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NGN Charging Principles

This paper prepared for NGNuk explores whether the charging principles applicable in current generation networks, such as Calling Party Network Pays, remain appropriate once Next Generation Networks are implemented.

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Telecommunications networks are being upgraded from current generation circuit switched technology to Next Generation all-IP networks. These new networks will have lower operating costs and offer opportunities for new services. With some exceptions, voice and messaging services on current generation networks are paid for by the calling party’s network, whilst the Internet is largely characterised by Bill and Keep, whereby networks are responsible for their own costs. This paper reviews whether current interconnect charging principles or Bill and Keep will be more likely to promote dynamic and static efficiency gains when applied to voice and messaging services on NGNs. We find that efficient investment, an objective of both EU and UK law, is most likely to be supported by continuing with a system whereby the network of the party most likely to benefit from the transfer of a call or message continues to pay for the call. In this way networks are most likely to recover investments from calling or called parties who gain most. This basic economic principle is equally applicable to NGNs as it is to the current generation of networks.