South Africa’s Smaller Telecoms could be at Risk from Larger Companies

Sourced from Huge Networks

Call blocking by South Africa’s biggest network operators is negatively impacting many local telecoms customers who are finding they cannot always successfully complete phone calls.

This is according to Anthony Engelbrecht, Technical Director at the independent telco, Huge Networks. He explains that some clients of SA’s many Voice over Internet Protocol (VoIP) telecoms networks such as Huge Networks, Connection Telecoms and dozens of others are increasingly finding that calls they place are not reaching the intended telecoms user.

VoIP operators are typically smaller telcos that came into being as the country’s telecoms landscape was liberalised in the 1990s. Their emergence has provided the consumer with a competitive mix of voice and data offerings that have been a persistent thorn in the side of the big operators.

“The incumbent telecom operators seem to be pulling out all the stops to fight back against consumer choice. On an operational level, this is leading to billing disputes where excellent and mutually-beneficial relationships have existed in the recent past,” says Engelbrecht.

The current issue harkens back to a decision made by the Independent Communications Authority of SA (ICASA) and which is reflected in the Authority’s “Call Termination Amendment Regulations 2017”. Here, for the first time, ICASA excluded from the scope of the country’s call termination regulatory framework calls made outside of South Africa.

This decision has seen rates charged by some incumbent operators for terminating internationally-originated voice calls escalating to as high as $0.18 (R3.30) per minute, excluding VAT, against the then regulated tariff of only $0.007 (R0.12). What is being charged bears no relation to the underlying cost of delivering the service.

Today’s telecom technology, with its ability to direct calls around the globe in an attempt to find the most affordable route, can make determining the true origin and eventual destination of a call somewhat complicated. However, additional complexity is no excuse to add an enormous per minute international interconnection fee onto a call placed by a local VoIP customer to an SA mobile network user next door simply because the call used the Internet for part of its journey to take the least expensive route to the intended recipient, all at no additional cost to the incumbent SA network.

“Enormous profits can be made when an operator knowingly or unknowingly bills a locally-originating call at the inflated international interconnection rate simply because it has some hallmarks of being placed or journeying outside our borders,” Engelbrecht says.

According to Rob Lith of Connection Telecom, “Call blocking related to international call termination rate disputes involves potentially hundreds or thousands of blocked numbers impacting millions of telecoms users. The timing is especially bad. First, load-shedding prevents South Africa’s underperforming economy from gathering steam and now the country’s big telecoms networks are thwarting economic activity by preventing people from reaching each other.”

SA’s VoIP operators are in full agreement of the need to present accurate originating call details. However, there are innumerable instances where international calls are received on a local PBX system and then immediately diverted to an SA mobile phone. The relevant regulations require that the original international Caller Line Identity (CLI) details are preserved as the call is routed from overseas to the local mobile number. This means the forwarded call is charged at international termination rates by the relevant SA mobile operator. Clearly, something needs to be done to correct an absurd situation.

In addition, arbitrage opportunities mean the incumbent operators have adopted creative approaches towards the determination of internationally-originating voice traffic. They know that much traffic which, on the surface, appears to be international traffic is, in fact, local. As telecom operators, they know that switching equipment could be located outside of SA, a foreign network subscriber could be roaming on a local network, and a call with a foreign caller identity could actually have been diverted locally.

Some incumbent operators, at their sole discretion, are routinely and unilaterally determining enormous volumes of historical calls to be internationally-originating and attempt to back-bill smaller independent telcos for many months worth of interconnection fees at inflated rates.

It is not unusual for an incumbent network operator with tens of millions of customers to threaten a small VoIP operator with tens of thousands of users with summary termination of service if they do not pay a revised interconnection fee bill presented six months after the fact at the incumbent firm’s new and self-determined ‘international’ interconnection rate.

Billing in this fashion with enormous invoices presented months down the line means some smaller VoIP operators are finding it difficult to determine if they are indeed profitable from one month to the next.

“Imagine thinking you’ve had a good few months based on your historical cash flow and then your financials are turned upside down when one of the big mobile networks tells you they’ve revised their billing and you actually owe them 20 times what was originally invoiced,” says Lith.

Aside from billing disputes and threats of suspension that are threatening the overall health and sustainability of South Africa’s key telecoms sector, the massive disparity between termination rates applicable to locally-originally calls and rates applicable to internationally-originating calls, as regulated by ICASA’s ill-advised Call Termination Amendment Regulations 2018, has allegedly led to widespread fraud and unlawful practices as telecoms network operators seek arbitrage opportunities.

The regulation of internationally-originating calls by ICASA would hopefully introduce a measure of realism into the determination of international interconnection fees while also helping to fairly ascertain what exactly constitutes an internationally-originating phone call.

Finally, “the fact that many consumers are not being able to make or receive calls due to interconnection disputes outside of their control is an untenable situation. The SA telecoms sector needs urgent agreement and a common position on what constitutes an international call,” concludes Lith.

Edited by Luis Monzon

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