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Icasa makes its call on interconnection fees
| Thabiso Mochiko | July 30, 2007 | No comments |
The Independent Communications Authority of SA (Icasa) is planning to control the fees that cellphone networks and fixed-line operators charge each other to connect calls to one another.
This is an effort to lower telecoms costs and it is the first time that the regulator has effected such a move.
Icasa last week released draft regulations on interconnection charges and facility leasing for public comment.
The interconnection fees between cellphone operators have increased 500 percent in the past 12 years to R1.25 a call for cellphone to cellphone.
The cost of fixed-line interconnection rose 47 percent from 21c in 2004 to 31c in 2005. The high interconnection rates mean that major retailers are able to influence retail prices – the fees that consumers pay when making a telephone call.
Previously, Icasa did not intervene on interconnection agreements between operators. Recently, the regulator was blamed by Cell C for failing to protect it from MTN and Vodacom.
The two companies, which have a combined 90 percent market share of the cellphone industry, increased interconnection rates when Cell C was preparing to enter the market, making it difficult for the Saudi-backed company to make profit.
The regulations propose that charges for interconnection must be cost based and that the structure must reflect underlying costs. They recommend that interconnection fees must be sufficiently unbundled so that a party seeking interconnection does not pay anything it does not require for interconnection.
In addition, charges for interconnection may not exceed retail charges for the provision of substantially similar services.
The draft regulations also state that charges for billing and settlement procedures must be transparent and fair.
But it seems that Icasa’s intervention may not be enough.
Arthur Goldstuck, the managing director of World Wide Worx, said that in the absence of a ceiling being placed on pricing by the regulator, the cost of interconnect has ballooned out of control.
“By putting the onus on networks to specify how the interconnect cost is made up, the draft regulations leave ample scope for continuation of this abuse. Set a price ceiling and costs will be tailored to fall in line with that ceiling,” he said.
Vodacom, MTN and Cell C have until September 3 to comment on the regulations.
The companies were reluctant to speak to Business Report about the draft regulations.
Business Report
