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Cheaper cellphone
calls
ADSL
South Africa (Broadband South Africa), 24 April
2007
This cost of making a cellphone call in
South Africa could fall in the next few months if Icasa
has its way. Icasa wants to regulate cellphone
termination fees to the benefit of all South
Africans.
‘Icasa, which regulates the
telecommunications industry, is examining the fees that mobile
operators charge one another to terminate calls on each other’s
networks and will hold public hearings into the matter next
month. A review of fixed-mobile fees is also likely to form
part of the process’ (Cheaper calls on the way, McLeod,
Financial Mail, 20 April 2007). Also, ‘…though it is not
prepared to say whether it thinks these rates are fair until
the process is concluded, Icasa argues that interconnection
fees contribute to the high cost of telephony in SA’ (Cheaper
calls on the way, McLeod, Financial Mail, 20 April
2007).
In other words, while Icasa is
not saying it straight out, its clearly not happy about the
call termination fees that mobile operators charge.
What seems to be the
cause of high call termination fees?
The ability of cellphone
companies to set call termination fees between
themselves.
‘Until now, the cellphone
companies have agreed the interconnect fee between themselves
on commercial terms. Now Icasa, which previously did not have
the power to set these fees, says it is considering the
imposition of remedies, should it decide to intervene’ (Cheaper
calls on the way, McLeod, Financial Mail, 20 April
2007).
In other words, previously
cellphone companies could set call termination fees without any
interference from regulators. This posed a problem because they
could set fees as high as they wanted.
‘Icasa says that in SA, in the
absence of regulation, mobile-mobile call termination rates
have risen by 525% since 1994, to 142,5c/minute (125c plus Vat)
for calls made in peak time. Off-peak, mobile mobile call
termination is set at an agreed 87,8c/minute (77c plus Vat)’
(Cheaper calls on the way, McLeod, Financial Mail, 20 April
2007).
In other words, any thinking
person can see that cellphone companies have been abusing the
privilege of setting call termination rates themselves. Average
increases (1994-2007) of plus minus 40% per year is not a way
of beating inflation but rather to help increase the cost of
telephony in South Africa at the cost of consumers.
Does Icasa want to use a
specific price or cost model?
Yes.
‘It wants to use a model known as
“long-run incremental costing”, which is used by regulators
around the world to impose termination rates on operators’
(Cheaper calls on the way, McLeod, Financial Mail, 20 April
2007).
In other words, Icasa
wants to use a model where the gradual increase of call
termination rates is
encouraged.
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