Cheaper price project: ICASA deadline rundown

The Independent Communications Authority of South Africa (ICASA) announced the launch of its Cost to Communicate programme at an event in Sandton on 7 June 2013, promising an extensive review of the South African telecommunications sector.

Pieter Grootes, general manager of markets and competition at ICASA, said that the programme’s goals were as follows:

• Stimulate public debate on the topic;
• Establish regulatory needs to address concerns; and
• Stimulate enhanced competition in the telecommunications sector.

To start with, ICASA’s Cost to Communicate programme will look at four areas: the broadband value chain, call termination rates, ICT indicators, and local loop unbundling (LLU).

Pieter Grootes

Broadband value chain

Grootes explained that they are going to conduct a study on the South African broadband value chain to determine what causes high prices, and then develop regulations to address problem areas.

Are high costs to end users due to a monopoly in retail markets, or due to high input costs to the industry?

If the industry is facing high costs, is it because of an infrastructure monopoly; barriers to network deployment; import duties; and/or volatile exchange rates?

Grootes was asked if the ad-hoc data rates (R1/MB – R2/MB) that mobile networks charge falls under their “high costs to end users” investigation.

He explained that they would want to see what drives those prices first.

“Is it driven by a firm that is totally vertically integrated, controls all of its costs, has everything endogenously under control and charges an unrealistic price? Or does a firm rely on a number wholesale inputs controlled by somebody else?” Grootes said. “It’s not our job to target, it is our job to identify.”

Grootes provided the following deadlines for their study into the broadband value chain:

Call termination rates

The last round of call termination rate cuts specified in ICASA’s current regulations took effect on 1 March 2013, despite Cell C’s request to the regulator to postpone it until a new market review could be done.

Cell C complained that the level of asymmetry in the prices that larger and smaller operators ask one another for calls placed to their networks was not high enough.

As of the recent rate cuts, peak and off-peak mobile termination is R0.40, local fixed calls terminate at R0.12 during peak times and off-peak times, and the rate for national calls on fixed lines is R0.19.

Smaller operators are allowed to ask larger operators 10% more than the above rates.

After this last decrease in termination rates, ICASA committed to do a market review in the following financial year to determine what should be done about call termination in the years ahead.

The Cost to Communicate programme’s deadlines for call termination are as follows:

ICT Indicators

ICASA also wants to put together a report with indicators on South Africa’s information and communications technology sector.

As with the rest of the Cost to Communicate programme’s activities, the ICT Indicators report will require information from electronic communications network (ECNS) licensees.

Asked what would happen if operators did not provide ICASA with the necessary information, Grootes said that he does not expect resistance from licensees in this regard.

“It is in South Africa’s interests that everybody comes forward with what they know,” Grootes said.

He explained that the license terms and conditions obligates operators to provide ICASA with the information requested. If licensees do not comply, ICASA has “various tools” with which it could enforce compliance, Grootes said.

“The bluntest tool we have is to lodge a case against the operators with the complaints and compliance committee,” Grootes said when asked for an example.

The table below summarises ICASA’s deadlines for the ICT Indicators report.

Local loop unbundling

Another year, another set of LLU deadlines, though this time ICASA promises it will simply implement the relevant sections of the Electronic Communications Act.

It is able to do this, according to the project manager for the Cost to Communicate programme, Christian Mhlanga, because all the groundwork has been done now.

“We are now guided by the Act and we’re just going to do it,” Mhlanga said.

Mhlanga said that all potential forms of unbundling will be considered and not only the Bitstream Access solution that was promised to be implemented after the initial LLU deadline was missed.

DTT Rate Card

In addition to the above projects, ICASA has also announced that it’s going to tackle the wholesale pricing of digital terrestrial television (DTT).

South Africa is in the middle of switching from analogue to digital terrestrial TV broadcasting, and ICASA says that it must be affordable, and the SABC and e-TV must face cost-oriented prices.

The deadlines for this part of the programme were provided as follows:

William Stucke

That’s a whole lot of deadlines

ICASA councillor William Stucke confirmed that there are risks that might impact on the regulator’s ability to deliver on the above deadlines, among them getting timely information from licensees.

“There is always risk in any activity, particularly in terms of project and programme management,” Stucke said in answer to a question from the media.

Stucke maintained that it’s no different to normal project risks which must just be managed.

He added that they may not always be successful, but that they will deal with factors within their control and do their best to mitigate factors beyond ICASA’s control.

“We cannot guarantee that we will meet all deadlines,” Stucke said, adding that they will give it a solid attempt and that they have a good chance of hitting them.

“We have been realistic in determining our objectives,” Stucke said.

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