ICASA probes mobile market failure

By Damaria Senne, ITWeb senior journalist

Johannesburg, 18 Oct 2006

The Independent Communications Authority of SA (ICASA) has finalised the findings of its investigation to determine whether local mobile prices are too high.

The investigation, which included written and oral presentation by stakeholders, aimed to establish whether the high costs of mobile services are justifiable and if there is a need for more rigorous regulatory oversight of mobile tariffs.

According ICASA manager Nomvuyiso Batyi, the findings will be published in the Government Gazette by the end of October after council approval.

Intervention measures

One of the key issues in the report is the recommendation that ICASA conducts a study of the mobile phone market to find areas of market failure before deciding on intervention measures, Batyi says.

"We need to find the relevant areas where the pricing needs intervention from ICASA," she says.

This recommendation fits in with calls by Vodacom and MTN. In their submissions, the two largest mobile operators argued that mobile prices were reasonably priced.

They suggested ICASA conduct an economic analysis of the mobile market and identify specific areas where competition is insufficient before prescribing fees and charges which may be levied by licensees.

However, it was clear they expected such an investigation to support their argument that mobile prices were not too high.

"The market is operating efficiently and is generally in a healthy state," Vodacom said.

Priority areas

Interconnection charges and call termination rates are areas that will be given priority in the market study, says Batyi.

She adds that while retail prices will also receive the regulator`s attention, benefits from interventions in interconnection and call termination charges will also have a beneficial impact on consumer prices.

ICASA will publish a discussion document, which aims to define markets, by 15 December, she says. A second document examining wholesale and fixed-line call termination rates will also be published around that time period.