SOUTH AFRICA CELL OPERATORS FACE ICASA BID TO CUT COSTS OF ROUTING CALLS

Telecoms

A fresh attempt to force down the cost of phone calls is being made by the industry regulator, with a move to slash the fees local operators charge to route calls from one network to another. High interconnection fees are the main reason why calls are so expensive in SA, with the cellular operators adding R1,25 a minute to calls made to a rival network. That fee is passed straight on to consumers.

Genesis Analytics estimates that the fees are at least 30% pure profit, and says 75% of the cost of a Telkom call to a cellphone goes straight to the cellular operators. Now the Independent Communications Authority of SA (Icasa) wants to force them to charge a fee that maps out the cost of making the connection, with no massive profit margin. Icasa tried to force that move in 2005, but was stymied by changing legislation. It is now using its powers under the new Electronic Communications Act to reinstate the battle.

"Cost-based pricing is a market remedy that will begin to reduce the costs of calls," Icasa says. Icasa has issued a discussion document proposing that Telkom, Vodacom, MTN and Cell C have "significant market power" over call termination. That step would mark them out as monopolies and let Icasa force them to charge a cost-based interconnection fee.

Since Icasa can only intervene if it can prove that insufficient competition exists, the operators are likely to take legal action to oppose Icasa's attempt to dub them dominant players. Icasa says regulators in many other countries support cost-based call termination. It has also studied Tanzania, Nigeria and Uganda, where Vodacom and MTN operate, and found that call termination there was cheaper than in SA.

"SA's rates are at least double the actual cost of making the connection and are well above most other Africa countries," it says.

The Communications Users Association of SA has long railed against high call fees, complaining that it is cheaper to make a Telkom call overseas than to call a neighbour's cellphone. "We welcome any serious attempt to try to bring down the cost," spokesman Ray Webber said yesterday. "The mobile guys are putting more money in their pockets for every call that's made. They have to have their wings clipped."

The cellular networks pumped up the interconnection fee from 20c a minute in 1999 to a punishing R1,23 in 2001, a rise of 515%. It is now R1,25. Telkom charges just 31c to receive a call from a mobile network, only a quarter of the fee users pay for a call going in the other direction, or for a mobile-to-mobile call on rival networks.

Business Day