Telephone call rates to drop

By David Mugabe

THE cost of routing calls from one telecom operator to another should be sh98, from the current sh131, a PriceWaterHouse Coopers (PWC) UK study has recommended.

The implication of a lower interconnect fee announced Friday is that rival telecoms firms can now negotiate the cost of customers calling from one network to another at a lower or reduced rate closer to the sh98, which ultimately means lower call rates for subscribers.

If rival firms do not agree, then the Uganda Communications Commission’s sh98 default rate, which is mandatory from August 1, 2012, applies.

The recommendation follows a six-month study commissioned by the UCC that started in November 2011.

“It has been a contentious issue. Most operators complained that the sh131 was too high,” said Godfrey Mutabazi, UCC’s executive director.

The interconnect fee is the charge paid by one operator to another for routing their calls through the other’s network.

Operators have up to April 16, 2012 to respond to the consultant’s recommendations.

“We don’t promise that we will adjust this figure, but the Act will help us to have the mandate to enforce these rates,” Mutabazi said.

The Uganda Communications Regulatory Authority bill, currently in Parliament, will give power to the merged UCC and Broadcasting Council to set a default interconnect rate.

On Thursday, UCC urged operators to negotiate lower interconnect rates.

Alastair Macpherson, a PWC partner, said lower rates would spur more usage and operators would not have to undersell or overcharge subscribers.

He said if it were not for the macro-economic environment, mainly the high inflation, the interconnect would have been sh90.

For the next two years, the rate will be adjusted downwards, depending on themacro-economic environment.

It is expected that the rate will drop from sh98 to sh84 in 2013 and then to sh73 in 2014.

Experts said with the growing volumes, companies are able to operate on larger economies of scale, thus lowering their operational costs.

“The cost of calls at unit level is declining. Once a tower is built, you can carry more new traffic without building a new one,” said Macpherson.