Termination rates Archives — LIRNEasia

OECD has done a good analysis of the wrong-headedness of raising international voice call termination rates, and indeed of having international termination rates. Outside the OECD countries, the price has been dropping too, accompanied by a huge increase in traffic. Calls from the United States to India increased eight fold over 2003-2011 for example. But not everybody has benefited. Despite a massive increase in the number of telephones in Africa, international calls to that continent from the United States remained stagnant during this same period.
Sri Lanka Telecom Growth 1992-2010 The validity of the proposition that extending the existing accounting-rate regime for international voice to Internet traffic in order to provide additional revenues to increase the build-out of broadband infrastructure in developing countries rests on the claim that the accounting-rate regime contributed to the extraordinary increase in voice connectivity over the past years by providing funds for building out the infrastructure. As can be seen from the Figure above, the rapid growth that led to the elimination of the persistent waiting lists in Sri Lanka commenced in 2002-03. It was in this same period that the government liberalized the international telecommunications market, issuing multiple external gateway licenses. The inflow of revenues from the accounting-rate regime fell sharply. Yet connectivity exploded.
Usually politicians like low prices. But the Kenyan President dislikes them so much that he could not wait for the Task Force established by the Prime Minister to examine a decision by the “independent” regulator to lower mobile termination rates, an esoteric wholesale price determined by technical methods. I have not looked at the Kenyan legislation in detail, but I’d be surprised if the legislation permits review by a Prime Minister’s Task Force, let alone the President acting after a meeting with a few of the stakeholders behind closed doors. With its “independence” in tatters, the regulatory agency did the one thing it can do to recover: it ratified the President’s unlawful act. A mass resignation would have been the more appropriate response, methinks.
The UK regulator, Ofcom, has proposed cuts in interconnection fees (also known as mobile termination rates), the wholesale charges that operators make to connect calls to each others’ networks. It has unveiled plans to cut the rate in stages from 4.3 pence ($0.065) per minute to 0.005 pence per minute by 2015.
Namibian Communications Commission (NCC) has ordered the convergence of interconnection rates between operators (Cell One, Telecom Namibia and MTC) through the introduction of a standard charges structure; rates will be reduced bi-annually over a two-year period. Symmetry between mobile and fixed termination rates supports fixed-mobile convergence and removes distortions caused by previously higher mobile-to-mobile rates. A benchmarking study conducted by Research ICT Africa, LIRNEasia’s sister organization, on behalf of the NCC indicates that the cost of termination of an efficient operator in Namibia is NAD 0.24 (USD 0.03).