Lower interconnect rates for Ugandans

Lower interconnect rates for Ugandans

TELECOMS

By BiztechAfrica – April 7, 2012, 8:22 a.m.

By Omondi Julius Odera, Kampala, Uganda

Ugandans will soon enjoy lower telephone rates once the Uganda Communications Commission (UCC) implements the new interconnection rates. The move follows the release of findings of a study commissioned by UCC last year.

The six-month study was commissioned in November 2011 and conducted by Price WaterHouse Coopers (UK). It sets the new interconnection rate at Sh98 compared to the current rate of Sh131.

Interconnection rate is the cost of routing calls from one telecommunications operator to another. It is the commercial and technical framework through which telecommunications operators connect each other’s infrastructure to allow for cross network communication.

The study, entitled “Review of the Interconnection Cost Model for Telephony Services in Uganda” says the figure should be further be reduced to Sh84 in 2013 and then to Sh73 in 2014. Here below are the proposed interconnection rates:

In 2009, after a similar study in 2009, UCC set the current industry termination rate at Sh131 compared to the previous average of Sh181.

PwC lead consultant Alastair McPherson said the reduction in interconnection rates was largely due to availability of telecommunications infrastructure.

“The cost of calls at unit level is declining. There is no longer much need to set up new infrastructure. Once a tower is built, you can carry more new traffic without building a new one,” he said. He also notes that lower rates would spur more usage, and hence operators would not have to undersell or overcharge subscribers.

UCC Executive Director Godfrey Mutabazi said the Communications Act (Cap 106 Laws of Uganda) mandates UCC to regulate interconnection and access systems. The law further mandates that the Commission to issue minimum guidelines within which operators may negotiate interconnection rates. These guidelines may include reference interconnection rates.

Mutabazi also notes: “The Commission places much emphasis on the principle of cost orientation in determination of interconnection rates in the country. These proposed rates were arrived at through a thorough consultative process with the licensed telecom operators and other stakeholders.”

Anyone objecting the proposed rates has a life line as UCC still welcomes further comments on the matter though up to April 16, 2012. Mutabazi adds: “The Commission is also taking comments or request for revision on model parameters from operators on condition that the operators provide detailed evidence and facts to warrant the said review.”

Comparative East and Southern Africa Mobile Termination Rates, Jan 2012