ICASA fails consumers

The Independent Communications Authority of SA's (ICASA) failure to promulgate complete carrier pre-select (CPS) regulations means consumers will not benefit from lower prices next month.

CPS, which allows end-users to use an alternative operator to place a call, starts coming into effect from the end of next month. In theory, this should reduce the cost of long-distance calls as it should introduce more competition into the sector.

However, alternative telecoms providers argued that CPS is “dead in the water”, because ICASA did not regulate how much operators can charge at the call-origination or access point. As a result, it will not be more cost-effective to make use of CPS, and consumers will not benefit.

So far, only Telkom and Cell C have told the industry what they will charge for call origination. While Cell C will charge the same amount to terminate a call, Telkom charges alternative operators more than consumers would pay if they stayed on its network.

Alternative telecoms providers argue incumbent operators are moving to protect their market share by costing origination fees at an untenable amount. This is being allowed to happen, because ICASA has not done its job properly by regulating the cost.

ICASA has previously been accused of being toothless and of failing to sew up regulations so that end-users do benefit from its interventions.

Internet Solutions regulatory director Siyabonga Madyibi recently said, during local loop unbundling hearings, that ICASA has made a number of interventions that have not been effective.

Eugene van der Westhuizen, MWeb's GM for voice, said CPS is not viable and will not save consumers any money.

Theoretically, CPS allows alternate firms such as Internet solutions providers to carry a fixed or mobile call for an end-user. This should trim the cost of calling long-distance, 50km away or further.

However, said Van der Westhuizen, the origination fees that some operators will charge will negate the effect of this regulatory intervention, as it will be more expensive to use CPS than an incumbent operator.

As a result, said Van der Westhuizen, consumers will not see any benefit from ICASA's intervention because the body has not regulated call origination fees, as it has done with call termination fees.

Telkom will charge an origination fee of 43c, which must then be added to the local termination fee of either 12c or 20c, depending on either off-peak or peak.

Consequently, the base cost to the alternative operator is either 55c or 63c a minute, depending on whether the call is placed at off-peak times or not. Telkom's charge to end-users is either 25c or 50c a minute, Van der Westhuizen pointed out.

Murray Steyn, Vox Telecom's chief commercial operator, said CPS is a “non-starter in its current form”. He said because the origination fee has not been set by ICASA, operators can charge what they want.

Steyn added the only way CPS will work is if the regulator intervenes and sets the rate, in the same way it did with termination costs. The “incomplete regulation” means there will not be core competition, and end-users will not benefit, he explained.

ECN commercial director Jeremy Macdonald said if call origination rates are set higher than termination charges, CPS is not viable. “If the rates are not set at an efficient level, it will completely negate the impact of CPS.”

Macdonald added that ICASA should set the rates, as leaving it up to incumbents allows them to charge a fee that will protect their customer base.

“If CPS is not commercially viable, new entrants will not offer CPS services, consumers will not benefit from improved choice and cost-based competition, and prices will remain relatively high. Consumers will be negatively affected,” added Macdonald.

However, operators justified the call origination cost by arguing that they need to cover network expenses.

Telkom said call origination charges, similar to other unregulated wholesale and retail charges, are subject to commercial negotiations between licensees. The operator added the charge is “broadly determined on the basis of recovering the costs incurred in the rendering of the service”.

Vodacom's executive head of media relations, Richard Boorman, said it is usual to charge for the origination and termination leg. He explained these actions take place on different networks, so there is no double charging by operators.

“Capacity on each base station is limited, so it doesn't make sense to allow a company free access to a network to the detriment of that network's paying customers,” said Boorman.

Cell C's executive head of regulatory affairs Mothibi Ramusi added the origination fee is equivalent to its interconnection fee. He said the company is acting within the framework of the regulations, but the charge will not deter companies from using CPS, or hamper competition to the detriment of consumers.

ICASA failed to respond to several queries regarding its failure to regulate the cost, or whether it would intervene to ensure CPS is not a failure. MTN also did not respond to several requests for comment.