Business

Telecom regulator going after fixed line rates

Friday, May 30, 2014    

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THE Office of Utilities Regulation (OUR) is going after fixed line telephone call rates following the two-thirds slash in mobile rates last year.

The telecommunications regulator will make a determination on landline rates within two years following the pending appointment of a consultant.

"A decision can be expected within 20 months of the commencement of the project. This should be by April 2016," stated Elizabeth Bennett Marsh public education specialist at OUR in mailed response to Observer queries.

The OUR will choose a consultant from 10 applicants in order to determine the cost of providing the service.

"The OUR expects that a consultant will be chosen by June 26, 2014," stated the OUR.

Major landline providers include LIME, FLOW and Digicel.

The determination would set the termination rate or the price that these players charge each other to transfer calls which in turn would influence the consumer price.

For instance, the largest landline provider LIME offers prepaid and postpaid fixed line per minute rates at $2.40 to other landline providers and $2.85 to call mobile providers (including LIME or Digicel).

However, LIME landline calls to another LIME landline is $0.99 a minute, according to LIME's residential rates online.

Fixed line revenues across the telecommunications companies continue to decline amidst rising mobile revenues.

The OUR indicated that despite the reduced role of landlines it still has a duty to determine cost pricing.

"Under the Telecommunication Act, the OUR has a responsibility to ensure that the price levied for interconnection by dominant carriers, with the exception of interconnection charges for wholesale termination services, is cost reflective and between the total long run incremental cost (LRIC) of providing the service and the stand alone cost of providing the service," said the OUR in a mailed response to Observer queries. "Interconnection charges for wholesale termination services charges should be calculated on the basis of a forward looking long run incremental cost, whereby the relevant increment is the wholesale termination service and which includes only avoidable costs.

"In essence, the OUR has to ensure that prices are cost-oriented. Having cost- oriented interconnection rates facilitates a level playing field thus aiding the development of a competitive environment."

The OUR defended plans for a LRIC study on fixed line despite the reduced importance of fixed telephony. LIME the largest landline provider made $6.4 billion of its $18 billion in annual revenues ending March 2014 from landline business or 12 per cent less year on year.

Mobile termination rates dropped from $9 to $5 in mid-2012 as an interim rate until the OUR finalised its LRIC study. Then in July 2013, the OUR cut the termination rate from $5 to $1.10.

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