Helping to resolve an interconnection dispute

The problem

A South American incumbent fixed and mobile operator has been engaged in a difficult struggle with an entrant, present in many countries in Latin America. Major interconnection agreements were about to expire, and both sides were at an impasse. 

The regulator had not assisted in resolving the dispute and the entrant was threatening to stop payments to the incumbent regarding a series of termination charges that were critical to the client incumbent company’s financial health.

The solution

Analysys Mason provided three levels of regulatory and management assistance. 

Firstly, we benchmarked termination rates best practice, and were able to show both sensible comparisons (particularly from Latin American countries) supporting our client’s position. We then picked apart the entrant’s benchmarking arguments and we completed an extensive analysis of the traffic flows and charging practices of the two companies for three areas of interconnection—fixed, mobile and international. 

Secondly, to help the client in negotiations with the entrant, we provided the face-to-face negotiator with extensive experience in negotiating termination rates in Latin America. 

Finally, we built a LRIC model to reinforce their case with the regulator.

The Result

The client ended up with a far better resolution to the interconnection dispute than it had anticipated, and commented favourably on how robust our LRIC model is. The model has since been used by the client for a number of other purposes.