Progress at any price
Interconnection fees, also called termination rates, define the tariffs that telecom operators charge to terminate calls on each other’s networks.
This month, Telkom published its interconnection fees to Internet service providers (ISPs), underserviced area licensees and Neotel, the recently launched, second fixed-line operator.
The rates are higher than local call prices, but still have to be approved by the Independent Communications Authority of SA (Icasa), before Telkom provides telecommunications services to the affected parties.
Icasa declines to comment. It is understood, however, that the authority is expecting to receive a formal complaint about Telkom’s filing, though it was not clear at the time of going to press who the complainant would be.
In terms of the proposed fees, all calls from Telkom to other networks will attract a minimum 72c termination fee, which is equal to Telkom’s retail rate for national, long-distance calls.
But the termination rates beyond the initial connection fee are complex, with different rates for different operators, and are likely to confuse consumers.
Telkom has defended the high rates and their complexity. In written response to questions from the FM, Telkom’s managing executive for retail marketing, Steven Hayward, says most ISPs have only one point of interconnect, which means that Telkom has to carry all calls destined for ISPs to this single point.
“If an [ISP’s] point of interconnect is located in Cape Town, Telkom has to carry all calls originating from Gauteng destined for this [ISP] over long distance. One cannot compare it with Telkom’s local minimum call charge,” Hayward says.
In should be noted, however, that Telkom does not offer a lower termination rate for points of interconnection that are located in the same city as an originating call. It assumes that all calls that terminate with other operators are long-distance in nature.
Per-second rates will apply after the initial 72c charge, with different companies attracting different per-second termination rates.
Calls from Telkom to Neotel will be charged at 65c/minute after the initial 72c charge. Telkom says Neotel has not requested an off-peak rate from Telkom, so the termination rate will be the same, day or night.
Hayward says telephone numbers on the Neotel network will look similar to Telkom’s and so it will be difficult to distinguish between the two. Telkom customers will have no way of knowing they are calling a number on Neotel’s network and may unwittingly pay a premium for calls made to Neotel customers.
Neotel has criticised the fees, expressing surprise that Telkom is “penalising” its own customers by charging them a higher tariff for making local calls to other networks. It says it finds this particularly surprising, given that Telkom customers will not always be able to tell whether the call is being made to a Telkom phone or to the phone of another operator.
But Hayward says Telkom’s national call rates are distance-based and Neotel’s network overlay and billing structure will differ from Telkom’s, making fair distance-based billing impossible.
Termination rates for calls made to ISPs, which have been issued numbers in the 087 dialling prefix to provide telephony to consumers using the Internet, vary widely. Off-peak termination rates range from 41c/minute to 107c/minute; peak rates are from 59c/minute to 107c/minute.
MWeb CEO Rudi Jansen welcomes Telkom’s filing to Icasa, with the rates set to come into force from this week. He believes it is right that operators negotiate the interconnect fee among themselves, rather than Icasa prescribing a rate for the industry.
However, Jansen says a solid regulatory framework needs to be established by Icasa. If one operator is treated unfairly, Icasa should have the power to intervene, he says.
“If people are using bullying tactics, Icasa needs to step in. But you can’t leave everything up to the regulator. Some people want the regulator to do their fighting for them.
“We have to work with a very anticompetitive telco [in Telkom] but if Icasa gets the framework right, we should be able to get it going,” Jansen says.
Some ISPs have already reached interconnect arrangements with one another. MWeb, Storm and Internet Solutions, for example, already switch calls from each other’s customers. Many ISPs have established interconnection agreements with mobile operators, too.
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