South Africa to regulate mobile interconnect fees

Reduction in the rates mobile providers charge each other should lower user costs

A reduction in the cost of communications is expected in Zambia and South Africa following announcements by national authorities to regulate mobile interconnection fees by mobile operators.

The Independent Communication Authority of South Africa (ICASA) and the Zambia Information and Communication Technology Authority — the telecom regulators in the two countries — have announced they are stepping in to intervene in the high interconnection fees by mobile operators. ICASA has proposed that mobile interconnection rates currently set at 0.89 rand (or US$.01) a minute be reduced to 0.65 rand from July 2010, to 0.50 rand (or US$.005) per minute in July 2011, and further reduced in 2012. ZICTA has not, however, said how much it will reduce interconnection rates.

The Zambia Information and Communication Technology Authority is reducing the interconnection fee by June this year, while ICASA said it will implement the new interconnection rates by July this year. The idea is to protect consumers from exploitation by mobile service providers. Interconnection rates are fees mobile operators charge each other for carrying calls to their networks.

Since the arrival of mobile communication in Africa more than 15 years ago, mobile service providers have been left to decide their own interconnection rates, but many African governments are now taking steps to regulate the fees. Zambia and South Africa join Uganda in embracing interconnection rates in order to reduce the high cost of communication. Major telecom operators in South Africa reduced the interconnection fees in March this year, but ICASA said the reductions were not sufficient enough to make communication really cheaper.

"The authority now has power to regulate the interconnection rates because the new law gives us powers to do so," said Richard Mwanza, acting ZICTA director general.

Interconnection refers to the commercial arrangements under which service providers connect their equipment, networks and services to each other in order to allow their customers to access the networks of other service providers.

The move by African governments to regulate the interconnection rates also follows uncompetitive restrictions by incumbent operators who have been overcharging private operators using their networks. The reduction in interconnection rates means that incumbent operators will no longer be making profits based on high interconnection rates.

Many nations are now looking into ways to lower costs and allow low-income earners to access mobile-phone services. High termination costs tend to favor bigger players and stifle competition, while regulated interconnection fees allow smaller operators to compete based on the quality of services.

Generally, subscribers in Africa face a lack of consistency in pricing as interconnection rates are determined by service providers, all of which charge different rates. The argument now by African governments is that unregulated fees stifle competition, kill innovation, hold back telephone penetration and prevent additional investment in the sector -- and users get cheated as a result.

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Tags Networking & Telecomms IDmtrs

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