The Independent Communications Authority of South Africa (ICASA) has published its "Discussion Document - 2004 Price Control Review".
This follows the first price control review initiated by the regulator in 2000, and for which regulations have been in place since 1 January 2003.
ICASA says at the time of that review, it did not have Telkom`s management accounting information, concerning the costs of the different regulated telecommunications services the fixed-line operator provides.
The monopoly has since submitted this audited management accounting information on its fixed network operations to the authority, in the form of regulatory accounting statements, on 30 September this year.
According to the regulator, the purpose of price Ncontrol is to provide incentives for Telkom to improve its performance while competitive pressures are not yet sufficient to do so.
ICASA states: "A target is set by the regulator for efficiency improvement. The current rate regime requires Telkom to reduce the average level of its prices for a specified 'basket` of services each year by 1.5% below the level of inflation, as measured by the Consumer Price Index (CPI).
"In addition, individual prices cannot be increased by more than 5% above the rate of CPI, except in exceptional circumstances by agreement with ICASA."
The authority has reviewed the existing level of price control that applies to the PSTN, in light of the new regulatory accounting information supplied by Telkom, and has published its initial proposals for amendment to those controls.
The report says: "The importance of price cap control is that subscribers gain the assurance that prices will go down in real terms, after allowing for the effect of inflation, and that Telkom will share the benefits of improved efficiency, mostly in the form of lower prices."
ICASA`s revised price control regulations incorporate a provision requiring Telkom to file a new set of price adjustments within 30 days of the regulations coming into effect.
These price adjustments will be required to reflect the average price reduction required at the new proposed rate of 4% below CPI for the remainder of the price control year, namely end-2005.
The authority is calling for comment from interested parties by 7 December 2004. ICASA has made the consultation document on the price cap review, as well as the draft PSTS price cap regulations, available at www.icasa.org.za or they may be obtained from the ICASA library at Pinmill Farm, 164 Katherine Street, Sandton.
It will also hold public hearings on 13 and 14 December at its offices in Pinmill Farm, Sandton.
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