SOUTH AFRICA: OPERATORS HOWL OVER ICASA PROPOSALS TO LOWER INTERCONNECT

Telecoms

Moves by the telecommunications regulator to slash the fees that rival operators charge to route calls from one network to another would not result in a substantial cut in the costs to consumers, the operators claimed on Monday last.

The Independent Communications Authority of SA (ICASA) says Telkom and the mobile operators charge each other too much to interconnect their calls. ICASA believes consumers will benefit if it forces the fees down.

But ICASA was wrong about the net effect, and was also overstepping its powers by proposing to intervene, said Telkom and MTN at public hearings on Monday. ICASA has drawn up interconnection guidelines proposing that the operators charge a fee that reflects the actual cost of terminating a call on their networks.

That could be at least 30% lower than the present fees. At the moment, interconnection fees account for 66% of what consumers pay for a fixed line-to-mobile call and 11% of a mobile-to-fixed line call, according to recent research.

The operators argue that although they pay some fees as well as receive some fees, the rates are negotiated so the players that have invested the most in their networks receive more than they pay, to help them recoup their costs.

Telkom's regulatory affairs executive, Gabriele Celli, said cost-based fees would leave the operators unable to recover the costs incurred in rolling out their networks. MTN's GM of regulatory affairs, Graham de Vries, agreed that cost-based fees would undermine MTN's investment.

"ICASA is on the verge of restructuring the industry through interconnection guide-lines that would probably be the most intrusive regulations deployed for mobile operators anywhere in the world," he said. "High interconnection fees have no impact on retail prices because the operators receive as much as they pay," De Vries said.

What fees did was allow South African operators to earn more money from foreign operators, as local users typically receive three times more international calls than they make, he said.

If Icasa felt there was a problem with the cost of calls, it could take less Draconian steps than intervening in the interconnection fees, he said. "You take a fly swatter to a fly, not a hammer."

Interconnection fees are subject to confidentiality clauses but, according to Genesis Analytics, Telkom charges 31c at peak times and 17c in off-peak periods for mobile-to-fixed calls.

The mobile operators charge R1,25, which was probably at least 30% higher than the actual cost of connecting the calls, Genesis said. ICASA councillor Zolisa Masiza said there had been a 635% rise in interconnection fees over 11 years, up from 20c.

Current laws allow Icasa to impose cost-based inter- connection fees on "dominant" operators and ICASA has declared Telkom a dominant player.

ICASA has also ruled that MTN and Vodacom are dominant companies, which would let ICASA determine their interconnection fees. MTN and Vodacom oppose that view and have gone to the Supreme Court to argue that, although they have big shares of the market, that does not translate into unfair dominance.

Business Day