Speed Service229
9Social Issues in the Interconnected Network: Universal Service and Privacy231
9.1Universal Service231
Reforming Universal Service231
Financing Today's Universal Service System232
Financing the Universal Service System: Options for Reform234
NetTrans Account System237
The FCC's Universal Service Reform239
9.2Privacy in the Network of Networks240
Emerging Privacy Problems240
Policy Approaches242
Markets in Privacy?243
10Into the Future247
10.1Emerging Network Technology247
10.2Transformation of Networks248
From Interconnection to Modularization248
From Modularization to Integration and Personal Networks249
From Integration to Reorganization252
10.3Future of Regulation in the Network of Networks253
Expansion of Redistribution254
Expansion of Consumer Protection Regulation254
Privacy Protection255
Legacy Rules255
10.4Regulating Interconnection?255
10.5Societal Interconnectivity260

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