The South African Telecommunications Regulatory Authority (SATRA) has published a request for proposal in the government gazette for consultants to examine the Telkom pricing regime.
The consultant that wins the bid will examine the pricing on all of Telkom`s exclusive services, evaluate representations made to SATRA, and deliver a final report and recommendation to the SATRA council.
The services affected include local, long distance and international call charges, rentals, equipment installation and leased lines.
The licence issued to Telkom in 1997 grants it exclusivity over these services, but also sets out terms under which tariffs may be calculated. The licence provides that for the first three years in which it is effective, up to May this year, Telkom monitors the effect the rate regime has on its financial situation. If the regime is projected to have a "materially adverse impact" on its situation or its ability to fulfil its obligations, Telkom has the right to request a review of the structure. SATRA public affairs manager Kotli Molise says SATRA initiated the review, based on the licence.
Molise says the consultant that wins the tender will provide the basis of a consulting document. "The document will then be published and we will invite public input."
The tender-winner will be expected to present a complete report by the end of July. According to the licence, the new rates will become effective from the first of either January or July, whichever comes first, following SATRA`s decision. It can be adjusted on a pro rata basis.
Tenders will be evaluated mainly on the basis of the ability to develop an appropriate model for the determination of fees and charges for a fixed line operator. Three other factors will all carry equal but lesser weight: experience in fixed line price control mechanism, the ability to ensure promotion of universal service and universal access in the design of the pricing, and the use of local historically disadvantaged consultants.
Ray Webber, a member of the South African Telephony Managers Association (SATMA) steering committee, says his organisation will be interested in the outcome of the review. If it is recommended that tariffs be increased, SATMA would object strenuously. "But if Telkom can show that it is under-recovering on certain services, an increase may be justified," he says. "You don`t want them making a loss on services, but then you could argue that they would not [make a loss] were they more effective."
SATMA would like to see cost-related charges, he says, and not cross-subsidisation. The organisation says the issue is complex and it plans to look carefully at any recommendation.
SATMA represents major business telephone users.
Telkom declined to immediately comment on the matter, saying only that it was studying the request for proposal.
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