African providers under pressure on interconnection charges

Zambia, South Africa, Zimbabwe, Nigeria and Kenya are putting pressure on mobile service providers to cut high interconnection charges in order to make communication between networks cheaper.

The five eastern, western and southern Africa countries want services providers -- including Zain, Safaricom, Vodacom, MTN, Cell C and Telkom -- to reduce interconnection charges being slapped on subscribers. The move is being made to reduce the cost of communications in the region.

The efforts follow complaints by customers that mobile service providers are exorbitantly charging interconnection fees in order to discourage customers from calling other networks.

The interconnection charges make calls to a different network more expensive than within the same network. The term interconnection refers to the commercial arrangements under which service providers connect their equipment, networks and service to each other in order to allow their customers to access the services and networks of other service providers.

Telecom companies in the region charge on a "calling party pays" basis.

With low fixed-line penetration in many countries in Africa, the mobile phone has become an easy way to communicate, but customers are complaining they are paying too much for calls.

The Zambian government has come up with a law that punishes service providers whose interconnection charges have not been approved by the regulator, while the Zimbabwean government has so far managed to bring down the fees. The new Zambian law gives powers to the Communications Authority of Zambia to regulate tariffs and agreements on interconnection fees in order to protect customers from exploitation by service providers.

"The law will enhance service delivery at affordable prices to the majority of Zambians and enable license holders to expand their services," said Communication Authority of Zambia acting CEO Richard Mwanza at a recent media briefing in Lusaka, Zambia.

Generally, subscribers face a lack of consistency in pricing as the interconnection rates are determined by service providers, all of which charge different rates

The argument by African governments is that unregulated interconnection fees stifle competition, kill innovation, hold back penetration and prevent additional investment in the sector -- and users get cheated as a result.

The South African parliament wants the interconnection charges to be slashed to US$0.60 per minute by Nov. 1 this year and by a further $0.15 next year.

The Kenyan government, meanwhile, said it has already initiated a process of cutting interconnection costs.

The South African government's communications committee said high interconnection fees were the consequence of apparent historical collusion between mobile operators in the country, which they claim placed profits above customers. Further, the committee accused the Independent Communications Commission of South Africa (ICASA), the country's telecom sector regulator, of ineffectively regulating the interconnection rates.

The move toward lower rates in many African countries has been gaining speed over the past few months. The Kenyan government has directed the Communications Commission to substantially lower the interconnection charges.