Vodacom, MTN rebuke CUASA

Johannesburg, 22 Feb 2005

Vodacom and MTN have responded to criticism levelled last week at the three cellular operators by the Communications Users Association of SA (CUASA).

CUASA spokesman Ray Webber claimed last week that it is now more expensive to call local cellular phones than some international destinations.

Webber also said SMSes are "a huge rip-off, costing the cellular operators virtually nothing to carry, while the sender pays a fortune to use the service".

Other questions raised by CUASA include why the interconnect tariffs between the various operators in this country are so secret and why the interconnect tariffs are different when calling from a Telkom line to a cellphone, than when calling in the opposite direction.

A Vodacom spokesman has responded by saying interconnection tariffs are not a secret, since every interconnection agreement has to be lodged and approved by the Independent Communications Authority of SA (ICASA).

"Regarding the differing costs, it must be noted that the question deals with two distinctly different services, namely the completion or termination of a Telkom/fixed-line call on a mobile cellular network versus the completion or termination of a cellphone call on fixed/land-line network," says the spokesman.

"As with any commercial business, the tariff for providing goods and services should at least cover the cost of providing the relevant goods or services, and it is a known fact that the cost of providing a mobile service is significantly more than the cost of providing a fixed-line service."

She says there are also other considerations, such as the interrelationship between the different services offered by a specific operator and subscriber sensitivity towards tariffs, which play a key role in determining the right price for a service.

International cheaper than local?

According to Vodacom, CUASA`s statement that "it is less expensive to call from a Telkom line to a landline number in countries such as Australia, Canada, France, Greece, Ireland, Sweden, Switzerland, UK and the US, or a mobile number in Canada, Liechtenstein, Luxembourg, San Marino and the US, than it is to call an SA cellphone number from a Telkom line" is also flawed.

"Using Telkom`s tariffs for calls to international landline destinations as a reference framework for commenting on local fixed to mobile interconnection tariffs are inappropriate due to the differential interconnection tariffs that apply to fixed versus mobile cellular interconnection services.

"The examples of destinations (Canada, Liechtenstein, Luxembourg, San Marino and the US) in respect of which a fixed to mobile international call would cost less than a national fixed to mobile call, is not representative of the total sum of foreign destinations, as it is less than 5% of the total population of possible mobile destinations."

She says the examples are also not appropriate because these countries do not have the same economic, demographic and regulatory conditions as SA and these differences would impact directly on the cost of providing the relevant service in the respective countries, therefore such a comparison is of no value.

"Since 'the effect on the consumer`s pocket` is what CUASA is really interested in, it is also worth noting that in their comparison only the peak tariff that applies to the relevant services are being compared," says the spokesman.

"However, none of the tariffs for calls to international destinations, regardless of whether the call is made to a landline or cellphone, are lower than the off-peak tariff for a call from a Telkom line to a local cellphone."

"By comparing tariffs only, and in this case peak tariffs, one cannot meaningful comment on the effect on the consumer`s pocket. In order to more accurately assess the effect, the peak and off-peak traffic blend must be considered."

MTN`s response

MTN responded to last week`s criticism by claiming it has tried to keep its increases as low as possible.

According to Mandisa Korri, senior manager of public relations and internal communications at MTN, tariffs in the South African telecommunications industry are subject to approval by ICASA.

"At MTN, we have tried to keep tariff increases as low as possible, below CPI, and an example of this is in 2003, when the CPI rate for June 2002 to April 2003 was 7.32%. MTN, on average adjusted contract subscriptions by 5.84% and its prepaid increased by 1.53%," says Korri.

"In 2004 the average increase for a contract subscriber was 2.88% and 0.5% for prepaid, while the CPI for the same period was 4.4%."

Korri also says MTN encourages its customers to raise any concerns regarding products and services with MTN directly or by calling its customer services operation.

Cell C had still not responded to ITWeb`s requests for comment by the time of publication.