Icasa drops interconnection fee bombshell - TechCentral

Icasa drops interconnection fee bombshell

Icasa drops interconnection bombshell

Consumers hoping for a cut in mobile interconnection rates next month are set to be disappointed after the Independent Communications Authority of SA (Icasa) indicated on Monday that it would not consider a proposed voluntary reduction in the fees by the mobile operators.

Interconnection rates are the fees the mobile operators charge each other and other network operators to carry calls onto their networks. They have been set at a relatively high R1,25/minute in peak calling times for several years.

MTN, Vodacom and Cell C agreed in discussions facilitated by communications minister Siphiwe Nyanda that they would reduce the rate to 89c/minute in peak times while leaving the off-peak rate unchanged at 77c/minute. The reduction was to have taken effect at midnight on 1 March.

It now appears highly unlikely that the rate will be cut until Icasa is able to regulate the market and determine what the rates should be. The authority says the mobile operators are trying to force it into agreeing not to begin setting the rates until at least 2013.

Icasa says in a statement that it received interconnection amendment agreements between Vodacom, Cell C and MTN on Monday, 25 January. However, “these agreements sought to bind the authority to an undertaking not to review mobile termination rates until 1 March 2013. For this reason, the authority has decided not to review the interconnection amendment agreements as submitted.”

Icasa’s decision appears to add to evidence that the mobile operators have tried to reach an agreement on interconnection rates for the next three years without the authority’s buy-in.

In December, TechCentral revealed that MTN had sent letters to other communications companies, including ECN Telecommunications, that seemed to suggest that the three mobile operators had agreed to a glide path that would result in peak-time interconnection rates being reduced from 89c/minute in March 2010 to 85c/minute in October 2011 and, finally, to 80c/minute in October 2012. The off-peak rate would remain unchanged at 77c/minute throughout that period.

These rates are well above levels demanded by parliamentarians and by competing telecommunications providers and are far above the approximate 40c/minute Icasa has said it costs the mobile operators to carry calls over their networks.

Icasa’s decision not to consider the applications from MTN, Vodacom and Cell C is a big blow to them. All three are keen to retain control over when and by how much the rates are reduced.

Icasa, which came under heavy fire in parliament last year for allegedly kowtowing to the industry, is keen to prove its independence and show that it is willing to regulate the sector in the public interest. Its decision not to consider the mobile operators’ applications suggests it’s prepared to face down the industry on the issue.

“The authority is committed to releasing draft regulations on the effectiveness of competition in the wholesale call termination market in March 2010,” it says. “It is hoped that the outcome of these regulations will be a reduction in call termination charges as well as fair and equitable access to existing networks for all licensees.”  — Duncan McLeod, TechCentral

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9 Comments

  1. Hardly a bombshell. ICASA is known for its obstructiveness, not for its action in the interests of consumers. And SA consumers are known to be consistently disappointed.

  2. Well you didn’t really think it was going to actually happen did you? Banks, telecoms, mining, energy, they all get to do what they want with no interference from the competition board.

    The poor sods who do get penalised in the end just pass it on to the consumer

  3. @ donovan – whereas the mobile networks which are trying to slime a ridiculous reduction over three years and get ICASA to sanction it are genuinely acting in the interests of consumers?

    ICASA have done absolutely the right thing. Unfortunately they now have to do the work required to get a proper reduction, and this is where it all too often goes pear-shaped.

  4. @dominic: You’re absolutely correct: As I tweeted last night: Icasa has made the right decision here. Regulatory investigation must determine interconnection rates, not the cellphone companies negotiating among themselves. Thumbs up to Icasa. Now let’s hope they regulate this area properly. Duncan

  5. ICASA finally comes to the party, and is not being bullied into accepting the meager revenue protection strategy proposed by the MNOs. Big win for the consumer in South Africa (assuming ICASA gets the numbers right of course)

  6. While it is laudable that ICASA has not kowtowed to the networks, the real question is whether ICASA has the necessary muscle and political will to implement the regulations that are required.

    it’s a win-win for the networks. ICASA refuses to accept a voluntary reduction, and if its history is anything to go by, will take years to implement any kind of regulation. In addition any draft regulation will be fought tooth and nail by the networks’ bulldog legal teams.

    Don’t hold your breath for any consumer relief any time soon.

    By the way, what happened to the handset subsidy regulations? .. weren’t they supposed to come into effect in early 2009? What’s that? Withdrawn because of legal pressure from the networks? Surely not?

  7. @Andrew – ICASA has forced them to back down from their three year glide path to nowhere and now they are trying to occupy the moral high ground by doing what they agreed with the Minister to do in the first place. Perhaps for one of the first times in its history ICASA has achieved something meaningful for telecoms competition in this country.

    As to whether ICASA will have the ability to do the work we have to wait and see and it probably will end up in the courts. But at least there is an initial reduction of 36 cents in the meantime (and without the 89c – 85c – 81c insult which was proposed).

    Handset Subsidy Regs have morphed into a Code of Conduct on the Sale, Lease, Rental and Subsidisation of Subscriber Equipment (see http://www.ellipsis.co.za/draft-code-of-conduct-on-the-sale-lease-rental-or-subsidisation-of-subscriber-equipment/) which, IMO, is also doomed for failure.

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