XL Axiata Axis Capital Group: Interconnection in Telecommunications

Interconnection is defined as the chance for telecommunication providers to build bridges for full transparency to their customers and an opportunity to know what the client needs. It provides harmonization between network operators. With the expanse of competition getting fiercer between telecommunications operators, interconnection is expected and reviewed to be reassessed with emergence of different strategies and business governance structures.

Despite the value and the weight given to interconnection and its importance, it has been an issue in telecommunications for the last decade. Surely, it is a focal point for tensions and interests conflicts and complaints among operators. The problem in adherence and the demand to answer on the appeal of the market is challenging.

Yet, there is no denying the impact of interconnection to both providers and customers. Its importance includes:

•             It eliminates the need for a customer to subscribe to multiple networks in order to be able to communicate with all other customers.

•             Dominant carriers can hinder or eliminate competition by delaying interconnection, degrading the quality of interconnection, or charging high prices for interconnection.

In some cities like Jakarta, Indonesia where mobile carriers are too preoccupied to customer satisfaction, some providers sometimes become too ensnarled to interconnection disputes and delink their network. Many customers in these countries find it necessary to have a SIM card for each mobile operator to ensure that they can reach customers on all networks during the times of these interconnection disputes. This raises costs for customers and decreases the rate of call completion, which costs customers time. The Big Three operators, Indosat, Telkomsel and XL Axiata provide direct line for their subscribers to continue the steady stream of interconnection. Other local operators such as Axis Capital Group, which is also an affiliate of XL have also adapted the system.

International law requires operators to propose interconnection that are nondiscriminatory and transparent. That proposal requires the regulator’s approval. Transparency is important as the industry is expanding its services and inclusions.

Global commerce, mobile subscription and data usage are only some of the products of interconnection. As global commerce continues to become integrated and paperless, efficient interconnection is important to enable activities such as electronic banking, e-commerce, mobile roaming, and e-mail. Efficient interconnection also facilitates the implementation of new technologies as countries reap value from global connectivity and strive for cost-saving technologies. Although the term interconnection and the term access are often used interchangeably, many industry experts prefer to draw distinctions between the two.