ICASA outlines cellphone tariff plan

Johannesburg, 08 Jan 2007

The Independent Communications Authority of SA's (ICASA's) long-running enquiry into the alleged high costs of cellphone calls will "follow a new course as we enter 2007", says Tracy Cohen, senior councillor involved in the investigation.

On 3 May 2005, the Communications Users Association of SA lodged a complaint with the regulator, related to the high costs of South African mobile communication.

A year-and-a-half later, ICASA gazetted a notice (number 1 795 of 2006) explaining the process would take a different direction.

"We are not going to continue with the mobile findings process in its current form. In accordance with chapter 10 of the ECA [Electronic Communications Act], we will examine wholesale call termination in the fixed and mobile space," explains Cohen.

Benchmarking challenged

She says local cellular operators challenged, on principle, previous benchmarking studies, comparing South African cellphone rates with other countries, and as the ICASA study contained "unfortunate errors".

Operators questioned the choice of countries, and the methodology employed in the benchmarking studies, she notes. "While ICASA stands by the countries it chose for its study, but regrets the errors in calculation, the ECA mandates a different approach to the course ICASA had embarked on in 2005."

Cohen also states that chapter 10 of the ECA "primarily requires that markets be defined and that a finding of dominance with respect to operators be determined as a starting point," before any proposed intervention in pricing regulation".

ICASA did not await the promulgation of the ECA before commencing the pricing enquiry, as she explains: "This was one approach to consider, but given the long-awaited promulgation, the authority was not prepared to pend every enquiry in anticipation of the Act's promulgation."

'Inadequate framework'

SA's current framework requires mobile operators to lodge tariffs or fees with the authority before they may charge for services. Proposed increases in any existing tariff plans cannot be greater than the percentage year-on-year increase in the Consumer Price Index (CPI).

In the gazetted notice, the regulator lists its findings:

ICASA views this framework for fees and tariffs as inadequate, in that the CPI criterion serves as a major decision-making tool, though certain economic and social impact considerations are taken into account in the analysis of tariff applications.

The authority will commence the process of defining markets as required by ECA chapter 10.

In this regard, by 31 January 2007, ICASA will publish a discussion document for public comment, soliciting written comments from all interested parties.

ICASA believes that to reduce mobile prices, wholesale mobile and fixed-line call termination charges must be examined - in accordance with chapter 10 of the ECA.

In this regard, a discussion document regarding wholesale call termination will also be published by 31 January 2007, soliciting written comment.

This approach will allow it to deal with issues of alleged significant market power and pricing in a holistic manner, says the authority.