Total regulatory failure, says ECN
MTN has requested a private hearing with the Parliamentary Portfolio Committee on Communications to present their allocation of costs in respect of interconnect services. This arose out of a claim made by the managing director of MTN, Mr Karel Pienaar, on 14 October 2009 that the mobile interconnect fee of 60 cents (which was proposed by the Committee on the 21 September 2009) is below MTN’s actual cost of termination.
In its presentation to the Parliamentary Portfolio Committee on Communications on 14 October 2009, ECN made specific reference to the regulations on Chart of Accounts and Cost Allocation Manual for Mobile Cellular Services published as far back as July 2004 (“the COA/CAM Regulations”).
These Regulations require that the mobile operators file revenue and cost information for interconnection charges with ICASA so that ICASA can ensure that the charges are cost based (sub regulation 2.3) and based on the operations of an efficient operator (sub regulation 6.3).
The Regulations also require the mobile operators to provide ICASA with regulatory accounts prepared on a long run incremental cost basis (sub regulation 3.2) so that ICASA can “fulfil its regulatory responsibilities” which, according to the Regulations are –
- confirming that the charges for interconnection are cost based;
- determining the extent to which interconnect charges contribute towards affordability of retail tariffs; and
- determining the extent to which interconnection charges promote competition in the telecommunications market.
ECN wants to know what steps ICASA has taken in terms of the Regulations to discharge its regulatory responsibilities. ECN also wants ICASA to explain why it has insisted on completion of a market study before regulating interconnection prices when it has clear, unambiguous regulations at its disposal which can be used to lower interconnection prices.
ECN has asked that the Parliamentary Portfolio Committee on Communications raise these questions with ICASA because, had ICASA indeed taken these steps, consumers would not effectively be paying R1.25 to be interconnected to a network that is not a consumer’s home network.
From the information available to ECN it seems that there has been a blatant disregard for the provisions of the Regulations on the part of both the regulator and the mobile operators. To ECN, it appears that the operators have been charging rates that are contrary to what is required by the Regulations and that ICASA has tacitly condoned this conduct by failing to enforce the Regulations.
If the mobile operators are charging interconnect fees that are not cost based the conduct is unlawful and, as such, the conduct must cease immediately. The mobile operators should then be required to immediately comply with the Regulations without negotiation and without an easy glide path to compliance.
Councillor Robert Nkuna, who has insight into the COA/CAM accounts that have been filed with ICASA, informed the Committee on the 15 September 2009 that that the cost of interconnect is no more than R0.40. During the Committee’s interview with Mr Boqwana for the vacant ICASA councillor position, Mr Boqwana stated that – “I can tell the committee this: that the unit cost of calls bears no resemblance to what the cost for interconnection is.”
Mr Boqwana is the person at ICASA who had the responsibility of consolidating the network operators’ COA/CAM returns.
ECN trusts that the Parliamentary Portfolio Committee on Communications will investigate whether the provisions of the Regulations have been applied correctly in the preparation of the accounts.
ICASA’s apparent dereliction of its duties and the seeming disregard for the COA/CAM Regulations on the part of the mobile operators has deprived consumers of affordable telephony (a means by which consumers can exercise their right to freedom of expression) and has raised barriers to much needed competition
If the costs have not been allocated as per the COA/CAM Regulations and if it is clear that ICASA has failed to enforce the COA/CAM Regulations, any interested party (including the Minister) would then be entitled to approach the High Court for an order which compels ICASA to enforce the COA/CAM Regulations. Depending on the steps taken by ICASA in the coming weeks this is an option that ECN will consider.
Regulation and interconnect – comments and views
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