The Internet Service Providers' Association (ISPA) has spoken out in criticism of SA's telecommunications regulator on the issue of carrier pre-select.
Carrier pre-select has to date not been realised - leaving consumers prone to miss out on the potential benefits of choice and reduced call costs.
ISPA says initial steps taken by the Independent Communications Authority of SA (ICASA) to introduce carrier pre-selection (CPS) in SA boil down to a “half-hearted and incomplete effort” to meet its legislated obligation.
ICASA spokesperson, Paseka Maleka, says the authority notes ISPA's views regarding the matter of call origination and its link to the implementation of CPS, and the claim that it does not intend to conduct a market review in the 2013-2015 period.
CPS has been in the pipeline for almost four years now, since ICASA issued draft regulations and invited public comment in December 2008. While a code of conduct governing the provision of CPS services was finalised in April this year, ISPA says the code and CPS regulations will not have their intended effect of promoting subscriber choice and reducing call costs unless the authority intervenes in the matter of call origination rates.
Dead in the water
ISPA co-chairman Jaap Scholten says: “The Electronic Communications Act requires ICASA to introduce carrier pre-selection to benefit consumers, and the code of conduct should be a last step in doing so.”
Scholten says, however, the CPS intervention is dead in the water due to ICASA's omission to make the necessary intervention in the market for call origination. “[This leaves] the door open for the incumbent mobile and fixed-line operators to squeeze out new players.”
The issue, says ISPA, is that service providers charge other providers using their networks either call origination or termination fees, depending on which portion of the network they use. ICASA has already intervened in setting rates for call termination but it has not yet done so for call origination. This means that the provider offering CPS can set a rate for call origination that is too high to make it financially practicable for other providers to make CPS special offers available to their clients.
Not a priority
Dominic Cull, owner of Ellipsis Regulatory Solutions, says it appears ICASA has decided that regulating origination rates is too complex and that it has other priorities.
Meanwhile, he says, “incumbent operators, with the possible exception of Cell C, argue that origination costs are far higher than termination costs (which are already regulated) and have set their pricing accordingly”. ISPA says “almost all” incumbent service providers are adopting a strategy of charging high call origination rates to shut out competitors.
Cull notes that ICASA's medium-term strategic plan as lodged in Parliament indicates it does not intend to do anything on the issue of origination fees.
ISPA says, in order to resolve the issue and promote competition in the telecommunications services sector, the body is urging ICASA to intervene in the market for call origination. “What's worrying is that ICASA's strategic plan for the next three years indicates that it has no intention of taking this and other steps necessary to make carrier pre-selection a reality,” says Scholten.
Cull says ISPA's beef with ICASA amounts to the futility factor. “The major issue we have is - why start with introducing CPS when you have no intention of completing the exercise? It is then simply a waste of time and resources.”
“ISPA calls on ICASA to honour its obligations under the Act and move forward with carrier pre-selection. We are all agreed that telecommunications costs are too high and need to come down to stimulate economic activity. ICASA holds the key to achieving this and supporting the drive to create jobs, something that the government in general and the Department of Communications in particular have put their weight behind,” concludes Scholten.
ICASA's Maleka says: “The matter of whether call origination rates should or should not be regulated is dependent on whether there is ineffective competition in particular identified markets. In other jurisdictions, the charge for call origination has been regulated as an outcome for conducting a market review exercise, similar to that undertaken for the regulation of call termination rates.”
However, says Maleka, it is the authority's intention in terms of its annual performance plan, to undertake a review of the value chain of the provision of electronic communications services, from international connectivity through to the end-user.
“This review will identify the various markets across the value chain as well as identify the markets where regulatory intervention may be justified. This review represents a multi-year programme with the outcome of ensuring that prices across the value chain are fair, including where it is shown to be justified, the regulation of call origination rates.”
Out of step
Cell C confirmed its origination rates currently correspond with the termination rate.
Vodacom says the difference with call origination is that it includes retail and wholesale costs, while termination only allows recovery wholesale network costs.
MTN says termination and origination on a network are two distinct concepts and should not be conflated. Robert Madzonga, chief corporate services officer at MTN SA, refers to international instances: “The carrier pre-select regulations in SA are unique in the world and are in fact not in line with similar regulations in other countries.”
Madzonga says in other jurisdictions CPS has not been made applicable to mobile, or “if it was applicable, regulation was withdrawn very soon after publication”.
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