The interconnection rate should be lower than 25c, far below the 89c the cellular network operators had agreed to implement from the beginning of this month, says Research ICT Africa director Alison Gillwald.
Gillwald's organisation gave a presentation to Parliament's communications committee last year during its hearings into the cost of interconnection rates - a major factor politicians attribute to the high cost of cellular calls in the country. The presentation was heavily criticised by the network operators as being “unrealistic”.
MTN, Vodacom and Cell C subsequently reduced their interconnection rates - the cost of transmitting a call from one network to another - by 39c, from 1 March, from the 125c per minute peak rate. Telecommunications regulator, the Independent Communications Authority of SA (ICASA), approved the cut and is due to release its regulations in June.
Gillwald is convening a regulatory course, at the University of Cape Town (UCT). She says evidence from a benchmarking study conducted last year for the Namibian regulator, to determine its cellular interconnection rates, shows the cost-based interconnect rates of efficient operators are probably lower than 25c a minute.
“While in SA, by law, the regulator is required to conduct complex and lengthy studies before it can set the interconnection rate, in Namibia the regulator was able to move swiftly on the basis of benchmarking studies to reduce the interconnection rate between its operators by nearly 50%,” she notes.
Gillwald says that, while it was understood that operators needed time to adjust their business models to cost-based interconnection, the cuts proposed were way off the global benchmark price of an efficient operator.
“The reductions proposed by the networks are not nearly cost-based prices, and threaten to continue to inhibit competition in the market and constrain the reduction of end-user prices in SA, which are high by global standards.”
Gillwald adds: “It is thus critical that not just ICASA, but policy makers and key decision-makers entrusted with resolving these issues are equipped to deal with these growing demands in the policy and regulatory space, more often than not with somewhat limited resources.”
She points out that learning from neighbouring African countries and other emerging markets can help address these challenges. The UCT Graduate School of Business programme, Connectivity and Convergence, will do just that and be tailored to the African context, and the particular challenges facing the continent.
“In SA and many other emergent markets, policy makers and regulators have emulated the regulation employed in mature competitive economies with resourced regulators to address telecoms and ICT reform challenges.
“This programme examines these regulatory practices to understand why they are seldom successfully implemented in developing country contexts, and proposes less resource-intensive alternative strategies,” Gillwald adds.
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