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ICASA suggests interconnect rate

John Holdsworth, CEO of ECN: We have them on the run... And we are not going to give up.

Interconnect rates should be cost-based, with a reasonable mark-up not exceeding 50% of cost, says the Independent Communications Authority of SA (ICASA).

The regulator met with the operators yesterday in another closed meeting to determine how far the operators have come in renegotiating interconnect rates. Earlier this year, the regulator and operators agreed to begin cutting the rate of interconnect, starting in February 2010.

The operators said they would start implementing a new way of negotiating interconnection rates and would have the new contract agreements in place by the end of December, with full implementation of the new rates as soon as February next year.

While the regulator expected to see some movement on the new negotiations yesterday, ICASA's statement says the industry is in the process of finalising “bilateral discussions on the final [interconnect] rate”.

The statement says the operators are still in the process of negotiations and will meet again near the end of the month when it will consider the final proposals on interconnect. Sources close to the situation say the operators have signed an agreement not to discuss the matter with the media.

Contradicting authorities

The regulator's decision to not allow the rates to rise over 50% of cost flies in the face of an announcement made this weekend by the Department of Communications (DOC), which wants to slash rates to cost alone.

Communications director-general Mamodupi Mohlala told ITWeb on Saturday that the department would present a directive to the Parliamentary Portfolio Committee on Communications to stop profit-making off interconnect by November.

The department will present the order at the committee meetings to be held today and tomorrow. The DG also wants to get a council up and running to oversee tariff changes before they reach the regulator.

The department hopes to drop the cost of communications as quickly as possible. It also wants to make sure mobile TV solutions are available to South Africans at a reasonable rate by next year.

Crush the cost

Meanwhile, local alternative telcos have applauded the DOC's move to cut costs as soon as possible.

Huge Telecom CEO James Herbst says he looks forward to the lowering of tariffs for the consumer, but isn't convinced this will necessarily happen overnight as is being predicted. “I think there is a lot of noise being made around the interconnect issue at the moment and it is certainly being pushed hard by government and industry players.”

He says the way the incumbents respond should also be taken into account, because it will determine how quickly the processes will move forward. “A reduction in call costs will have a great impact on our economy and Huge supports the efforts of government in this regard,” he says.

John Holdsworth, CEO of ECN, has been spearheading the interconnect fight and says the company plans to keep up the battle to have interconnect lowered. “We have them on the run; we are winning. And we are not going to give up,” he adds.

He says the company would have a better chance of competing if the incumbent fees are dropped. “Most of our calls are outbound and terminate on someone else's network. Around 90% of our tariffs go to interconnect fees.”

Holdsworth says ECN supports the new DOC directive and hopes Cabinet will agree to the idea. “It is the one initiative that is most likely to achieve the goal of lower interconnect fees the fastest.”

Vox Telecom did not respond to ITWeb's queries by the time of publication.


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