Messente avatar logo

Does it make sense to regulate interconnection fees?

Joosep Pintsaar

05 Sep 2017 -

5 min read

Joosep Pintsaar

05 Sep 2017


2 min read

We’ve seen all kinds of countries and market situations at Messente –from Europe to Latin America, to Southeast Asia. The telecommunications industry landscape is unique in every market, but there are patterns.

One of those patterns that has a lot of influence in forming local telco landscapes is the presence and the role of regulatory government institutions.

There is one in most every developed market, but the extent of its role and functions is what matters what matters. One of the main differences in the set of functions is whether the regulatory institution influences (or even dictates) interconnection prices between network operators or not.  

From a philosophical standpoint, having a public-sector institution enforcing interconnection prices is a matter of market ideology. On one end of the spectrum, the telecommunications industry in any country may be a place where the free market sets prices, or completely controlled by the state on the other end.

The question of, “what is generally the optimal position on this spectrum,” I will leave to the able hands of economists.

But what I would touch upon, however, is whether there is a need for fixing interconnection fees by a state authority in 2017.

In my opinion –no, there is not.

Simply put, fixed or enforced interconnection fees ensure that one carrier (and its user base) does not get cut away from other networks operated in a country by unreasonably high cross network fees. It’s a situation quite hard to even imagine from the viewpoint of a European surrounded by rather mature telecom landscapes.

In an advanced society, and even reasonably competitive markets, blocking another network operator with high interconnection fees is an unlikely situation to happen. And this is realized by many countries –for example, in Poland, where the interconnection fees were recently deregulated.

In an era of flat monthly fees and service bundles, countless 3rd party communication platforms, and the rise of text-based communication, “borderless” has become the standard.

Think about number portability and other transformations we have seen.

The telecommunications industry has become a competition won by opening doors, instead of putting up walls.

The second Payment Services Directive (PSD2) impact: Read the full report.

Joosep Pintsaar

Head of carrier relations

Joosep is the person taking care that your messages will be delivered no matter where and when.

We're here to help you connect with your customers. Let's start talking.

Email again:

Further reading

How we do it: Supporting a culture of growth

14 Nov 2017

Recently, I’ve had several discussions about company culture. And here’s a common question: How do you build a...

Lauri Kinkar

2 min read

This is an opportunity. Take advantage of it.

07 Nov 2017

In today’s world, it feels like the technology changes faster than we can keep up. As technology becomes...

Raili Liiva

2 min read

Scrub customer databases and make SMS more effective

31 Oct 2017

It’s often that we are asked, “what is your average delivery rate in (fill in the blank) country?”...

Margus Sütt

2 min read

Startup Conferences: What’s the point? (Slush 2017)

25 Oct 2017

With Slush coming up in about a month, it’s a good time ponder the purpose of...

Yuriy Mikitchenko

2 min read