Having announced that Rwanda Utilities Regulatory Agency (RURA) is revising interconnection fees among telecom operators to deepen mobile penetration, Rwandatel and Tigo have come out to support the lowering of the fees.
A senior MTN official originally said the current fee is justified by the levels of investment a telecom company puts in the operation.
However both Tigo and Rwandatel have come out to say that the current fees place a burden on the consumer when making calls across networks.
According to Marcelo Aleman, Tigo’s Chief Executive Officer, the company is supporting a revision of the interconnection fee downwards.
“This will enable us to offer even more attractive and affordable tariffs benefiting our consumers. Lowering interconnection fees creates a fairer competitive environment especially in Rwanda where there is one dominant market player,” Aleman said.
RURA regards the interconnection charges as a bottleneck to the growth of the telecoms industry. The regulating institution’s acting director general Régis Gatarayiha was quoted in the press recently saying that the interconnection charge is seen as, “a bottleneck because operators can’t price lower than interconnection.
Rwandatel’s publicist Cleophas Kabasiita, told Business Times that Rwandatel deems it necessary to review current interconnection fees because of the undue burden on consumers making across-network calls.
“Across networks, calls are inclusive of the rate of Rwf40 per minute which makes it difficult for the consumer to enjoy the current aggressive pricing of minutes in the market,” she said.
“As Rwandatel, we welcome all attempts to lower interconnection charges as this will allow consumers the flexibility to enjoy the current “minute glut” (more minutes available than customers can consume) in the market. We hope that the RURA review will result in a drastic reduction of call termination charges,” she added.
With the current fee it also means that most of the promotions are on net-calls and in case of interconnection promotions the operators cannot go below Rwf40 because that is the interconnection fee.
Regardless of the current Rwf40, the biggest beneficiary is the dominant player, MTN, which has been in existence for over 10 years operating GSM platform. MTN claims over 2 million subscribers.
According to Andrew Rugege, the Chief Operating Officer (COO) of MTN Rwanda, the interconnection fees are based on the investment made and the cost incurred in the transfer of calls from one network to another.
A source in RURA who gave information on condition of anonymity said that Tigo has been at the forefront of the lobbying for the reduction of interconnection fees.
Rwandatel on the other hand has suffered most from the interconnection fees between TIGO and MTN networks.
When the company launched GSM operations in 2008, most of its new callers were compelled to call on the already existing MTN.
A source recently quoted in the press said that currently Rwandatel owes approximately $3.4 million in outstanding interconnection bills to MTN Rwanda. Last year, the two telecom operators were at loggerheads over the unpaid fees with MTN Rwanda threatening to seek redress from courts of law.
However Kabasiita added,”we know of the arrears and we do have a relationship with MTN. However, when we launched our GSM operations all our calls where being made to a telecom company which had existed for 10 years, basically that was a different market then.
The business plans were different that time. If RURA announces a new interconnection structure it would be operational under a new regime so it would have nothing to do with arrears.”
The press also quotes RURA officials as saying that the interconnection fee, “has nothing to with any arrears” that may have been incurred between any of the operators.
RURA has commissioned a study whose findings will be considered before setting up a new pricing. A new interconnection charge may be available in four month’s time, Gatarayiha said.
The move will allow operators to lower prices and deepen mobile penetration, which is around 26 percent of the over 10.1 million-strong Rwandan population.