World Wide Worx | Business Technology Research South Africa

Interconnect cut ‘a small victory’

World Wide Worx has welcomed the announcement by the Minister of Communications that the interconnect fee that is added to the cost of calls between mobile networks will be cut, but warned that consumers must be able to see how their call costs are affected.

The independent technology market research organisation was the first to bring public attention to the high cost of interconnect rates – formally known as the mobile termination rate – through its annual Mobility research project four years ago. It initiated the campaign to bring down the interconnect fee in 2005, and published a petition against the high interconnect rate 2006.

“It’s been a long time coming, but it’s never too late,” said World Wide Worx MD Arthur Goldstuck. “We welcome the announcement, and believe it is a first step towards more affordable communications. There is still a long way to go, and there are many obstacles to be overcome, but Minister of Communications Siphiwe Nyanda has demonstrated the kind of political will that is needed to address these obstacles.

“We also welcome the willingness of the mobile networks to make a meaningful cut in the interconnect rate, and trust that this heralds the beginning of a new approach towards the concerns of the consumer.”

Goldstuck warned, however, that the rate cut will have little impact if the networks are not required to be transparent regarding the cost structure to the consumer.

“Under the current structures of call packages, it is almost impossible for the consumer to understand the cost components of various categories of calls, and this is clearly an area of potential confusion and disinformation. Across both mobile and fixed line networks, consumers need to be able to see, for each category of call, such as off-peak and peak-time, to mobile and landline numbers, what amount is made up by the interconnect fee.”

World Wide Worx has pointed out that the interconnect fee could still come down to as low as 30c. In their 2006 book, “How to buy a cellphone in South Africa,” Goldstuck and Steven Ambrose of WWW Strategy published the first petition to bring down the interconnect rate, and invited readers to lodge their objections with both the Minister of Communications and Icasa. However, the call was ignored by the authorities until hearings into the issue were held two years later. Only in 2009, however, when the matter was raised in Parliament by Independent Democrats leader Patricia de Lille, did the Government step in.

“The cut of the peak interconnect rate from R1.25 to 89c is a small victory, but it is just the start,” said Goldstuck.

World Wide Worx has issued a priority list of further areas that need attention regarding the cost of communications in South Africa:

• Clear evidence of the real cost of terminating calls from one network onto another. Extravagant claims have been made, but no network has been willing to play open cards on the issue. It has been argued that the real cost may be a few cents, and it is important for both transparency and affordability to clear up the confusion;
• Transparency of the makeup of call costs to the consumer. This is essential for cuts in specific areas to be visible;
• Investigation of the requirement by all mobile networks for compulsory caller line identity and itemised billing on all contract accounts, both of which incur a cost to the customer. These do not apply to pre-paid accounts.
• An examination of high line rentals for fixed line users, and of a requirement by the incumbent fixed line provider for its customers to pay a high deposit fee, which is then held indefinitely or until the account is terminated.

“Fixed line costs should not be immune from the scrutiny of Government,” Goldstuck noted. - 12 November 2009