Interconnect prices are last barrier to lower telecoms costs in SA

Wholesale call termination prices are the last barrier to lower telecommunications costs for South African businesses and consumers, according to VoxTelecom MD Jaco Voigt.

VoxTelecom, a member of the AltX-listed DataPro Group, is one of the country's leading voice over IP (VOIP) service providers.

"Our value offering to our customers is based on the rates we're charged by Telkom and the big cellular operators for terminating calls on their networks," says Voigt.

"As ICASA has pointed out in their discussion document on call termination prices released earlier this month, all the major players have significant market power and can essentially charge what they like. Smaller competitors like VoxTelecom are effectively faced with a 'take it or leave it' price, so our customers are definitely paying more than they should be."

Voigt says although Telkom comes in for the lion's share of criticism over telecommunications costs, "the cellular operators have been getting away with murder. They're charging their customers as much to dial numbers on our VOIP network as they're charging for calls to rival mobile networks, when they're paying us much less. In the absence of firm guidelines from the regulator up to now, it's been a real Wild West situation."

Voigt says there is little agreement in the market about what constitutes fair interconnect pricing. "A few VANS operators proposed extremely high interconnect rates to the mobile operators, which didn't help. Ideally there would have been firm guidelines already in place in February 2005 when VOIP was legalised, because it will be harder now to change a situation that has already been established at prices far higher than they should be.

"Nevertheless, ICASA is the only player who can possibly intervene to change things and their move to impose some ground rules in the market is very welcome," says Voigt.

"Retail telecommunication prices are being driven by interconnect rates at the moment, and they won't come down until there is a clear mechanism for setting fair prices."

Fair prices are not necessarily rock-bottom prices, notes Voigt. "We all acknowledge that the networks need to invest to maintain and grow their infrastructure," he says. "It's not in anyone's best interests to force interconnect rates below the point where it makes sense to continue investing. But at the moment prices are definitely far too high."