Interconnect regulations snub pricing

The Independent Communications Authority of SA (ICASA) has made no mention of pricing structures in its final interconnection regulations published this week.

Industry watchers will be surprised by the lack of price controls in the regulations; however, ICASA has not left itself wide open. The regulator has given itself a cushion, saying all agreements made between telecoms providers will first need to be reviewed and accepted by the regulator.

Without price controls stipulated in this set of regulations, it is uncertain whether the operators will be called to cut rates again next year, as was expected following heavy political pressure last year.

Interconnection rates, more specifically mobile termination rates, have been a hot industry topic since last year, when Cabinet and the Department of Communications kicked up a storm about the high fees mobile operators charge each other to terminate calls.

The Parliamentary Portfolio Committee on Communications went as far as calling for an interconnect rate cut to 60c per minute, with immediate effect.

After much political and public badgering, the operators agreed to compromise, to introduce rate reductions on a sliding scale, which would see the rates cut from R1.25 to 89c (peak times) in March this year, to be followed annually with more cuts; to 85c in 2011 and 80c in 2012.

The operators subsequently submitted their revised interconnect agreements to ICASA, which decided not to accept the terms with the sliding scale, since it would likely prevent the regulator from doing its job for the next three years.

While the regulations are a generalised set of conditions, the regulator last year hinted it would include a clause for price controls, which would dictate a price no higher than cost, plus 50%.

ICASA now says it is in the process of putting together a set of regulations to govern telecoms competition, which the regulator says will include a price stipulation.

Despite the lack of cost stipulations in the interconnect regulations, operators have made good on their promise to bring down the cost of communication. All three operators implemented the lower interconnect rate of 89c during peak times on the prescribed date of 1 March.

Since then, they have all thrown some savings in the consumer's direction, something that was not expected to happen for some time. Cell C says it started the rate cut process last year, anticipating the lower interconnect fees, cutting its calls to R1.50 per minute (about 2.5c a second) flat rate on certain packages.

The flat rate has now been introduced to all its packages. “Cell C has also launched the All Week 100 package, which offers customers 100 anytime (peak or off-peak) minutes to any network from only R49 per month. Customers also get to choose from a selection of exclusive phones on a 24-month contract,” the company says.

Last month, both MTN and Vodacom hacked a chunk out of prepaid tariffs, with Vodacom cutting rates to 2.8c per second and MTN meeting that rate.