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Parliament impatient with interconnection

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It is not Parliament's place to set telecommunications prices, says Ismail Vadi, chairperson of the Parliamentary Portfolio Committee on Communications.

However, the interconnection issue has become so serious that setting an indicative tariff shows the legislature's impatience, he adds.

Yesterday, the committee heard testimony from telecommunications regulator ICASA, the Competition Commission and the Department of Communications (DOC). This testimony confirmed that South African mobile prices are too high, with the main contributing factor being the “exorbitant” 125c per minute interconnection fee charged.

At the end of the seven-hour grilling faced by the presenters, the committee resolved it would summon MTN, Vodacom, Cell C and other interested parties for further public discussions on the issue on 13 and 14 October.

During the meeting, the committee agreed to call for public submissions on the following proposals:

* That mobile and telecoms operators drop the interconnection rates with effect from 1 November to 60c per minute during peak times.
* Interconnection rates be further reduced by 15c annually on 1 November for each successive year until 2012.
* As a general rule, the progressive reductions in interconnection rates between 2009 and 2012 should yield concomitant reductions in the actual consumer (retail) prices of telecommunications.

Exorbitant rates

The committee says interconnection rates in SA, set at R1.25 per minute during peak times, are exorbitant and excessive, resulting in extremely high telecommunication prices.

This is the consequence of apparent historical collusion between dominant mobile operators in the country - which have placed profit and greed above people - and ICASA's incapacity to effectively regulate this matter, it notes.

It also says the high cost of mobile and fixed-line telecommunications has impacted adversely on the South African economy and citizens, particularly the poor and marginalised.

There is unanimity in the industry, government, other relevant stakeholders and the regulatory authority that the present situation is socially indefensible and economically unjustifiable, it adds.

The committee also called on the communications minister to finalise the performance management system of ICASA councillors, as stipulated in the ICASA Amendment Act. It also wants the DOC to report on the matter to the portfolio committee by 30 November.

ICASA was also called on to act professionally, effectively and boldly to regulate interconnection rates in SA as a matter of urgency.

Amend Acts

The committee has also declared it is willing to introduce, in the next session of Parliament, a Committee Bill to amend the Electronic Communications Act so as to enable ICASA to act swiftly in this matter.

Representatives of the cellular network operators said in their private capacity that their companies would welcome the opportunity to present their side of the issue.

“I think the committee has been given some very selective information over the issue,” one of the representatives said.

Another said it would set a dangerous precedent if Parliament had to set telecommunications prices.

“If you think the rand price fluctuations during the Vodacom listing debacle was bad, wait until the markets digest the implications of Parliament setting prices,” he said.

A third representative said the network operators wanted an efficient and competent regulator, and were on record asking for this to happen.

“However, one must realise that ICASA and the situation is not one that happened overnight,” she said.

Vadi said ICASA and the industry have had many years to sort out the issue and reduce prices, but that they had failed to do so.

“We have to move forward with this issue,” he added.

Related story:
State intervention urged for telecoms

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