Namibia cuts phone fees before SA

The lobby group SA Connect and Research ICT Africa are holding a seminar today, 28 July 2009, to highlight how Namibia's regulatory authority has slashed the cost of cellphone calls, while SA's industry regulator has failed to act.

Both the Namibian Communications Commission (NCC) and the Independent Communications Authority of SA (Icasa) have issued new rules governing the interconnection fee that operators charge for switching a call between rival networks. The NCC slashed the fee 43%, while Icasa did not touch the existing rate of R1,25 a minute.

Icasa's inaction promoted Independent Democrats leader Patricia de Lille to ask the Competition Commission to investigate whether the operators were acting anti-competitively. Competition commissioner Shan Ramburuth said he shared her concern and had forwarded her complaint to his enforcement division.

Communications Minister Siphiwe Nyanda has also criticised the high fee and has met the operators to discuss the issue, with no results so far.

“For the first time we are starting to see some heat generated around interconnection fees and how they translate into high prices for consumers, and there is an opportunity for something to happen,” said John Holdsworth, CEO of ECN Telecommunications. He has sent a document outlining Namibia's action to Icasa, the Department of Communications, the parliamentary portfolio committee on communications and the Competition Commission.

“People are paying R3 a minute for a call and it's all to do with the interconnection rates. It's the single biggest barrier to lower telecoms prices,” Holdsworth said.

A study conducted in Namibia found it cost an efficient operator N$0,25 to switch a call. Since they were charging consumers N$0,60 per minute, the NCC forced them to slash the interconnection fee 43% to N$0,60, with a target of N$0,30 by 2011. The NCC also looked at international benchmarks to confirm that the fees were out of line.

Icasa, in comparison, wants to conduct a study to determine which operators have market dominance before it attempts to fiddle with the fees. Holdsworth said that would be a waste of time, and “two years down the line people will still be paying a few rands a minute for a call”.

In his submission, Holdsworth argued that SA's telecoms costs were among the highest in the world, yet Icasa's new regulations did nothing to address the fees. “It is clear there is either rank profiteering in the South African mobile call termination market or our mobile operators are particularly inefficient. Icasa can now look across SA's borders to Namibia to find the solution for high pricing.”

SA Connect said regulators across Europe and Africa agreed that interconnection fees should be based on the actual cost of providing that service. Its seminar will cover the latest global trends and show how international benchmarking can be used to determine appropriate rates.

Source: Business Day

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