Bill and Keep as the Efficient Interconnection Regime?

In this paper I review the recent paper by DeGraba (2000) that proposes a version of Bill and Keep (called COBAK) as the efficient interconnection regime. I argue while the proposed interconnection regime is suitable for some types of interconnection it would be quite undesirable for others. I show that whether the COBAK approach is suitable for a particular type of interconnection depends on, among other things, the importance of network externalities and on the willingness of called parties versus calling parties to pay for calls.