Telco charges threaten preselect regulations

By Paul Vecchiatto, ITWeb Cape Town correspondent

MWeb has expressed concerns that the Carrier Preselect Regulations (CPRs) could be undermined by Telkom and the cellular network operators, making it financially unviable for alternative telecommunications providers to carry calls that originate on those networks.

The Independent Communications Authority of SA (ICASA) had the final CPRs promulgated on 20 August. This gives fixed-line operators Telkom and Neotel and mobile operators MTN, Vodacom, and Cell C, two and four months, respectively, to get ready to support alternative telecoms operators wanting to carry calls across their networks that originated on the incumbents' networks.

According to ICASA, CPRs are to afford consumers, who may have a limited choice of access, a greater selection in the provisioning of outgoing calls. ICASA adds that increased choice should lead to lower prices and a better quality of service.

Your call

Eugene van der Westhuizen, MWeb's GM of strategic programmes, says the point of these regulations is that they will allow a consumer to select, irrespective of which carrier they have a contract with, a different operator to carry and then terminate their calls.

Once the regulations are in place, a subscriber can choose which carrier will terminate the call by first entering a four-digit code, which links him or her to the relevant carrier, and then the number of the person being dialled.

“The carrier preselect code can be permanently stored in phone address books or can be entered on a call-by-call basis at the subscribers discretion,” explains Van der Westhuizen.

He says the problem is that the carrier's costs for carrying and terminating a call includes the termination rate that is normally payable, which is well known, plus this new unregulated and unknown call origination charge, which the access operator is entitled to charge the alternative carrier.

The interconnection rate for mobile operators is 89c a minute for peak hour calls and 77c for off-peak hour calls. Telkom charges 33c and 19c for national peak and off-peak calls, respectively. Local calls are charged at 23c and 12c for the peak and off-peak times, respectively.

Risk cost

Van der Westhuizen says the risk is the last charge, because it is unknown and unregulated, and could be set by the incumbent operators at such a high rate that, despite the good intentions of the regulations, it could become financially unviable and so revert to the status quo.

Carrier preselect introduces a new charge that is similar in concept to the interconnection rate – the price of the calls between all operators and which Parliament attempted to drive down in a series of acrimonious hearings last year.

“In terms of the carrier pre-selection regulation, the originating carrier (Telkom, Neotel or the mobile networks) will be entitled to charge the alternative operator (the one carrying the call) a call origination charge,” notes Van der Westhuizen.

This means the cost structure for an alternative telecommunications operator would be the interconnection rate for terminating the call, plus the new call origination charge to the originating carrier.

“The success of the whole venture depends on what charge is levied by the incumbents in the call origination charge. But, because this charge is not regulated by ICASA, it means that the incumbent operators can decide on the commercial viability of the regulations and they may not want to broaden competition in the sector,” Van der Westhuizen says.

None of the incumbent telecommunications operators had replied to ITWeb's queries at the time of publication.