Stage set for battle over telecoms rates | TechCentral

The stage is set for a battle of epic proportions at public hearings in Johannesburg next week. That’s when operators will make their arguments for and against proposed cuts in wholesale call termination rates.

MTN, for one, has warned of dire consequences for its business and for the entire mobile ecosystem if industry regulator, the Independent Communications Authority of SA (Icasa), proceeds with its plans to cut mobile call termination rates to 65c/minute this year. Other operators have also lodged strong objections.

Icasa wants the rates — the fees the mobile operators charge each other and other telecommunications companies to carry calls onto their networks — reduced to 65c in July. This would follow a 36c voluntary cut by the mobile providers on 1 March.

High mobile interconnection rates have been blamed for keeping retail prices high and for keeping new competitors from emerging.

Now, MTN has gone on the offensive. In its submission to Icasa ahead of public hearings scheduled for 28 to 30 June, the company says the draft proposals “suffer from serious legal and regulatory flaws”.

Moreover, when the March rate cut is factored in, the “drastic nature of the proposal is truly revealed”, MTN says. “In fact, it represents the most aggressive mobile termination rate price control MTN has ever seen: the peak rate would fall from R1,25 to 65c in just four months, and 70% of the total 85c cut proposed by the authority would take place between March and July this year.”

The operator says the impact of too steep and unbudgeted-for cuts in one year would force it to take “dramatic cost-cutting actions in the second half of 2010, affecting not just MTN’s business, jobs and investment plans, but also its customers and the whole mobile ecosystem” of least-cost routing companies, independent service providers and distributors.

“The ‘business shock’ is further heightened by the removal, overnight, of the peak and off-peak price structure that has characterised the market for the past 15 years, with great wholesale, retail and network disruption,” MTN says in its submission.

Vodacom, though disagreeing with large sections of the proposed cut in termination rates, has taken a more conciliatory approach to the regulator. In its submission, it says it agrees with Icasa that the wholesale cost-based rate is about 40c/minute — the level the authority has proposed the rates be cut to in July 2012.

However, Vodacom has objected to what it thinks is a too-steep “glide path” — the two-year period over which the rates will come down. It says the proposed timeframe is “far too aggressive and will significantly impact on the wholesale and price structures of the SA communications industry”.

Vodacom wants to delay the first step in the proposed guide path until March 2011. “This will assist businesses to factor the new rates into their business models and decisions for the next financial year,” it says.

Like MTN, Vodacom has also questioned the process Icasa has followed in creating the draft regulations, and has warned that, if issued in their current form, would be “unlawful and open to judicial review”.

Cell C, meanwhile, has — not surprisingly — argued for asymmetric termination rates that favour it over its bigger mobile rivals. In other words, it wants Vodacom and MTN to pay it more than it pays them to carry calls between their networks.

The country’s newest and smallest mobile operator argues that higher termination rates have undermined its full potential. It has objected to being defined as an established operator with significant market power for the purposes of regulation, alongside the likes of Vodacom, MTN and Telkom.

“The use of asymmetric mobile termination rates for an interim period will promote competition in the long run in the SA mobile market as this will enable Cell C to grow its market share and become a more effective competitor,” Cell C says.

— Duncan McLeod, TechCentral

Numbering regulations reach final phase / ITWEB

By Leigh-Ann Francis
Johannesburg, 14 Jun 2010

The Independent Communications Authority of SA (ICASA) is in the process of formulating the Number Plan Regulations and has published a draft version, which is now open for public comment until mid-July.

The regulations are intended to align the regulatory framework with the Electronic Communications Act 2005 and the ICASA Act 2000, as amended in 2006, and to cater adequately for the newly competitive environment.

Senior telecoms consultant at BMI-Tech Knowledge Tim Parle explains that the regulations cover three phases, two of which are already complete.

The first phase was completed in 2007 and entailed changing the international dialling prefix used in SA from "09" to "00". This was in line with international norms and freed up the numbers with the second digit of 9, states Parle.

The most visible part of the second phase was the withdrawal of local calling, requiring South Africans to come to terms with dialling the prefix to local numbers and not just national, long-distance numbers, he continues. “For example, where we had to add 011 to all Johannesburg numbers regardless of whether we were calling from Sandton or Durban.”

The second phase introduced non-geographic numbers and short codes, needed to allow Neotel, and operators, to compete in the fixed market, he explains.

Parle notes that the third phase entails a more radical change. Here, the first digit dialled will change from "0" to "6" for geographic numbers and to "8" or "9" for non-geographic numbers. The aim is to provide more capacity for the long-term, he explains.

ICASA has called for public comment by 19 July and is holding public hearings on the topic in early August. The date for the implementation of phase 3 will be determined after these events.

Neotel welcomed the publication of proposed changes to the national telephone numbering plan, which the telecoms operator says promises to provide structure and clarity that has been lacking to date.

The regulations will force the industry to prepare for new infrastructure requirements and changes to their business models, which is said to have positive long-term effects for operators and their customers.

Industry impact

“The impact of these changes will be felt by the operators, which will need to re-programme the routing tables in all their switches and do extensive testing,” Parle predicts.

