Although consumers have been crying out for cheaper cellphone call rates, the main obstacle – anti-competitive interconnection tariffs – is not going to vanish any time soon.<\/p>\n
South Africa’s telecoms regulator may have published long-awaited regulations for interconnection rates this week, but if its attempts to amend the country’s telecommunications law is successful, it may have to start all over again.<\/p>\n
The Independent Communications Authority of South Africa (Icasa) has formed a committee to prepare amendments to the Electronic Communications Act (ECA).<\/p>\n
Industry insiders said that if the amendments were adopted, Icasa could be forced to start regulatory processes, such as those into interconnection tariffs, from scratch.<\/p>\n
One industry insider said this could mean that South African consumers would have to wait a further five to seven years for regulatory measures, which the information, communication and technology (ICT) sector has urgently needed for the past five years.<\/p>\n
Interconnection tariffs are the portion of a cellphone call rate that the major networks charge one another for callers to make contact with their networks. For example, a call from a Cell C subscriber to an MTN subscriber will net MTN R1.25 per cellphone call, in India, by comparison, this fee is just $0.03 (about 20c).<\/p>\n
Interconnection fees were 20c in 1994, but were raised by MTN and Vodacom by a whopping 635% to R1.25 shortly before Cell C entered the market. Thus, in 2007, the interconnection tariffs raked in an estimated R12-billion for Vodacom and MTN.<\/p>\n
An Icasa staffer told the Mial & Guardian on condition of anonymity that there was a view within Icasa that Chapter 10, the section of the ECA that deals with competition issues, was unworkable and needed significant amendments.<\/p>\n
The staffer said that Icasa had already made an initial presentation to the department of communication, which was expecting its full report by the end of September.<\/p>\n
The M&G understands that the debate over amendments to the ECA is not new and was first discussed at Icasa more than three years ago.<\/p>\n
An industry insider said key regulations on interconnection, facilities leasing, local-loop unbundling and carrier pre-selection would be stalled because they were dependent on the wholesale pricing mechanisms that Chapter 10 would be used to enforce.<\/p>\n
“If you look at interconnection and facilities leasing,” said the Icasa staffer, “to give those regulations teeth you need price controls.”<\/p>\n
The Icasa source said it was unclear how long the delays would last, because it would depend on the scope of the amendments to the Act. The staffer admitted that some of the proposed amendments, such as the idea to delink interconnection and facilities leasing from a Chapter 10 process, would introduce inconsistencies into the Act and open the processes to legal challenges from operators.<\/p>\n
“Vodacom and MTN will challenge it in court. They will say that if it is implemented, it will cost us billions in revenue, so let’s throw R10-million at the lawyers.”<\/p>\n
James Hodge of Genesis Analytics said the way Chapter 10 was structured meant that Icasa had a large number of hoops to jump through to get to a common international practice such as interconnection regulation.<\/p>\n
But Hodge said that if Icasa was far down the line with some of the regulations, as it appeared to be, it was strange that it had not pushed through with them.<\/p>\n
“They could probably achieve some of these outcomes anyway,” said Hodge. “They certainly should not take their foot off the accelerator.”<\/p>\n
This week at a Neotel and Mail&Guardian business breakfast Competition Tribunal chairperson David Lewis called for competition authorities to be given greater jurisdiction over the telecoms sector.<\/p>\n
Neotel’s head of regulatory affairs, Tracey Cohen, said that resolving the issue was absolutely critical to the sector becoming competitive.<\/p>\n
“This Chapter 10 conundrum has to be addressed. You can’t impose pro-competitive remedies until you solve the Chapter 10 framework,” she said.<\/p>\n
Icasa responds<\/strong><\/p>\n It is important to understand that Icasa has no power to amend legislation and that it is the prerogative and responsibility of the department of communications to design and amend legislation.<\/em><\/p>\n Icasa intends to table it recommendations to the minister before the end of the 2009 calendar year.<\/em><\/p>\n One key area concerns competition matters relating to the powers and functions of the authority versus those of the Competition Commission.<\/em><\/p>\n The current process to implement Chapter 10 is ongoing and will be concluded in this financial year.<\/em><\/p>\n Accordingly, the authority recently issued draft interconnection regulations for public comment.<\/em><\/p>\n Interconnection remedies will form part of the Chapter 10 process.<\/em><\/p>\n