New call termination rates published

entrepr said:
Perhaps. However when calculating the cost of moving a call minute between dialing codes, there is no method that would generate a 7c/minute rate. There are surely top notch service providers who one could outsource that network function to for less (including for redundancy etc).
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(own emphasis) Indeed but here is exactly the problem with a regulatory focused approach. The need for the regulator to wield Solomon's baby cutting sword is what we should be bemoaning rather than what limbs he apportions to what side.

Something I've been beating on with this whole saga is that there is no right termination rates which the regulator can set and the entire construct of the regulator setting the price is the problem. More importantly it is a self-created problem for Vodacom and MTN and consequently the best solution lies in Vodacom and MTN executive management realizing that they are placing their companies in jeopardy by persisting with viewing the problem from the wrong angle.

Now in the presence of a a market participant agreeing - such as by applying for an i-ECNS licence - to a certain set of rules and principles then they really cannot complain at the regulator enforcing those rules as agreed to, in our present context the bulk of those rules and principles are found in the ECA: The network operators must interconnect at non-discriminatory tariffs and if they can accomplish this without regulator set prices it would be considerably better for all concerned and we wouldn't have ICASA performing anything other than a registry function on the CTRs issue -- if the operators wanted to they could enter into an interconnection agreement that involves some or another formula to cause an "under-invested" operator to pay over an interconnection fee etc ... - but the reality is that Vodacom and MTN were (possibly are) greedy and viewed the arrival of a third operator as a threat that needed to get cement boots and thrown into the Braamfontein spruit (while not as voluminous as the mighty river Hudson I suppose it does suit the purposes well...) and they went all extortion on the industry. In the process they abused the regulatory created duopoly and invited everything on the mobile termination front which has followed: so frankly I feel nothing for the two companies being destroyed by their own greed, until they take ownership and responsibility for the mess they created for themselves ...
It is the responsibility of the regulator to deal with this mess in equity that that has been created and absent some maturity from the players we are going to see a continuation of this Bleak House state of affairs. MTNs decision to litigate earlier this year was absolutely appalling with only the lawyers having anything to celebrate about.

Similarly Telkom was legislated-in to a position where it was generating considerable revenue off providing services to the MNOs while loosing revenue on the voice front (much of which of course cam back to it in the form of its Vodacom holdings). The most horrendous consequence of the mismatch (accepted by shortsighted management at Telkom of the time and as part of de facto government policy) was that the installation of last mile home copper was driven not by revenue considerations [and an efficient user pay model] but rather as part of a cost of doing business [Telkom had to install a huge number of unsustainable voice lines but in exchange got a a herd of cash cows]. The consequence though was that Telkom took 5 years to long to look at DSL rollout and hampered the DSL value proposition in order to protect diginet. Ultimately the copper crisis of today is a consequence of government policy enforcing a subsidisation of mobile over fixed substitution.

There is now a serious disconnect in this country between fixed and mobile interconnection pricing as well as between the apportionment of termination revenue towards delivering a reasonable return on infrastructure investment and on customer acquisition. No asymmetrical entrant in the market has any incentive to utilize the CTR windfall they may claim as part of an infrastructure investment and instead will use whatever comparative advantage they may have to garner market share. What we see as a result is that a "price war" is almost a default position whilst all players in the market are looking for government funding for certain infrastructure (the rural broadband statements) and whether they can extract value off another players infrastructure at zero cost (which is highly detrimental for ADSL market ...).

ICASA can want to use whatever "scientific" model it wishes to deploy but there will always be a failure to ensure proper costs accounting because there is an incentive to get the accounting wrong. Commercial relationships and agreements that are mutually beneficial are always preferable to imposed courses - sadly we are now at the point where an imposed solution is the one that has to be followed and the squabbling that follows is simply going to be a lot of energy wasted and an obstacle to real growth in the industry.

The cost of moving a call between dialing codes needs to be the cost that an efficient operator is charging, we aren't going to see any efficient operators while we are telling them they can make 7c or even 5c or for that matter 3c to do so.
 
entrepr said:
Perhaps. However when calculating the cost of moving a call minute between dialing codes, there is no method that would generate a 7c/minute rate. There are surely top notch service providers who one could outsource that network function to for less (including for redundancy etc).
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don't disagree but note the convergence of these rates proposed for year 2
 
i fail to understand how you pay consultants millions to come up with a model based on the information you have obtained and it spits out results you are so uncertain about that you change them completely 2 weeks later...
 
dominic said:
i fail to understand how you pay consultants millions to come up with a model based on the information you have obtained and it spits out results you are so uncertain about that you change them completely 2 weeks later...
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They provided a "guideline". :p

But I do agree with you.

Something is rotten in the State of Regulators...
 
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