From Switches to Packets: The New World of Interconnection

In: Journal of information policy: JIP, Volume 2, p. 273-286

Abstract

Abstract
As the telecommunications market transitions from POTS to VoIP, interconnection plays a key role. How will migration from a termination regime to a peering regime impact carriers and subscribers? Cunningham and Alexander model the potential results under conditions of both traffic symmetry and asymmetry. Competition for subscribers, they find, is the key factor in holding interconnection costs down, although possibly increasing prices for subscribers. Under symmetry, this may ultimately increase firms' profits. Under asymmetry, some firms will lose profits. The consequences of this may be somewhat offset by public policies. This has implications for universal service, antitrust law, and network neutrality.