Pricing Analysis in International Interconnected Networks

The international telecommunications market is characterised by the need of operators in different countries to be interconnected. These operators enter into agreements whose principal variables are, firstly the interconnection tariff, and secondly the traffic volumes. The liberalisation of the telecommunications market has affected the dynamics of the bilateral agreements between international operators. This paper examines the interactions between fixed telephone operators in interconnected countries and analyses the effects that various settlement agreements can have in terms of the operators profitability.