Business Times

Vasu takes on telecom firms over phone tarrifs

Parliamentarian Vasudeva Nanayakkara is calling for a public hearing to discuss telecom tariffs after revelations made by a prominent mobile telephone operator at a meeting held in the Treasury on call charges.

In a media statement, Mr. Nanayakkara said the public hearing, which the Telecommunications Act has provisions for, is to protect consumers from black marketers who anticipate windfall profits. According to him, the mobile telephone operator revealed the cost per minute of a call is a few cents to the service provider. It is not a surprise to those who are aware that a unit of operating cost to the service provider decreases annually at a rate more than 15%, the statement quoted Mr Nanayakkara as saying.

In countries where there is a well regulated market, Mr. Nanayakkara said prices have dropped and the usage of the telephone has increased as per statistics published by those regulators. Those knowledgeable in telecoms claim that it is quite the reverse in Sri Lanka. The rising costs of telephone usage have also become a burden to the government and the number of circulars issued from time to time to curb its usage is ample proof of the Sri Lanka scenario.

At the meeting held at the Treasury, some companies have coaxed those in authority to raise floor prices for telephone charges throwing rules of competition overboard. In order to fortify their position they also wanted to fix charges payable for call termination in the network of competing companies, Mr. Nanayakkara stated. However, a government company confessed at the meeting that the cost of a call is only 20 cents. This company also exposed the infirmities of costing methodology that results in high prices and suggested to use a methodology based on international practice that gives reasonable values.

Mr. Nanayakkara added that those knowledgeable in the mean duration of a call have shown that based on the aforementioned confession, the cost per minute will be less than 10 cents. Yet it is reported that the representatives of the Telecommunications Reulatory Commission (TRC) have, as in the past promptly agreed at the meeting with such incorrect methods, to raise tariffs without any reason. Some companies seem to justify this stance of the regulator by showing that they are running at a loss.
Mr. Nanayakkara said the issue has been communicated to the TRC Director General who has referred the matter to an officer.

Mobile interconnection charges unfair
Issues surrounding the mobile interconnecting rate addressed in a Business Times article on May 16 has served to highlight several issues that remain unaddressed which are crucial to the public interest and service affordability, according to a telecommunications expert.

In a letter to the Business Times, he said these issues are contrary to the fundamental regulatory norms of transparency and accountability which are the pre-requisites for the protection of the public and the national interest which is also a concern of the Mahinda Chintana Idiri Gamana.

The expert said that the cost of a call is 20 cents and the decision to raise the floor price not withstanding, declining operating costs raises a lot of questions. He said he hopes the new Director General of the Telecommunications Regulatory Commission (TRC) will address these issues to foster a win-win scenario and enable the realization of Mahinda Chintana for Sri Lanka to be the economic hub of the region.

The expert says the disclosure made at a meeting by a prominent mobile operator that the cost of a call is 20 cents has remained unmentioned by the TRC. Based on that disclosure and the average duration of a call, it is now apparent that the cost per minute is around 8 cents whereas the actual call charges depending on rental and onetime payment is around Rs.1 to Rs.2 for an own network call and around Rs.2.50 to Rs.5 for an off network call. Has the impact of the call charge reduction offered by this mobile operator to boost usage and drive down cost been noted by the TRC? Has the TRC estimated the unit of operating cost of mobile services which has been on the decline for over two decades at a pace of around 20% per annum? If so, has it been taken into consideration in the determination of call charges, he asked.

The expert is also asking if the TRC accounted for one time payments and rental charges in the determination of floor price and usage charges? If so, what is the model? What is the methodology used to arrive at the interconnection rate of 50 cents refered to in the recent Business Times article to compensate for the use of the receiving party network infrastructure?

Considering the national tariff structure and that charges are cost based, are own network and off network call charges consistent with the interconnection rate of 50 cents? If not, should the charges be around Rs.1?

Finally, the expert also questioned if the TRC has verified whether the need to raise the floor price is consistent with the price cap clause prescribing the upper limit of permissible tariff hike, stipulated in the operator licence?

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