Question:

(a) Long Run Incremental Cost (LRIC) is considered as the "gold standard" for setting interconnection charges. Discuss the strengths and weaknesses of the three approaches to LRIC modeling.

(b) Within the context of telecommunications networks, two parts of the service can be distinguished: originating the call and forwarding it to the point of interconnection and the termination service, which involves picking-up of the call from the interconnection point and transferring it to the final destination. With telecommunications, the entire call is in most instances paid for by the originating party of the call (CPP principle). There are also cases where the receiving party pays for the termination services (RPP principle). Many practical arguments militate in favor of CPP. Discuss the advantages and disadvantages of RPP and CPP.

(c) Efficient Component Pricing Rule (ECPR) has been subject of considerable discussion and critics. List the principles and the disadvantages of ECPR.