Anti-competitive telecoms industry

[I Robot]

Independent Communications Authority of South Africa (Icasa) publishes interconnection and facilities leasing draft regulations

27 July 2007

The Independent Communications Authority of South Africa (Icasa) has published interconnection and facilities leasing draft regulations for public comment. Interconnection is the physical and logical linking of telecommunications systems in order to enable any user of one network to communicate with a user of another network

More...

[Dave A]

Anti-competitive telecoms industry

Ever wondered why the introduction of new companies in the cellular field hasn't really reduced prices?

Interconnection tariffs are the portion of a cellphone call rate that the major networks charge one another for callers to make contact with their networks. For example, a call from a Cell C subscriber to an MTN subscriber will net MTN R1.25 in interconnection revenue.

Where South African interconnection tariffs are R1,25 per cellphone call, in India, by comparison, this fee is just $0.03 (about 20c).

Interconnection fees were 20c in 1994, but were raised by MTN and Vodacom by a whopping 635% to R1,25 shortly before Cell C entered the market.
full story from M&G here

Is the service supporting the recipient of the call worth about two thirds of the call value? How much more evidence of anti-competitive behaviour against new entrants do you need?

I'm amazed the competition board wasn't all over that one like a rash.

[SilverNodashi]

Dave, how do you think MTN can afford their fancy new buildings every 2 years, and fancy new cars for the "top of the food-chain" bosses without this increase?

[Dave A]

It looks like Patricia is taking the issue up:

Cellphone call costs in South Africa are among the highest in the world and need investigating, Independent Democrats leader Patricia de Lille said on Wednesday.

In a statement, De Lille said she had lodged a complaint with the Competition Commission to investigate whether local cellphone service providers were "acting anti-competitively or are guilty of any prohibited practices".

Among other things, the complaint calls on the commission to investigate "possible collusion between the dominant operators, particularly with regards to interconnection fees".
full story from M&G here

[Dave A]

Sometimes raising issues bears fruit:

The Independent Communications Authority of South African (Icasa) and telecommunications companies will embark on a process to cut call termination rates, the authority said on Tuesday.

Following a meeting between Icasa, Vodacom, MTN, Cell C, Telkom, Neotel and the Internet Service Providers' Association, Icasa said the interconnect rate had been discussed.

Interconnect rates are the amounts charged by networks for carrying calls on behalf of one another, with South Africa having exorbitant interconnect fees when compared with most other countries.

"The meeting was necessitated by the ongoing public discussions around the cost of call termination in the country," Icasa said in a statement.

After deliberations, the meeting had resolved to embark on an industry-led process to reduce termination -- or interconnection -- rates, with Icasa exercising an oversight responsibility.

The meeting resolved to ensure that in negotiating a new termination rate regime they took into account competition law requirements.

The meeting decided to conclude negotiations between the operators by the end of December 2009, with Icasa proposing an implementation date of February 1 2010.
full story from M&G here

[Dave A]

Well here is some good news:

Vodacom on Wednesday denied that it was against the reduction of interconnection rates by the Independent Communications Authority of South Africa.

"We are ready to reduce these mobile terminating rates as long as the cost of terminating another party's call plus a fair profit is demonstrated," Vodacom's Bob Collymore said.

Collymore said it would be unfair for Vodacom to reduce its rates, as it would cause damage to their business, whereas other operators were reluctant to do so.

"Icasa must orchestrate the rate cut. Last week they initiated such talks, and strong progress is being made," Collymore said. Vodacom also said it sent Icasa its cost structure in order for them to ascertain how to decrease the rate, including the termination costs.

Collymore urged Icasa to apply its mind in determining the cut, so that it did not financially damage any operator.
full story from Business Report here

[Sieg]

Telecommunications industry

Here's my quote [been on my facebook profile for a while]

"The telecommunications companies are turning out to be the biggest rogues of the 21st century." They are carrying on where the Nazis, the Nats and the newspapers left off.

Sieg

[Dave A]

I see all the recent media excitement about an imminent reduction in interconnection fees is smoke. At least the reason why the competitions board never tackled the issue has become evident - government is/was the major stakeholder.

Talk about self-interest

What is needed to move this forward is to disconnect interconnection fees and final-charge-to-client as issues. Keep the final fee to client the same for the transition. Just have it so that less money is going to the network supporting the recipient's call and more money goes to the service supporting the person making the call.

All the recipient network has to do is put the call through, using much the same technical infrastructure as has to be in place for their clients to make calls in the first place.

The calling network has the same technical infrastructure costs plus the marketing and distribution channel costs, and the job of collecting the money.

How the service providers can put on a straight face and claim the interconnection fee as a proportion of total charge is anywhere near related to actual cost portioning is beyond me.

[Dave A]

Unsurprisingly MTN and Vodacom are claiming changing the interconnection fee is going to harm the future of the industry. However, this is worth highlighting:

The company (MTN) added its margins in South Africa compared poorly within Africa, and any reduction in interconnection prices would need to be recovered in other parts of its business.
from M&G story here

Yep - that would probably be the way to go.

[I Robot]

Communications Authority to brief media on interconnection and call termination regul

Invitation to a media briefing on interconnection and call termination regulations

13 April 2010

The Independent Communications Authority of South Africa has completed its review of the market, concluding that some form of regulation is necessary to overcome identified market failures. The authority hereby invites all interested parties to attend a media briefing wherein it will share the results of this review. Further note that the authority will issue the draft regulations on wholesale call termination on Friday, 16 April 2010.

