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Is There a "Right" Charging Principle with the NGN Advent?

Author

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  • Elena GALLO

    (LECG Consulting, Milano, Italy)

Abstract

Historically, telecommunications services developed adding one network to another (voice and data networks), but Next Generation Networks (NGN) are developing as native multiservice networks. Main characteristics include: broadband capacity, IP protocol, ability to transmit voice, data and video, quality control, separation among different network layers. The fact to deliver with one only network different services such as voice and data, now treated in a very different way with respect to charging principles (interconnection for voice, peering for Internet exchanges), poses the problem of the charging model to adopt in the future. In the paper we will analyse pros and cons of the different charging principles, both at wholesale and retail level, from an economic perspective. The first conclusion is that there is no "magic solution", as any criteria has pros and cons, but that it appears more appropriate to leave operators to choose their retail models, once the wholesale criteria are settled. Then the paper concentrates on the different scenarios which can arise choosing different charging principles at wholesale level. Particular attention is given to the issues of quality safeguard and of recovering nvestments in innovative networks and services. On many aspects "intermediate" scenarios seem better to answer economic problems than the "pure" scenarios, (calling party network pays for all wholesale services, including Internet/data, or bill & keep for everything, including voice).

Suggested Citation

  • Elena GALLO, 2008. "Is There a "Right" Charging Principle with the NGN Advent?," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(72), pages 33-50, 4th quart.
    • Handle: RePEc:idt:journl:cs7202
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    References listed on IDEAS

    as
    1. Benjamin E. Hermalin & Michael L. Katz, 2004. "Sender or Receiver: Who Should Pay to Exchange an Electronic Message?," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 423-447, Autumn.
    2. Yoon Kiho, 2006. "Interconnection Economics of All-IP Networks," Review of Network Economics, De Gruyter, vol. 5(3), pages 1-15, September.
    3. Wright Julian, 2002. "Bill and Keep as the Efficient Interconnection Regime?," Review of Network Economics, De Gruyter, vol. 1(1), pages 1-7, March.
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    More about this item

    Keywords

    NGN; charging principles.;

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other

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