High interconnect fees slammed

Interconnect fees this high cause serious problems for customers. It is easy to illustrate using Vodacom and MTN.

These two networks have similar call volumes between each other. So, let's say Voda owes MTN R400 mil in interconnect fees and MTN owes Voda R500m. MTN just sends over R100m and the fees are settled. But if you look closer, the two operators have taken in R900m from their subscribers. This is how they screw their own customers: MTN earns R300m interconnect fees (R400m-R100m) and Voda earns R600m (R500m+R100m).

It is even worse if you add a third, smaller operator into the mix. Let's say Cell C owes Voda R300m and MTN R200m but Voda owes Cell C R100m and MTN owes them R100m. Now Cell C pays Voda R200m and MTN R100m and doesn't get a cent of the interconnect charge income (Cell C earns R200m interconnect, but pays out R500m). Voda earns R200m and MTN earns R100m.

So the biggest player wins hands down and the smallest player and their customers suffer the most damage.
 
Has this not come up numerous times before? And here we still sit. No-one has budged on this unrealistic charge. The cellphone companies' greed and a weak regulator are to blame, at the risk of sounding obvious.
Pass the vasaline, please :(
 
Need Icasa to say that and then I'll actually read the article :rolleyes: (with excitment)

Not downplaying anything from ISPA - wholeheartedly agree and support their stance.
Just wish that all the noise would rattle the proper cages.
 
Gaz{M} said:
Interconnect fees this high cause serious problems for customers. It is easy to illustrate using Vodacom and MTN.

These two networks have similar call volumes between each other. So, let's say Voda owes MTN R400 mil in interconnect fees and MTN owes Voda R500m. MTN just sends over R100m and the fees are settled. But if you look closer, the two operators have taken in R900m from their subscribers. This is how they screw their own customers: MTN earns R300m interconnect fees (R400m-R100m) and Voda earns R600m (R500m+R100m).

It is even worse if you add a third, smaller operator into the mix. Let's say Cell C owes Voda R300m and MTN R200m but Voda owes Cell C R100m and MTN owes them R100m. Now Cell C pays Voda R200m and MTN R100m and doesn't get a cent of the interconnect charge income (Cell C earns R200m interconnect, but pays out R500m). Voda earns R200m and MTN earns R100m.

So the biggest player wins hands down and the smallest player and their customers suffer the most damage.
Click to expand...

The interesting thing here is that we see this scenario play out in various areas in SA, not just telecoms. If this could all be added up together, imagine the vast amount of cash involved.
 
Lazy said:
The interesting thing here is that we see this scenario play out in various areas in SA, not just telecoms. If this could all be added up together, imagine the vast amount of cash involved.
Click to expand...
Remember Tannhasuer's Ponzi scheme and how many lawyers, CEO and other rich people got caught up in it? Most are highly educated, knowledgable people. How come, when we have a saying that "if it looks too good is probably is" (like 200% capital growth per year in that scheme).
My theory is that so many rich people got involved in it because it does not look "too good" for them, it looks quite normal in their line of business.
 
risingtide said:
Remember Tannhasuer's Ponzi scheme and how many lawyers, CEO and other rich people got caught up in it? Most are highly educated, knowledgable people. How come, when we have a saying that "if it looks too good is probably is" (like 200% capital growth per year in that scheme).
My theory is that so many rich people got involved in it because it does not look "too good" for them, it looks quite normal in their line of business.
Click to expand...

Just today there was a report of R 6.5 million to build a website, so there might actually be some truth in your theory.
 
get the competition commission involved, fine the buggers R250M each!
 
Simoski said:
get the competition commission involved, fine the buggers R250M each!
Click to expand...

I disagree. Force them to drop their interconnect fees (or at least make them reasonable and affordable).

The Competition Commission is a farce. Yes, they can levy huge fines, but this generally gets paid by the consumer at some point anyway. Secondly, where do all these huge fines go?
 
Gaz{M} said:
Interconnect fees this high cause serious problems for customers. It is easy to illustrate using Vodacom and MTN.

These two networks have similar call volumes between each other. So, let's say Voda owes MTN R400 mil in interconnect fees and MTN owes Voda R500m. MTN just sends over R100m and the fees are settled. But if you look closer, the two operators have taken in R900m from their subscribers. This is how they screw their own customers: MTN earns R300m interconnect fees (R400m-R100m) and Voda earns R600m (R500m+R100m).

It is even worse if you add a third, smaller operator into the mix. Let's say Cell C owes Voda R300m and MTN R200m but Voda owes Cell C R100m and MTN owes them R100m. Now Cell C pays Voda R200m and MTN R100m and doesn't get a cent of the interconnect charge income (Cell C earns R200m interconnect, but pays out R500m). Voda earns R200m and MTN earns R100m.

So the biggest player wins hands down and the smallest player and their customers suffer the most damage.
Click to expand...

While I agree that the interconnect fees are a sham, your maths aren't quite correct... see if you can spot where!

Your wrong about what the companies earnings as well. They pass on the interconnect fee payable to the users, so they dont end up suffering that as a loss. In effect they earn all the interconnect fees they charge other operators, minus the negligent amounts needed for the electricity and admin needed in the process...
 
Even though interconnect fees are high it is possible to call from SA (on MTN) to a landline in Germany for R1.31/minute, using call2...
 
Antonf said:
Even though interconnect fees are high it is possible to call from SA (on MTN) to a landline in Germany for R1.31/minute, using call2...
Click to expand...

That is because the German Telco is not the one charging the exorbitant termination fee. Bet you can't make the reverse call for the same price.
 
The high interconnect fee's are a barrier to new competition.
A new competitor will have to charge extremely high interconnect fee's back to their customers, thereby making them uncompetitive.

*applause @ excrement*
 
RVFmal said:
I disagree. Force them to drop their interconnect fees (or at least make them reasonable and affordable).

The Competition Commission is a farce. Yes, they can levy huge fines, but this generally gets paid by the consumer at some point anyway. Secondly, where do all these huge fines go?
Click to expand...

And more importantly.. after getting fined none of the companies are ever forced to reduce their price, they just keep them the same(with new justification) and pay off the fine.. then later increase their prices to cover :erm:
 
davemc said:
The high interconnect fee's are a barrier to new competition.
A new competitor will have to charge extremely high interconnect fee's back to their customers, thereby making them uncompetitive.

*applause @ excrement*
Click to expand...

That's not all the Cell phone networks have put in place to stop competition.

Any new operators will want to get their own number ranges and will then want the cell phone networks to agree to send calls to their numbers if one of their clients phones it.
Vodacom is the worst perpetrator of preventative policies by demanding:

1. The new operator pay a deposit of R150K before Vodacom will forward calls dialled by its customers to its 087 number range.
2. The new operator must then pay an equivalent fee of R50K a month to Vodacom
3. Vodacom demands a payment of R1.26 per/minute for any calls it connects to the 087 number but is not willing to pay more than R0.20 for any calls the ECNS switches to its 082 number range
5. If the ECNS finally swallows all of the above Vodacom then prohibits the ECNS to switch any calls internationally effectively forcing it's subscribers to pay it's exhorbitent international call rates.
 
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