ANSWER TO THE CHARGES
Following complaints by the public, Icasa wants to know why the operators charge what they do and whether they are justified in doing so. It’s not clear at this stage what action Icasa can take or whether action is in fact warranted.
Icasa councillor Tracy Cohen, who chaired a second round of hearings into the matter last week, says there still needs to be further deliberations by the regulator. A findings document will eventually be drawn up. This document will recommend remedies, she says.
Cohen won’t be drawn further as she says she does not want to pre-empt the findings.
It seems unlikely that Icasa will institute price controls similar to those it enforces on fixed-line monopoly operator Telkom. If Icasa determines that regulations are necessary, they are likely to be less onerous. But even light-touch regulations look set to be vigorously opposed by the operators.
Vodacom and MTN are already challenging Icasa in court after it said it would deem them to be “major operators” for the purpose of regulating the interconnection fees they charge each other for terminating calls on their networks. Being labelled major operators would force them to comply with a cost-based pricing formula for interconnection fees.
Instead of intervening, the operators want Icasa to hold off. MTN regulatory group executive Nkateko Nyoka says the new Electronic Communications Act, which was recently signed into law, allows for the licensing of many more mobile operators. In his comments to the Icasa panel, Nyoka implied that prices would come down if Icasa were to licence more network operators.
Even Cell C, the smallest of SA’s three cellphone companies, agrees that regulatory intervention in a competitive market is unwelcome, and used the hearings to urge Icasa not to introduce price controls.
But not everyone agrees with the operators’ assessment. Telecom expert, academic Ewan Sutherland, says the regulator should become involved because he believes the poor are disadvantaged by high tariffs.
In submissions to Icasa, the operators argue that their tariffs form only part of the bigger picture. Icasa, they say, should consider that handsets are cheaply and readily available and access to telephony enables the poor to engage more meaningfully in the economy. The cost of connecting a Sim card is virtually nil and services such as the free “please call me” SMS and cheap community service phones mean poor people are able to keep in contact, says Nyoka.
But Sutherland does not buy this. If tariffs were not high, there would be no need for “please call me” and community service phones, he says.
Sutherland says it is not enough that poor people have handsets. “The poor cannot call each other and the rich do not call the poor.” It is a false notion, he says, that poor people benefit because rich people can contact them.
The operators dispute, however, whether their tariffs are excessive. They point out that Icasa has not done a study to determine whether this is true.
When asked by Cohen whether Vodacom was providing an affordable service, its SA MD Shameel Joosub replied in the affirmative but said the company could not provide a study of its own to back up its argument.
Joosub and Nyoka both pointed out at the hearings that more than half of SA’s population had access to mobile phones. They said this indicated that affordability was not as big an issue as some critics had suggested. But Cohen said that though mobile penetration was high, usage was very low. She noted that the average prepaid user talked for only 65 minutes a month. That’s just two minutes a day, she said.
Joosub said in reply that it was “dangerous” to make assumptions about average consumer talk-time because it did not take into account special packages offered by operators.
Cohen then asked Joosub why the operators did not offer the poor a few free minutes, much as the water and electricity utilities did. “Nothing is for free,” Joosub replied. Even the “please call me” service generated revenues for the operators as it usually resulted in a call being made by the party receiving the message, he added.
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