Anguilla: Disapproval of Proposed Interconnection Agreement

In the wake of the liberalization of Anguilla’s telecommunications sector, Cable & Wireless (West Indies) Ltd. (C&W) and Wireless Ventures Anguilla Limited (WVA Ltd.) negotiated an agreement to interconnect their networks.

The Public Utilities Commission of Anguilla (the PUC) examined the agreement in the context of the criteria set out in the interconnection framework for Anguilla and concluded that it could not approve the agreement as set out.

This note summarizes the reasons given by the Commission in support of its decision.

Contravention of Non-Discrimination Principle

The interconnection agreement incorporated a ‘side’ agreement, which formed part of the overall interconnection agreement. The side agreement provided for C&W and WVA to only route traffic to a third party via C&W’s network in Anguilla.

The Commission found that this provision would unduly favor C&W, as it requires traffic between WVA Ltd. and other operators to transit C&W’s network even though there are no technical reasons to prevent other operators from providing transit services or interconnecting directly to each other’s networks. Approval of this provision would therefore contravene the principle of non-discrimination.

Treatment of the Access Deficit Charge

The side agreement also provided that, should the PUC find that an Access Deficit Charge should not be levied, or should be lower than the rate proposed in the agreement, the parties intend that such a finding shall not have any material effect on the total service rates set forth in the agreement.

As a result, C&W would be free to increase other interconnection charges (such as call set-up, call duration, interconnect specific charges) to off-set any Commission decision that an Access Deficit is not warranted. The Commission found that this contravenes the interconnection framework, which requires every operator to submit to any interconnection decision rendered by the Commission.

The Commission also found that the amount of access deficit contributions included in the fixed termination prices was excessive, given the substantial rate rebalancing already undertaken by C&W.

Allowance for Access Cost Recovery in Transit Charges

The agreement included an allowance for access cost recovery in prices for transit services. The Commission considered that, as transit services do not make use of the access network, they are not required to contribute to access costs. Accordingly, the Commission found the proposed transit charges to be excessive to the extent that they included costs for access network components.

Notice of Termination

The agreement’s Legal Framework allowed either party to suspend or terminate the agreement on notice to the other party without consulting with the Commission.

The interconnection framework required the party seeking to suspend or terminate an agreement to notify both the Commission and the other party no later than twenty days before the effective date for termination or suspension. In addition, upon an application by the other party, the Commission could issue a Preliminary Order preventing such suspension or termination. The proposed provision contravened this part of the interconnection framework, and did not comply with previous Commission decisions.

Incompleteness

The agreement did not contain details on the cost of establishing the physical links (joining circuits) between the two networks or the manner in which the related costs were to be recovered. The absence of this cost information rendered the agreement incomplete.

Required Format for Specified Network Elements

The interconnection framework provides that all interconnection agreements must set out prices for specified network elements: access lines, domestic switching of calls, domestic transmission of calls, international switching of calls, international transmission of calls, and transiting between domestic operators and service providers. Some of the prices presented in the proposed agreement did not meet this requirement.

Adequacy of Cost Model

The Commission found that the outputs of C&W’s cost model were not of an auditable standard. Problems with the model included the following:

  • The source of the financial and operational data employed in the model was not identified according to time periods or dates;
  • C&W did not provide a rationale to explain the basis for the costing allocators employed in the costing methodologies;
  • The explanation of the methodology for applying the cost allocators was inadequate; and
  • C&W did not provide audited financial statements or other supporting documentation to identify the original source of the financial and operational data employed as inputs to the cost model.

As a result, the Commission found that the overall methodology for developing the proposed interconnection prices failed to meet even the minimum test for transparency.

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