Study questions South African mobile call costs

25.07.2005
Von Samantha Perry

ICASA last week released its discussion document on South African mobile prices. The regulator says that it has received numerous complaints, amongst them one from the Communications Users Association of SA (Cuasa) on May 3, about the high cost of mobile calls in SA.

As a result of the Cuasa complaint, it decided to conduct an enquiry into mobile prices in a bid to determine if they are indeed too high, and whether or not a need exists for more rigorous regulatory intervention.

Icasa says that the introduction of Cell C into the market four years ago was expected to drive prices down, but that this has not happened.

Internationally, voice costs are being driven down by competitive pressure. Locally, says Icasa, competition, to date, has only driven down the cost of international calls.

The huge capital outlays needed to deploy network infrastructure notwithstanding, the need for ongoing network maintenance on the part of the mobile operators does not, Icasa states: ?provide the operators with leeway to levy astronomically high service tariffs against users or depart significantly from their cost base when providing services.?

Given that voice services are indispensable to customers, and that demand is inelastic as a result, Icasa notes that it may be argued that high services take-up, coupled with little downward trend in pricing, warrants regulatory intervention.

Interconnection rationale unclear

Currently, Icasa says, prepaid calls from a mobile to a fixed-line phone are cheaper than mobile to mobile calls. By contract, it says, fixed-line to fixed-line calls are cheaper than fixed-line to mobile. As the wireless networks are almost identical, Icasa says it is conceivable that calls amongst these networks should be cheaper.

It says that while interconnection fees are left to the discretion of the players, and that it cannot intervene, beyond ensuring the regulations are adhered to, it is its opinion that the interconnection charges between operators remain unclear, as the operators cannot explain the rationale behind them.

Comparing SA pricing with international pricing in countries economically similar to SA, the regulator says that overall, South Africans pay over a Rand more across the board than in other countries. These charges are aggravated by initial SIM card payments, it adds.

SA prepaid rates are also on average double the price of contract rates, while there is little or no difference in most other countries. Icasa adds that, while SMS is perceived to be cheap, pricing is still high when compared internationally.

Icasa is inviting all interested parties to respond to the discussion document, in writing, by August 25. The document is available on http://www.icasa.org.za.