It's more than just interconnect

Neotel has welcomed Cell C's call for asymmetric interconnection, which it says is a good step to increasing competition in the telecoms market.

However, Neotel MD and CEO Ajay Pandey says there is much more that needs to be done before real competition takes off in the market.

Since the inception of mobile services in the country, termination rates have been symmetric, meaning they apply to all telecoms carriers equally. The system was adopted since the industry has been highly-regulated and only a few companies held licences to compete.

Since the beginnings of liberalisation, hundreds of companies have been given the right to act as a competing carrier, and Cell C has called for asymmetric interconnect fees to boost competition. Asymmetric fees generally apply to the incumbents only.

For example, the US and Canadian regulators impose an interconnection rate on all carriers; however, the incumbent operators are forced to unbundle the local loop and share network space with newcomers.

“Cell C's call for asymmetric interconnection tariffs is welcomed and fully supported by Neotel in that it will stimulate competition,” says Pandey.

However, Neotel says the objective behind this type of tariff structure is generally to provide a “leg-up” to new entrants in the market. “A new entrant is typically someone who has recently entered the market and is an operator who is actively investing in growing its network to compete against incumbents,” he notes.

Asymmetric regulation, including asymmetric interconnection tariffs, has a specific role to play in driving competition, he points out. “As the innovative telecommunications challenger, the need for asymmetry has always been part of our communications to the regulator since day one. We believe it provides an opportunity for new entrants in a market to immediately start driving competition.”

While Neotel feels the interconnect debate is long overdue, the industry and regulators must not lose sight of the other issues impacting the sector. “There are a number of issues that will remain until long after interconnection prices are dropped, unless they are addressed directly,” he says.

All of the issues presented by Neotel have been subject to regulatory processes over the last few years; however, barring number portability, none have actually seen formal regulation publication.

“That said, we are positive that this move [forced lower interconnection] will benefit the consumer, provided the right mechanisms are put in place to ensure the benefits of any reduction in interconnection is passed through to the consumer,” says Pandey.