New Uganda interconnection rates could open market

The Uganda Communications Commission (UCC) is set to regulate the interconnection fees that players in the mobile telecommunications sector pay when they carry traffic from other operators.

A fixed interconnection rate is international practice, which the Ugandan market has yet to adopt.

Today, every one of the five players in the Uganda market charges a high interconnection fee to maximize profit.

Interconnection is a salient feature in the price of a call going across another network. When the termination fees are finally fixed, at the start of July, experts on the sector expect a drop in the call costs for the user.

Interconnection refers to the commercial arrangements under which service providers connect their equipment, networks and services to each other in order to allow their customers to access services and networks of other providers.

Patrick Masambu, the executive director UCC, said sound interconnection conditions and pricing are a prerequisite for a healthy competitive market.

"In order to effectively enter new markets and deliver high quality consumer driven services, network operators must be able to interconnect with incumbent networks at competitive and reasonable rates and without onerous regulatory burdens by the regulator," Masambu said.

The move to regulate interconnection charges has been informed by a study of interconnection, retail costs and pricing that was undertaken by PricewaterhouseCoopers London on behalf of the UCC. However, before UCC implements the new changes, it has to amend its regulatory functions.

"We are making changes to the regulation as a result of this study. On July 1, we should issue wholesale rates and address the price control issue and that is when we will announce the interconnection rates," Masambu said.

New players coming into the Uganda market have in the past been critical of the existing policy of leaving interconnection to the players. The argument is that if interconnectivity is not regulated, it stifles competition, kills innovation, reduces penetration and users get cheated.

This though does not mean that the sector players are not innovative or that the market is characterized by poor quality of service and prohibitive prices. Existing regulations and policies have led to investment in the sector, which has 62 licensed players, more than 9 million mobile users, 168,481 fixed lines and an estimated 2.5 million Internet users.

In mobile telephony, interconnection aims to provide users with the widest possible choices of quality service at the most competitive prices and gives policy makers and regulators opportunities to foster and enhance universal service/access initiatives.

It also requires network operators and service providers to perform competitive and complementary activities in an orderly manner and with due regard to public interest.

Zul Javaid, the chief executive Warid Telecom, which is one of the new operators in the sector, said the industry needed regulation to ensure fairness among the players.

"If UCC implements these recommendations, it will lead to a more competitive environment and a more attractive investment environment," Javaid said. "The man in the street will benefit from cheaper pricing and from a business perspective it will create consistency."

The study also proposes the development of regional interconnection points to create a transit market. Today, all operators interconnect in the capital, Kampala. According to the study, the creation of a transit service market would open the door for regional players to enter parts of the country without needing their own transmission links between the capital city and the region where they operate.