Accusations that mobile network operators are still charging smaller telcos R1.25 a minute to terminate calls on their network have surfaced. This despite voluntary interconnect rate cuts to 89c per minute announced in March.
So said Douglas Reed, Vox Telecom MD, at the Independent Communications Authority of SA's (ICASA) public hearings on the draft call termination regulations, held in Midrand this week.
Also at the hearings, ECN, a small local telecoms operator, accused two of SA's mobile network operators of still charging ECN R1.25 in termination costs. The telco failed to identify which two operators were responsible.
However, Reed did not hold back in naming the culprits. “Today, Vox is still interconnecting with MTN at R1.25, that is despite MTN supposedly dropping to 89c from 1 March,” he stated.
Later, Reed stated that Cell C was also charging the telco the R1.25 rate. However, after much deliberation with Vodacom, Vox now pays the agreed upon 89c to terminate calls on Vodacom's network.
While issues of symmetrical and asymmetrical costing remain undecided in the draft call termination act, MTN wasted no time in drawing on the Competition Act to enforce a reduction in the interconnect, explained Reed.
Vox explained that its subsidiary, Vox DataPro, had previously negotiated an interconnect rate with Telkom of 50c per minute and so MTN expected the same interconnect rate from Vox.
MTN hits back
But Africa's biggest mobile operator lashed out at Vox's arguments: “MTN would like to point out that Vox Telecom are net receivers of interconnect revenue. Contrary to what Vox presented to ICASA, the impasse in negotiations has benefited them to the tune of 75c per minute since March 2010,” countered Robert Madzonga, chief corporate service officer at MTN SA.
This rate is the difference between the existing R1.25 that MTN pays to Vox and the rate of 50c, which Datapro offers to Telkom, which MTN understands to be their best rate in the market, he continues.
MTN began a process to renegotiate the MTN and DataPro agreement during the third quarter of last year where MTN requested that each party offer the other their best rate in the market.
After MTN's voluntary rate reduction in March 2010 (from R1.25 to 89c), MTN established that Vox/Datapro had in fact two rates in the market: DataPro at 50c and Vox at R1.25.
Subsequently, the two parties have been unable to agree upon the interpretation of “non-discrimination” as provided for in the Interconnection regulation, offers Madzonga.
Therefore, the rates provided for in the original agreement, R1.25 payable to DataPro and vice versa, remain in effect until there is clarity with respect to the concept of non-discrimination and/or the call termination regulation is finalised,” he states.
Cell C also attributes non-discriminatory concerns as its reason for still charging the smaller operators the R1.25 rate. “Cell C has engaged with all of its interconnect partners to conclude revised interconnect agreements based on non-discriminatory terms,” offers Lars Reichelt, Cell C CEO.
The process of concluding revised interconnect agreements is a standard business practice and Cell C is in fact awaiting feedback from several interconnect partners.
“Cell C has raised concerns with some of the partners, who are engaging in discriminatory practices by applying different termination rates for different operators,” he adds.
Regulatory loopholes
Independent Communications Authority of SA (ICASA) says this is the first it has heard of this situation and its hands are tied as no formal complaint has been lodged.
However, the crux of the situation relates to clarity on the call termination regulations. Until these regulations have been finalised, industry players are able to circumnavigate interconnect cuts based on regulatory loopholes.
If these regulations are not clearly defined, it will lead to abuse by the dominant players who have and will use the very regulations designed to curb established significant market players (SMPs) to the detriment of the smaller operators and new entrants, argued Reed.
ICASA needs to clearly set out the Call Termination Rates with specific guidelines and parameters, he continues. The established SMPs will use the “fair and reasonable” clause to their own advantage to delay, threaten court action and to bully the small operators into what they regard as fair.
Reed maintains that, if the regulator allows any discretion in the call termination rates regarding attempts to make rates symmetrical with the different services, the Competition Law will apply and ensure that access to a network has to be done at the lowest rate.
The rates need to be set, and if there is asymmetry, it needs to be made clear what is fair and reasonable.
Director of research at BMI-TechKnowledge Brian Neilson believes if the smaller companies are not terminating at the new lower rates with the mobile operators, then a large part of the intended competition enablement is not being realised.
Competition remains oligopolistic when there are only three players in a market - in this case the market of terminating calls on handsets, he continues.
“The intention of the regulation is to allow other players to also play on a level playing field on the fixed to mobile call routing. I think ICASA will deal with this issue as part of its review, which is required to take an SMP approach in its analysis,” concludes Neilson.
Related story:
ECN rubbishes interconnect arguements
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