NEWS | Wednesday, 09 July 2008

GO irked by MCA decision to reduce rates

Charlot Zahra

After the Malta Communications Authority (MCA) decided to reduce the fixed line telephony interconnection rates by an average of EUR 7c3 or 9.08 per cent as from July 1, a GO spokesperson speaking to Business Today did not mince his words when asked to provide his reactions.
“The MCA decision is part of an exercise it carries out on a yearly basis to review GO’s interconnection rates,” he said.
“This exercise is based on a theoretical bottom-up costing approach, where the MCA calculates what it believes would be the rates of an optimally efficient operator on the market.
“It makes assumptions as to what it thinks would be the most efficient network configuration, manpower and operational setup and based on these, it derives the rates.
“In reality, it is almost impossible to have such an operator in practice. The interconnection rates mandated by the MCA are thus routinely below the cost of an operator like GO to provide interconnection services,” the spokesperson added. Asked whether the telecoms company was consulted before the MCA took this decision, the GO spokesperson was equally critical of the MCA’s actions.
“The MCA published a public consultation document on its website before it issued its decision. Contrary to what happened in previous years, the MCA did not carry out a one-to-one consultation before publishing the public consultation document.”
“Some discussions were held within the framework of a consultation on leaded lines, but GO had limited visibility of the calculations and assumptions made by the MCA,” he complained.
On what impact GO expects on competition in local telecoms, he said: “GO is not in a position to say what the effects of the reduction will be overall. It must be said that this is a reduction that to date has been carried out on a yearly basis, so in a sense there is nothing novel.
“Furthermore, the level of the interconnection rates is already very low, ranging from just above 1 eurocent per minute to 0.3 eurocents per minute.”
On the other hand, another major telecoms operator in Malta, who must connect to GO’s fixed line network in order to enable their customers to contact GO’s fixed line clients, welcomed the MCA’s decision.
Asked for his reactions on consultation, a Vodafone spokesperson said: “The MCA issued a public consultation on this topic in April 2008. Vodafone welcomes the fact that the MCA consults publicly on such matters and gives the industry operators the opportunity to voice their views on such matters.”
Asked whether the company believed that this decision would bring more competition, the Vodafone Malta spokesperson explained: “Predominantly it is intended to bring about more competition in the fixed line telephony sector, however it is possible that this may have a spill-over effect into the mobile telephony sector as well.”
Likewise, a spokesperson for Melita Cable said: “Melita has always been a strong pioneer in introducing more competition in the Maltese market, by striving to provide better and more competitive products to consumers.
“Melita welcomes the MCA’s decision to reduce the fixed line interconnection rate, a draft of which was open for consultation as is usual procedure for the MCA.
“This decision is bound to bring more competition in both the fixed line and mobile telephony sector, a direction that Melita was hoping that the market will take and which we will continue to support and spur.”
The MCA had announced this decision on 17 June after a consultation period with telecoms operators which expired on 2 May this year.
“After taking into account the feedback from respondents, the MCA is hereby confirming the proposed prices featured in its proposed decision that was published in April 2008,” the MCA had said in its decision.
As from July 1, the Peak rate went down from EUR 1.267 to EUR 1.155, a reduction of EUR 0.112 or 8.84 per cent, the Off-Peak Rate went down from EUR 0.876 to 0.797, a reduction or EUR 0.079 or 9.02 per cent, while the Night rate went down from EUR 0.335 to EUR 0.305, a reduction of EUR 0.03 or 8.96 per cent.
The new tariffs apply both for origination as well as for termination of phone calls.
Therefore the average rate for interconnection went down from EUR 0.804 to EUR 0.731, a reduction of EUR 0.073, both for origination as well as for termination of phone calls.

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