Lower interconnect not the promised panacea

Decreasing interconnect fees was supposed to lower telecoms costs, promote competition and create world peace.

It’s done none of these because the logic underlying it was flawed. Analysts focused on interconnect as an expense, happily ignoring the revenue side (since it was a fee paid to another company within the industry). Never has a telecoms issue been so badly hijacked by lack of understanding.

Now, in a press release that is a little vague, BMI TechKnowledge reflect concerns that telecoms growth rates may be lower as a result of falling mobile termination rates.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.