In addition, the authority released final interconnection regulations on Friday, 9 April 2010, which provide a framework for the conclusion of interconnection agreements. These support the objective of a fair, transparent and non-discriminatory access regime in the electronic communication sector.

It is against these two matters that the authority invites all interested parties to a media briefing to be held as follows:

Date: 15 April 2010
Time: 10h00 to 12h00
Venue: Block C Presentation Room, Pinmill Farm 164 Katherine Street Sandton

All media enquiries should be directed to:
Paseka Maleka

More...

[Pap_sak]

I see all the recent media excitement about an imminent reduction in interconnection fees is smoke. At least the reason why the competitions board never tackled the issue has become evident - government is/was the major stakeholder.

Talk about self-interest

What is needed to move this forward is to disconnect interconnection fees and final-charge-to-client as issues. Keep the final fee to client the same for the transition. Just have it so that less money is going to the network supporting the recipient's call and more money goes to the service supporting the person making the call.

All the recipient network has to do is put the call through, using much the same technical infrastructure as has to be in place for their clients to make calls in the first place.

The calling network has the same technical infrastructure costs plus the marketing and distribution channel costs, and the job of collecting the money.

How the service providers can put on a straight face and claim the interconnection fee as a proportion of total charge is anywhere near related to actual cost portioning is beyond me.

Yup. Same as banks adverts and how they are "there for you"...Then hit you for R14 for Debt Orders - which, in this country, you can only cancel for 3 months - if the supplier wants to put it through again,it will go through, not the banks problem. Anyway R14 for an automated process??? How many debit orders go through a month anyway...millions.

[Dave A]

At last, real action!

South Africa's telecoms regulator has finally taken the bull by the horns and announced its plan to regulate interconnection rates.

The Independent Communication Authority of South Africa (Icasa) announced on Thursday that it would be slashing interconnection rates by 27% in July this year -- from the current rate of 89c per minute -- to 65c.

It also announced a "glide path" that would see the interconnect rate cut to 50c in July 2011 and 40c in July 2012
full story from M&G here

[I Robot]

Communications Authority to hold public meetings on draft call termination regulation

Independent Communications Authority of South Africa (ICASA) to hold public hearings in respect to the draft call termination regulations

22 June 2010

The Independent Communications Authority of South Africa hereby invites all interested parties and the media to the public hearings in respect to the draft call termination regulations released on 16 April 2010.

The level of call termination charges has been a cause for concern in South Africa for some time. During 2009, the Independent Communications Authority of South Africa conducted a market review of the provision of wholesale call termination services.

ICASA released its proposals on the outcome of this review in the draft "call termination regulations" on 16 April 2010 in Government Gazette No. 33121, where the authority proposed, amongst others, the need for a cost oriented price cap on both mobile and fixed call termination rates.

The closing date for written submissions on these draft regulations was 18 June 2010, by which time ICASA had received 20 written submissions.

The public hearings on these draft regulations are to be held as follows:

Date: 28 to 30 June 2010
Venue: Bytes Technology Centre, Midrand, Gauteng
Time: 10h00 to 16h00

More...

[Dave A]

Vodacom, South Africa's largest cellphone operator, said on Tuesday it has lost about $79-million in the last three months due to a regulatory rate cut.

South Africa's communications regulator in March forced wireless operators to reduce their interconnection fees, the rate they charge to use each other's networks.

Vodacom, which is majority owned by Britain's Vodafone, has cut its rate for peak calls by nearly 29% to 89 cents minute.

That has cost it about R600-million so far, a Vodacom spokesperson told Reuters.
full story from M&G here

Just to be clear - did Vodacom drop its interconnection fee or the rate they charge their customers?

I'm a Vodacom customer and I didn't notice a drop in what I'm paying.

So where did this "lost" revenue come from then?

[I Robot]

Communications Authority on extra time to submit additional information on Draft Call

Operators granted extra time to submit additional information on Draft Call Termination Regulations

2 July 2010

The Independent Communications Authority of South Africa held public hearings from the 28 to 30 June on the draft call termination regulations.

These regulations seek to reduce the wholesale price licensees charge each other for reaching their customers from the current commercially agreed upon scenario to a regulated rate based on the cost of providing such a service.

Stakeholders raised a multitude of concerns, chiefly around the proposed glide-path and how this may negatively affect their businesses. These concerns were raised mainly by Vodacom, MTN, CELL C and NASHUA. Counter to this, however, was the desired result of enhanced competition that would ultimately benefit consumers through a reduction in retail prices.
In the interest of balancing the triple mandate of this exercise of ensuring fair prices to consumers, promoting competition in the ICT sector whilst ensuring a favourable investment environment, the Authority has granted stakeholders until Friday, 9 July 2010 to make further written submissions to the Authority.

The authority will review all the written and oral submissions over the next few weeks and inform all stakeholders of progress in this regard.
The authority is therefore of the view that the granting of extra time to provide additional information pursuant to the public hearings held this week could have an effect on the issuing of the final regulations and the implementation date for rate reductions. The authority will however keep the public informed of further developments in this regard.

More...