UCC cuts interconnection fees, seeks to lower cost of calling

Monday July 1 2019

Determinant. Interconnection charges are key in

Determinant. Interconnection charges are key in determining the cost of calls in the telecommunication sector. PHOTO BY EDGAR R BATTE  

By Christine Kasemiire

Kampala. Telecommunications regulator, Uganda Communications Commission (UCC), has cut the price of call interconnection fees from Shs65 to Shs55.

Interconnection fees are charges between telecoms for hosting a call from another telecom network.
During the 2019 Uganda Telecom Forum held in Kampala last week, Ms Juliana Mweheire, the UCC director industry affairs and content development, said interconnection rate for SMS and phone calls will be reduced to cut back on the cost of making phone calls.

“The mobile termination rate will be revised from Shs65 to Shs55 per minute for voice while SMS termination rate will be revised from Shs7 to Shs5,” she said, noting the changes would be effected beginning today (July 1).

The mobile termination rate is otherwise known as the charge one telcom charges another for terminating calls on its network.
In essence, this is the cost incurred when calling across networks for instance, MTN to Airtel.
Mr Ibrahim Bbosa, the UCC spokesperson, said at the weekend that they cap interconnection rates /termination fees to bring down the cost of calling.

“When you regulate the wholesale price, you expect that the savings that operators make should be passed on by giving lower tariffs. But sometimes it is not the case,” he said, adding that the cost is expected to reduce further to Shs45 per minute next year.
While the cost to call across networks has been reduced, it is not a guarantee that telecoms will reduce the amount charged when calling a different network.

Mr Bbosa said some telecoms could decide to keep the current charges while others might respond to industry dynamics.
Uganda’s telecom sector is largely controlled by MTN and Airtel, which share between themselves at least 90 per cent of the 23m subscribers.

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The regulation of interconnection fees gives new entrants momentum to grow their capacity into competitive companies as well as limiting exploitation by big players.
According to available data, MTN charges Shs4 per second on and off-net calls while it charges Shs60 and Shs90 for onnet and offnet SMSs, respectively.

Africell’s onnet calls cost Shs4 per second while local calls to other networks cost Shs5 per second.
SMS from Africell to Africell cost Shs50 while offnet SMSs cost Shs90. Airtel charges Shs4 per second for both onnet and offnet calls within East Africa and Shs180 per minute.

Mobile termination rate studies costly

Innovation and competition. According to UCC, while capping the interconnection rates is not a guarantee to reduce call tariffs, it creates an enabling environment for innovation and competition.
Costs incurred in transmitting a phone call both on and across networks are both complicated and variant depending on the operator.

However, because of the expensive nature of costs incurred in undertaking studies about the cost incurred in making phone calls, while UCC is supposed to carry out studies every after three years, the commission lacks regularity over the years.

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While the cost to call across networks has reduced, it is not a guarantee that telecoms will reduce the amount charged when calling different networks. UCC says some telecoms could decide to keep the current or even raise charges while others might respond to current industry dynamics.

editorial@ug.nationmedia.com

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