Monday June 13 2011

Phone calls to cost more after ‘order’

By John Njoroge

The Uganda Communications Commission (UCC) has issued new directives to telecom operators, barring them from lowering call rates beyond a certain minimum.

In the directives, issued last Friday, telecom operators will not be allowed to charge on-net telephone calling rates lower than 70 per cent of inter-connection rates.

Interconnection rates, which is the money that a telecom company pays to others when callers make cross-network calls, currently stand at Shs131 per minute, the highest in the region.

Promotions limited
With the new arrangement, no telecom operator will be allowed to offer on-net calls below Shs91 per minute, which translates into not less than Shs2 per second. Currently, some telecom companies offer rates cheaper than Shs2 per second, largely on promotion basis.

The new guidelines also stipulate that a promotional tariff shall not be in the market for more than 90 consecutive calendar days and may only be re-introduced after another 90 calendar days from the end of the previous promotional tariff offer.

Failure to comply with the regulations, the UCC could, among other measures, levy penalties of up to 10 per cent of annual turnover of any licensed provider.

UCC said the decision was reached following a consultation process involving relevant stakeholders from the communications industry in the country. The guidelines will be effective as soon as they are gazetted.

“The guidelines, which takes cognizance of recent trends in the voice market, is aimed at promoting fair, efficient and competitive market conduct in the telecommunications sector,” UCC announced.
Although the announcement states that the guidelines may be amended at anytime deemed necessary by the commission or at the request of the industry players, the news has been received with apprehension in some sectors.

Yesterday, some operators told this newspaper that the decision and timing of the announcement was suspect. Others said the new regulations are an affront on legitimate business competition.
Airtel Uganda’s Public Relations Officer, Mr Joseph Kanyamunyu, said his company was studying the new guidelines.

He added: “Our view is that the telecom industry in Uganda has evolved greatly, is very competitive and market forces should be allowed to determine prices. I believe UCC will be doing the customer a disservice to dictate market prices at a time when affordability of telecommunications service is key.”

Another operator speaking on condition of anonymity said, “Why is UCC worried about operators offering lower calls rates to subscribers? In fact, they should be encouraging it for public good.”

City lawyer Fred Muwema said: “Uganda moved away from price fixing and price regulation. This makes this move unprecedented.” UCC’s Executive Director Godfrey Mutabazi could not be reached for comment by press time yesterday as he was reportedly out of the country on official duty.

When this newspaper contacted him last week when the regulations were still in a draft state, Mr Mutabazi said: “We are simply harmonising tariffs in the market.”

The new law will also require telecom operators to notify UCC in an application five days before introducing a new calling rate. UCC says it will then examine the contents of the application, taking into account current calling rates.

A ‘No Objection’ decree will then be provided four days after such an application but only if the application conforms to the new regulations.

“Thereafter, all licensed providers shall be required to ensure that their tariffs remain transparently available to the public and should be advertised in the local print media at least once every six months,” the new guidelines state.