Trade union wants interconnect fees slashed - TechCentral

Trade union wants interconnect fees slashed

Solidarity wants interconnect rates at 60cSolidarity has asked the Independent Communications Authority of SA (Icasa) for a significant cut in interconnect fees, the trade union said on Thursday. Interconnect rates are the amounts charged by networks for carrying calls on behalf of one another.

The union said a thorough investigation into the true cost of interconnectivity should be carried out. According to Solidarity, this would strike a fair balance between cellphone users and cellphone companies with a large market share.

“Consumers currently pay exorbitant tariffs for this service while cellphone companies benefit from the excessively high tariffs for a service that actually costs a lot less to provide,” it said in a statement.

The union’s reaction followed talks earlier this week between Icasa, Telkom, Neotel and various cellphone service providers regarding the possibility of reducing interconnect fees. While Solidarity welcomed these talks, it warned that a slight fee reduction would not be acceptable.

“The trade union argues that Icasa must first drop the current interconnect fee, which has been fixed at R1,25 for cellphone-to-cellphone and landline-to-cellphone calls, to a maximum of 60c per minute. The original fee was fixed at 20c/minute in the early 1990s … it has since increased by 525%,” Solidarity said.

It said the fees were originally fixed on the assumption that there would be about 500,000 cellphone users in SA to cover the necessary costs for establishing the infrastructure. “However, this assumption is outdated,” Solidarity said.

According to a study by the Target Group Index, nearly 72,9 percent of South Africans, in other words about 35m people, had access to cellphones in 2007, the union said. “In addition, it is estimated that there are currently more than 50m Sim cards in use in SA, and this figure is still increasing.”

The union said that for many years the resulting lower cost per consumer had created the opportunity for much lower interconnect fees than those in place. Solidarity said lower fees would eventually benefit consumers as well as smaller competitors in the industry.

“In fact, Namibia made the decision earlier this year to lower their interconnect fee, as an interim measure, from N$1,06/minute to $0,60/minute and they aim to gradually reduce the fee even further until 2011,” Solidarity spokesman Jaco Kleynhans said.

“This is being done even though it was found that, with the current technology, interconnectivity in Namibia costs only about 12c-35c/minute.”

He said the same gradual reduction could also be implemented in SA — a country that had considerably more cellphone users per square kilometre and where cellphone companies consequently already had an advantage over their counterparts in Namibia as far as cost per cellphone user was concerned.  — Sapa

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