How to improve telecoms in SA
Over the last few months consumers have seen the price of ADSL data plummet, interconnect rates are likely to come down next month, both Vodacom and MTN are rolling out 14.4 Mbps HSPA services and Telkom is set to launch an 8 Mbps ADSL service and larger data bundles soon.
Things are starting to improve in the local telecoms market, but these are merely the first steps to creating an environment where local consumers will see similar types of services and prices as their international counterparts.
MyBroadband recently caught up with ECN CEO John Holdsworth to get his views on how to ensure that consumers get a better deal.
Holdsworth was instrumental in driving the initiative to reduce mobile termination rates (MTRs), and he says that ICASA has committed to conclude its chapter 10 process around interconnection in March. “The market expectation is that ICASA will lower interconnection rates to R0.60. The rate should be lowered with immediate effect although ICASA may advocate a glide path,” said Holdsworth.
“The Chapter 10 study will also identify players with SMP (Significant Market Power). This is an important pre-requisite for the interconnection regulations. Final interconnect regulations should be published during the course of the year. These will facilitate interconnection on fair terms for new entrants. They also contain a number of pro-competitive clauses which should benefit parties without SMP,” added Holdsworth.
According to Holdsworth the regulations will spell the end of LCR (Least Cost Routing). “Parties with CSMP are not allowed to price on net calls below their unbundled wholesale interconnect rates. Geographic number portability will allow new entrants to port numbers from Telkom and earn lucrative inbound interconnect revenue. Individual GNP (Geographic Number Portability) is available from 18 March 2010.”
GNP regulations are set to be published during the course of 2010, and in the interim GNP is governed by regulations gazetted under the Telecommunications Act, says Holdsworth.
Another issue which can benefit consumers is the ability to select a carrier of choice when making a phone call. “ICASA has committed to finalise carrier pre select (CPS) regulations this year. The proposed CPS regulations include mobile CPS – this will allow SA’s 40m mobile phone users to select a carrier on a call by call basis.”
“CPS will facilitate the entry of many new mobile carriers and boost competition on the pricing of calls from mobile phones. CPS will also allow next generation networks to compete with Telkom for outbound call traffic from all of its customers irrespective of size including long suffering residential subscribers.”
The long awaited facilities leasing regulations are also expected in 2010. “Facilities leasing will allow new entrants to lease capacity on the incumbents’ networks and gain access to their essential facilites (including local loops and facilities for accessing subscribers, satellite earth stations and undersea cable landing stations). These regulations will provide new entrants with wholesale line rental – allowing them to resell Telkom exchange lines to existing customers,” explains Holdsworth.
2010 should also see the finalisation of ownership and control regulations. According to Holdsworth the draft regulations have provided the incumbent operators with a headache. “ICASA has proposed that all licensees must ensure that they have at least 30% black ownership. Whilst it has been quite easy for the new entrants to comply with this requirement, the incumbent operators are grappling with how to transform their shareholding structures. If they do not comply, they risk losing their licenses.”
Holdsworth further says that Telkom’s retention rate on calls to new entrants is hurting competition in the fixed line market. “Per minute rates from Telkom’s network to new entrants are marked up by R0.44 (peak) and R0.22 (off peak) – (the retention rate is Telkom’s mark up on new entrants’ interconnect rates). This reduces the ability of new entrants to compete in the fixed line market.”
“As a result of the inflated cost of calling new entrant’s numbers from Telkom lines, the majority of our customers will not take numbers from- or port their numbers to new entrants (when it is possible). The result of this is that the majority of new entrants’ traffic is outbound – with the current high interconnect regime in place, inbound minutes are much more profitable than outbound minutes.”
Holdsworth says that without a balanced traffic profile, or large on-net traffic volumes, new entrants have to survive on much lower margins than the incumbents. “ECN has raised a complaint with the Competition Commission in this regard. The whole industry should be tackling this issue – if it is not dealt with appropriately, the mobile networks may take a cue from Telkom,” says Holdsworth.
“This issue affects competition in the fixed line market and will impact GNP negatively – customers are incentivised not to port their numbers from Telkom to new entrants as calls to their number(s) will become noticeably more expensive on the new entrant’s network.”
How to improve telecoms in SA << What do you think should be done?
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