Interconnection of telecommunications networks allows communication across different networks. The revenue and cost resulting from interconnection is distributed through interconnection charges. However, interconnection charges are a kind of transfer payment, which may very well lead to deadweight loss. As such, a ”bill and keep” arrangement is proposed to improve economic efficiency. This study attempts to analyze network formation under a bill-and-keep arrangement. The findings are: the topology of networks under a bill-and-keep arrangement may vary, but can never be a star, circle, or wheel network; and if the interconnection charges are priced at marginal costs, the bill-and-keep arrangement can not be sustainable. These findings may be helpful in reviewing and reforming the telecommunications interconnection regime.