Cellular firms face chorus for fee cut

by LINDA ENSOR and LESLEY STONES - www.businessday.co.za

Big drop in interconnection charges likely as MPs criticise ‘exorbitant and excessive’ costs

DRASTIC reductions in the cost of calling one cellphone network from another could finally be on the way, with politicians demanding that fees are slashed from R1,25 a minute to just 60c on November 1.

The interconnection fee may fall by another 15c each year until it costs just 15c by 2012 — an enormous plunge of 88% that will directly benefit consumers.

The cellular operators will be given a chance to object to the proposals when they are called before Parliament’s communications committee next month.

But the African National Congress (ANC) made it clear that if operators did not willingly co-operate, legal amendments would be pushed through so they had no choice, said Jacques du Toit, MD of telecoms operator Vox Orion.

Du Toit was in Parliament yesterday when the committee tore into the Independent Communications Authority of SA (Icasa), condemning it for failing to curb the “exorbitant and excessive” fees charged by mobile operators for switching a call between rival networks.

“The network operators have to explain why the fee shouldn’t be 15c by 2012,” said Du Toit. “They will be given an opportunity to present their costs. But if they don’t come up with a number the ANC likes, the law will be amended so that the government can set the fees.”

Icasa estimates that the cost of linking a call is 40c a minute. Yet it has failed to force the fees down, and yesterday it still argued that it must conduct more research before it could intervene.

“When Icasa told the committee it had to investigate properly, the ANC said it would not tolerate that any more,” Du Toit said.

“There was a major fight. Icasa proposed the fees should come down by February next year and the ANC ripped into them and said that was unacceptable.”

The committee signed a resolution proposing that the operators must slash the interconnection fees almost immediately, and must pass on the savings to consumers.

It blamed the “shockingly high” fees on “apparent historical collusion between dominant mobile operators in the country — which has placed profits and greed above people — and the incapacity of Icasa to effectively regulate this matter”.

The resulting expensive call fees had harmed the economy and citizens and were “socially indefensible and economically unjustifiable”.

Icasa was urged to “act professionally, effectively and boldly to regulate interconnection rates”.

Du Toit said the operators would probably tell the committee that if the rates were slashed too dramatically, they would be unable to invest much more in network infrastructure. They might also argue that cost savings would have to be found elsewhere, and may involve job losses.