A recipe for lower interconnect

The poor operators are facing something of an uphill battle when it comes to interconnect. With the massive media stink, they not only have to defend themselves against the authorities, but also against the people who feed them their revenue.

There is no getting away from it now, though, as the mobile operators are facing three consecutive initiatives to bring down the cost of interconnect. The problem is, there is no way to know who the head chef will be.

After a little rant by Patricia de Lille and “private meetings” with the Independent Communications Authority of SA (ICASA), the operators agreed to go back to the drawing board and start redrafting interconnect agreements.

Next came the bigger guns, with the Parliamentary Portfolio Committee on Communications lambasting the regulator on its slack progress, and demanding the rate (currently at R 1.25 at peak time and R 0.77 off-peak) be slashed to 60c.

Enter section 10; this is where the regulator does a detailed study of the industry, checking actual costs of interconnect, and determines whether there is “market dominance”. A process like this is expected to take 18 months to complete. It will be like watching bread rise.

Last, but not least, the Department of Communications came out swinging, with a proposed directive to cut the cost of interconnect to its minimum by as soon as next month. Communications director-general Mamodupi Mohlala is a woman after my own heart - fast, easy meals are best.

Add all the media hype to the situation and we have a concoction brewing that may not have the outcome we are all hoping for.

It seems to me that everyone is doing their own thing. The operators are renegotiating and ICASA is still playing dead. The DOC's decision still has to pass through Cabinet today, before it can go ahead and take the lead.

The operators have always managed to capitalise on confusion and misdirection, and with everyone fluttering around the issue, we could very well see another important step in the industry silently slip away, while the steam is still rising.

There is no real way to know what shape the process will take until after today's Parliamentary session. But there is every possibility that there are too many people attacking from the same side, without actually being on the same side.

The latest meeting between the operators and ICASA seems to have yielded a grand total of nothing.

The operators are renegotiating and ICASA is still playing dead.

Candice Jones, telecoms editor, ITWeb

Firstly, I hear from a few of the people that were there that anyone who attended has been gagged - so there will be no individual media interviews. Nice for all the incumbents, which don't feel like answering questions on the high cost of telecoms. I suppose I wouldn't want to either.

The regulator issued a press release on behalf of all the operators that were at this “closed meeting” yesterday. Basically, it says: “Industry will spend the next few days finalising bilateral discussions on the final rate.”

Translation: “We have done nothing and plan to stall as long as possible.” Zero ounces are the same as zero milligrams.

The two-day Parliamentary process could make all the difference. If the DOC's directive to cut rates to cost is accepted, then ICASA will be brought into the departmental ranks.

So the regulator will have a general to lead it, and the basic ingredients may well be put together properly. The trouble is, we are still missing the icing.

ECN CEO John Holdsworth, talking to ITWeb this morning, said it's unlikely the operators will pass on savings to consumers, even if the battle for interconnect is won. He says what will then be missing is alternative operator competition, which could come in and start dropping rates that the incumbents will have to match.

There is every opportunity for a million new operators if interconnect is cut, but whether any of them have the capacity or the will to face a dominated industry remains to be seen.

Meanwhile, let's hope the media hype surrounding the pressure to reduce interconnect fees will have some impact, and that the operators will face anger and customer backlash if they don't bow to public pressure.

But then again, the operators may take a “this too shall pass” stance and, if that's the case, there is not much that we, as consumers, can do about it, except get really, really angry.