This is a large operation for Telkom, given its footprint of telephone switches across the country, and a significant exercise for the mobile operators, given the large number of base station control and MSCs deployed, he continues.

“The effect ripples down to Neotel, ECN, Vox and the like too. For small to medium enterprises, company PABX/PBXes will need to be reprogrammed to handle the changes with knock-on impacts to billing systems, LCR systems, internal directories and the like.”

Gregory Massel, MD of Switch Telecoms, notes that, while mobile networks and wireless application service providers will have to amend some of their premium rate and content subscription services, both company and consumers stand to benefit.

“Companies like Switch Telecom will benefit by being able to provide toll-free services. At present, Telkom makes this difficult because rather than honouring the toll-free status of the 0800 number, it simply plays a message saying: 'Calls to this non-Telkom toll-free number will be charged.'

“In the future, the calls will be toll-free, irrespective of the network they originate on,” explains Massel.

Consumers also stand to benefit from regulations relating to SMS-based content subscription services. “Providers will not be allowed to sign a consumer into a subscription-based service unless the consumer subscribes via a premium rate shortcode.

“Any SMS-based advertisement they send you enticing you to respond will have to be sent from a premium rate shortcode so that consumers are not misled under false pretences,” he notes.

The regulations also allow for the implementation of tariff controls, adds Massel. Certain number ranges will be classified as cheaper calls and others will be classified as more expensive.

“Having two clear bands, excluding toll-free and premium-rate, will help remove the current situation that has arisen where consumers have no idea what the cost of a call is before dialling,” he says.

Parle predicts that consumers may grumble at the changes initially, and for a few weeks may fumble when trying to make a call, but will soon take the changes on board. There is also a chance that shares in media companies and PBX maintenance companies will become hot items, he concludes.

Single view reporting for optimal telecoms reporting

After decades of a telecommunications monopoly, and despite deregulation, the price of telephony in South Africa has skyrocketed. The issue has even drawn fire from the presidency of South Africa, via Thabo Mbeki who at the time complained that the high costs of telephony was deterring investors.

But despite complaints, Telkom's monopoly remains entrenched and while government and ICASA contemplate 'policy reviews', Alec Erwin contemplates becoming a self appointed SCM [second communications minister / the first one has not been very successful] by starting a new broadband operator to compete in the marketplace; it is left up to individual companies to explore methods of reducing their telecoms spend - a real challenge as telecommunications costs in South Africa are among the highest in the world, and businesses typically overspend by anything from 15 to 50 percent.

Customers are looking for new and intelligent ways to analyse and streamline their telecommunications spend. Recent requests for solutions include the Cape Town Unicity and Parliament. These are typical examples of BIG business shouting for help.

One of the major problems in terms of escalating costs is that most companies use a complex mix of traditional landline phones, their own WAN for Voice over Internet Protocol (VOIP), different cellular networks and multiple cellular service providers, to deliver telecommunications to their branches nationwide. Furthermore, all these networks and SP's deliver invoices and itemised billing to the customers every month in disparate formats, to multiple postal addresses [or email inboxes] and no intelligence is applied to this billing data. So as time goes on, customers find it increasingly difficult to manage their costs as invoices and itemised billing become more and more unwieldy to consolidate.

The problem is that you cannot manage your costs if you cannot measure them. And even if you can measure these costs, with convergence of voice and data you need the skill set [and time] to implement change efficiently. There are companies in the market place charging small fortunes to perform telecoms audits for customers. Once complete, the customer then has to find a service provider to deliver the change required and then 12 months on, if the customer wishes to measure success, perform the whole complex costly exercise again.

The Nett result to customers is that more and more [customers] are asking for a single point of contact / or single view point into their telecoms expenditure.

Our belief is that customers need a solution that gives them a ‘Single View' into their telecoms spend, irrespective of supplier, and derived from source documents; ie the network or SP's monthly billing.

This ‘Single View' should provide insight into the opportunity available to them based on their actual business need and products in the marketplace. Examples would be existing call patterns / employees profiles / business processes and company strategy. Whilst defining the business need, the solution should take into account the customers geographical location, supplier invoices and supplier detailed billing, analyse the call patterns and then use this data to come up with an optimal telecoms plan.

Once the action plan is agreed, employees / consultants / service providers can then work together to implement the plan, manage the change and reporting will show the fruits of their labour. This is approach is very different to the current solution's out there, in that most solutions [TMS / Extension Reporting / Consultants] are able to provide reporting on a portion of their clients telecommunications needs, but not everything.

The results are that in nine times out of 10 opportunities will go begging. For example, a service provider of Least Cost Routing (LCR) services understands LCR, but generally they do not understand cellular handsets, PBX or VOIP. The same would be true for any service provider / solution / consultant who does not provide a complete offering to market.

So when choosing a solution to manage your costs, ensure that the solution reports on all TYPE's of expenditure [especially cell phones / 3G cards and wireless] and that all the role players in your company [Networks / SP's / Management / Employees / Suppliers] have instant access to data that is relevant to the role they play in your business, whether they are employees / management or suppliers. This ensures that everyone will know where to start, what to start with and what change to expect.

Peter Walsh_3rd June 2007 / http://www.dataroom.co.za/