Icasa warns operators over interconnect

Interconnect charges, the fees telecommunications operators charge one another to carry calls on each other’s networks, will come down sooner than industry players think.

That’s the word from Icasa councillor Fungai Sibanda, who was speaking at the Internet Service Providers’ Association’s annual iWeek conference on Wednesday morning. “The writing is on the wall,” Sibanda said. “Interconnection rates will come down sooner than the operators expect [and so] they should start making downward adjustments to their interconnection prices in anticipation of the long arm of regulation.”

SA’s cellphone operators are coming under increasing pressure to reduce mobile interconnect rates, also known as termination charges, from R1,25/minute in peak times. Mobile interconnect fees in SA are among the highest in the world, and analysts say this has a chilling effect on new competitors emerging.

Industry players will likely greet Sibanda’s comments, which he said he was making in his personal capacity, with some scepticism given that Icasa is under-resourced and often takes years to craft regulations which are then immediately taken on review by the large operators.

But Sibanda said the authority is approaching the regulations carefully and methodically and will publish a detailed discussion and proposals document before the end of the year.

He admitted Icasa must still decide what is an appropriate level for interconnect fees and whether they should based on operators’ fully allocated costs, their long-run incremental costs, or the costs of an efficiently run operator.

Sibanda, who was previously chief director for regulatory policy and legislative development at the department of trade & industry, warned the large operators that “the days of interconnection being used as a cash cow for operators are over”.

He warned that there is a possibility that communications minister Siphiwe Nyanda could issue a ministerial directive to Icasa to deal with interconnect rates immediately.

Alison Gillwald of ResearchICTAfrica, speaking at the same conference, said she felt interconnection rates in SA should fall from R1,25/minute in peak times to 25c/minute. “And that’s still a very conservative figure,” she said.  – Duncan McLeod, TechCentral