This is an effort to lower telecoms costs and it is the first time that the regulator has effected such a move.<\/p>\n
Icasa last week released draft regulations on interconnection charges and facility leasing for public comment.<\/p>\n
The interconnection fees between cellphone operators have increased 500 percent in the past 12 years to R1.25 a call for cellphone to cellphone.<\/p>\n
The cost of fixed-line interconnection rose 47 percent from 21c in 2004 to 31c in 2005. The high interconnection rates mean that major retailers are able to influence retail prices – the fees that consumers pay when making a telephone call.<\/p>\n
Previously, Icasa<\/a> did not intervene on interconnection agreements between operators. Recently, the regulator was blamed by Cell C<\/a> for failing to protect it from MTN<\/a> and Vodacom<\/a>.<\/p>\n The two companies, which have a combined 90 percent market share of the cellphone industry, increased interconnection rates when Cell C was preparing to enter the market, making it difficult for the Saudi-backed company to make profit.<\/p>\n The regulations propose that charges for interconnection must be cost based and that the structure must reflect underlying costs. They recommend that interconnection fees must be sufficiently unbundled so that a party seeking interconnection does not pay anything it does not require for interconnection.<\/p>\n In addition, charges for interconnection may not exceed retail charges for the provision of substantially similar services.<\/p>\n The draft regulations also state that charges for billing and settlement procedures must be transparent and fair.<\/p>\n But it seems that Icasa’s intervention may not be enough.<\/p>\n Arthur Goldstuck, the managing director of World Wide Worx, said that in the absence of a ceiling being placed on pricing by the regulator, the cost of interconnect has ballooned out of control.<\/p>\n “By putting the onus on networks to specify how the interconnect cost is made up, the draft regulations leave ample scope for continuation of this abuse. Set a price ceiling and costs will be tailored to fall in line with that ceiling,” he said.<\/p>\n Vodacom, MTN and Cell C have until September 3 to comment on the regulations.<\/p>\n The companies were reluctant to speak to Business Report about the draft regulations.<\/p>\n