This section features background information and resources relevant to the current research theme. It includes resources produced by WDR and external sources and is organised by regions and topics. An archive of resources recommended in previous research cycles is also available along with news from the WDR/Intelecon Regulatory News Service.
South Africa: ICASA to Cut Call Routing Costs Print E-mail
Wednesday, 07 February 2007
The Independent Communications Authority of South Africa (ICASA) is attempting to reduce the cost of phone calls by cutting interconnection charges. High interconnection fees are the main reason why calls are so expensive in South Africa, with the mobile operators adding US$ 0.17 per minute to calls made to a competitor’s network. That fee is passed on to consumers.

Genesis Analytics estimates that interconnection charges are at least 30% profit, and says 75% of the cost of a Telkom call to a mobile goes to the mobile operator. ICASA wants to force mobile operators to charge a fee that is more consistent with the cost of making the connection.

ICASA attempted to change interconnection rates in 2005, but was stopped by changing legislation. It is now using its powers under the new Electronic Communications Act.

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 the operators as monopolies and enable ICASA to force a shift to cost-based interconnection fees.

ICASA says regulators in other countries support cost-based interconnection. It studied Tanzania, Nigeria and Uganda, where Vodacom and MTN operate, and found that termination is cheaper in these countries than in South Africa.

"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 mobile networks increased interconnection fees from US$ 0.03 per minute in 1999 to US$ 0.17 in 2001, a rise of 515%. Telkom charges just US$ 0.04 to receive a call from a mobile network, only 25% of the fee users pay for a call going in the other direction, or for a mobile-to-mobile call on rival networks.

Mobile operators argue that lower interconnection fees will not cut the cost for consumers as the operators pay out as much as they receive. However, it would leave them unable to recover the costs of expanding their networks, they say.

Last month, JP Morgan issued a report predicting regulatory and consumer pressures could result in lower interconnection fees. JP Morgan analyst Johan Snyman said that when similar regulatory intervention occurred in Nigeria last year, MTN cut its fees to consumers an average of 20%.

Source: Business Day - WDR/Intelecon Regulatory News