LIBERALIZATION AND INTERCONNECTION CHARGES

The paper first reviews some common approaches to setting interconnection charges. If then develops a framework in order to assess these policies and to suggest improvements. The optimal interconnection charges are shown to be discriminately, and may or may not obey the opportunity cost rule. Their implementation is discussed. Last, the paper shows that, when the number of regulatory targets increases (prevent inefficient bypass of the essential facility, offset users' market power, etc.), further regulatory instruments are needed if one does not want the interconnection charges to be jack-of-all-trades and masters of none.