This paper describes the importance of the interoperability in smart metering systems for modern distribution system operators. The lack of interoperability significantly increases the costs of smart metering system implementation for distribution system operators, especially the costs of purchasing new equipment. The replacement, cleanup and maintenance of electricity meters produced by different manufacturers, which are not interoperable, are also much more complex and expensive. Furthermore, without the interoperability, the system cannot be observable, i.e. the observability exists only for some particular segments of the system. This prevents many functionalities of distribution management system. In terms of interoperability, smart metering systems have gone through four different stages. A comparison of the system implementation costs for these four stages is presented for distribution system operator of Serbia.