Cell C wants room to manoeuvre

By Damaria Senne, ITWeb senior journalist

Johannesburg, 07 Feb 2007

Cell C has welcomed the Independent Communication Authority of SA's (ICASA's) inquiry into interconnection charges.

The third cellular operator says it supports the regulator's efforts to provide a cost-based rate structure in determining interconnection costs for licensees with significant market power.

"For Cell C, the key element of the inquiry will be to ascertain whether there is competition in the broader market (fixed and mobile)," says Vanashree Pillay, Cell C's executive head for corporate communications.

Should this not be the case, ICASA must then identify the players in the telecommunications industry who have significant market power, she says.

Cell C expects the cost of interconnection with the dominant players, whether mobile or fixed-line, to be reduced following the investigation, Pillay explains.

"This would give Cell C the necessary room, as the late entrant, to compete on an effective basis, something which it was denied on licensing."

Wholesale price control

Price controls on dominant market players to create a pro-competition environment was one of the key issues ICASA identified in its announcement to investigate interconnection charges.

The regulator also places an obligation on Telkom, Vodacom and MTN to maintain separate accounting books, which are to be submitted to the regulator for the purpose of ensuring interconnection charges are in line with the cost of providing services.

The terms and conditions in the operators' licences state they have to keep regulatory financial reports and submit them six months after the end of the financial year, says ICASA spokesperson Sekgoela Sekgoela.

For Cell C, Neotel and other network operators that could be launched in the future, ICASA only imposes the obligation to interconnect upon reasonable requests by another licensee. The terms of interconnection include calls not to discriminate between the buyers of call termination services, and price transparency.

Cautionary tale

While advocating an enabling interconnection regime, Jaco Voigt, MD of VoxTelecom, offers a word of caution.

He notes that German authorities enforced widespread interconnection with the goal of ensuring all services were as cheap as possible. As a result, nobody was prepared to invest in new infrastructure - and Germany now has a technology gap compared to its competitors, he says.

"While ICASA needs to ensure nobody is unreasonably denied interconnection, forcing free-for-all access sounds great in the short-term, but if the networks aren't compensated realistically, there's no reason for them to keep investing to give others a free ride," he says.

Stakeholders are expected to comment on ICASA's proposed remedies to create a pro-competition environment in wholesale markets by 31 March.