COM E BD
Operators howl over ICASA proposals to lower interconnect
Moves by the telecommunications regulator to slash the fees that rival
operators charge to route calls from one network to another would not
result in a substantial cut in the costs to consumers, the operators
claimed on Monday last.
The Independent Communications Authority of SA (ICASA) says Telkom and
the mobile operators charge each other too much to interconnect their
calls. ICASA believes consumers will benefit if it forces the fees down.
But ICASA was wrong about the net effect, and was also overstepping its
powers by proposing to intervene, said Telkom and MTN at public hearings
on Monday. ICASA has drawn up interconnection guidelines proposing that
the operators charge a fee that reflects the actual cost of terminating
a call on their networks.
That could be at least 30% lower than the present fees. At the moment,
interconnection fees account for 66% of what consumers pay for a fixed
line-to-mobile call and 11% of a mobile-to-fixed line call, according to
recent research.
The operators argue that although they pay some fees as well as receive
some fees, the rates are negotiated so the players that have invested
the most in their networks receive more than they pay, to help them
recoup their costs.
Telkom's regulatory affairs executive, Gabriele Celli, said cost-based
fees would leave the operators unable to recover the costs incurred in
rolling out their networks. MTN's GM of regulatory affairs, Graham de
Vries, agreed that cost-based fees would undermine MTN's investment.
"ICASA is on the verge of restructuring the industry through
interconnection guide-lines that would probably be the most intrusive
regulations deployed for mobile operators anywhere in the world," he
said. "High interconnection fees have no impact on retail prices because
the operators receive as much as they pay," De Vries said.
What fees did was allow South African operators to earn more money from
foreign operators, as local users typically receive three times more
international calls than they make, he said.
If Icasa felt there was a problem with the cost of calls, it could take
less Draconian steps than intervening in the interconnection fees, he
said. "You take a fly swatter to a fly, not a hammer."
Interconnection fees are subject to confidentiality clauses but,
according to Genesis Analytics, Telkom charges 31c at peak times and 17c
in off-peak periods for mobile-to-fixed calls.
The mobile operators charge R1,25, which was probably at least 30%
higher than the actual cost of connecting the calls, Genesis said. ICASA
councillor Zolisa Masiza said there had been a 635% rise in
interconnection fees over 11 years, up from 20c.
Current laws allow Icasa to impose cost-based inter- connection fees on
"dominant" operators and ICASA has declared Telkom a dominant player.
ICASA has also ruled that MTN and Vodacom are dominant companies, which
would let ICASA determine their interconnection fees. MTN and Vodacom
oppose that view and have gone to the Supreme Court to argue that,
although they have big shares of the market, that does not translate
into unfair dominance.
(SOURCE: Business Day)
Source: Balancing Act's News Update 298 (24th March 2006)
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