Cellular Operators Wary On Cheaper Rates

Cellular Operators Wary On Cheaper Rates

CELLULAR operators have responded with caution to a new legal finding that may pave the way to a huge cut in the cost of phone calls. Although their comments are guarded, it seems likely they will take legal action of their own if the Independent Communications Authority of SA (Icasa) tries to cut the fee of R1,25 a minute they add to the cost of a cross-network call.

Icasa has welcomed the opinion of Adv Gilbert Marcus that it has the right to force down the interconnection fees without any further market research. Icasa chairman Paris Mashile is waiting to hear whether the operators will accept the new legal opinion. If they do, it will demand a price cut.

If they disagree – which seems likely – they would probably instigate legal action to seek a different interpretation of the law. The operators are notorious for hiring legal experts to defend their positions, so consumers can expect more scrutiny of the convoluted telecoms laws before they see any price cuts.

Vodacom SA MD Shameel Joosub said the company was “very open” to discuss the rates, but Marcus’s opinion did not necessarily have the authority of law. Vodacom believed a market study was an essential requirement of the Electronic Communications Act, to avoid arbitrary regulation that could have devastating consequences for the economy.

Joosub also said the potential savings to consumers were being overestimated, as the idea that the fee may be cut by up to R1 a minute was baseless according to costing models in several best practice countries.

A study by UK telecoms watchdog Ofcom found no direct relationship between the retail cost of a call and the termination rate, he said. Moreover, the fee was only R1,25 in peak time, while 75% of calls terminated on Vodacom’s network paid a lower off-peak fee of 77c. That made the average fee 96c, not R1,25. MTN’s regulatory GM Graham de Vries said MTN had not seen the report by Marcus so it could not comment on its contents. Nor could MTN speculate about Icasa’s legal position. Cell C did not respond.

Mashile said the “labyrinthine” laws seemed to require Icasa to analyse the dominance of each operator first. But Marcus believes Icasa can intervene immediately. Icasa would call for lower fees if “we are not violating anything”, Mashile said.

Marcus also believes Communications Minister Siphiwe Nyanda has the right to instruct Icasa to urgently address the fees — in other words, to force them down. The Department of Communications was committed to lowering the cost of communicating, said spokesman Tiyani Rikhotso, but he did not say if the minister would act now. That means any hope of quick relief for consumers lies with Icasa, which has a poor record of standing up to the operators.

Marcus’s report was commissioned by ECN Telecommunications. CEO John Holdsworth said ECN would urge Icasa and the minister to act swiftly and cut the fee by 80% to 25c a minute, which would more than cover the cost of the service. ECN would urge Icasa and the minister to act swiftly and cut the (cross- network) fee by 80% to 25c a minute.

Leave a Reply

Your email address will not be published.