MTN, UTL PARTNER TO BRING DOWN RETAIL CALLING RATES
By Otim Nape
UTL, a fast-revamping telecom in which the government of Uganda has stake, has once again acted in a very patriotic way by reaching out to market leader MTN for talks that have resulted into something that will see millions of telecom customers smile as they enjoy unprecedentedly very low airtime retail call rates. In simple terms retail calling rate simply means how much a telecom customer is charged for every call s/he makes per minute. This retail call rate is determined by a number of factors the most important of which is the interconnection rate/fees which the telecom operators charge each other for the calls received or made across the network. It’s simply what a telecom is charged each time its customers call into another telecom’s network. Whereas the retail calling rate per minute has for long been Shs300/, the interconnection rate (on which Eng Godfrey Mutabazi’s UCC has a lot of say) has been Shs112/ per call.
This applies to someone who for example uses a UTL line to call a friend on MTN and vice versa. When you use the UTL line to call a friend on MTN, that retail rate of Shs300 is for MTN but UTL (the recipient network) is the one that collects that money and at the end of the month passes over a fraction of that money to the MTN (the calling network) as interconnection fees. The practice is that every end of month, the telecoms representatives will sit to reconcile their books and net off. This means agreeing on how much is owed on both sides having been accumulated as interconnection fees. Now the only way the retail (caller) rate would come down is for the interconnection rate/fees to come down first. The regulator now says all telecoms must take steps aimed at bringing down the interconnection fees and the deadline in 1st July 2018. In one of his letters, UCC boss Eng Mutabazi demands that the reduction of the interconnection fees (from the current Shs112 to Shs45 by 2020) must be done in a phased manner through UTL and MTN have clearly moved ahead of the regulator as reflected in their new interconnection agreement.
In our possession is a 19th March 2018 letter in which Mutabazi directs all national telecom operators (NTOs) to immediately revise their interconnection agreements reducing the interconnection fee from Shs112 per call per minute and they have up to 1st July 2018. The law empowers UCC to set the ceiling above which telecoms are prohibited to fix their interconnection rate. For many years UCC had kept the ceiling at Shs112. Being the maximum, the telecoms had taken advantage and kept the interconnection rate at that Shs112 though they are permitted to charge even lower. “The UCC set interconnection fee ceiling is just a maximum and telecoms can charge anything below it but they weren’t doing so because they don’t care after all it’s imposed on the consumer,” explains a telecom industry source. ”The UCC new directive simply means that the consumer is the winner because with a reduced interconnection fee, the retail calling rate at which consumers are charged per minute in a phone call will drastically reduce.”
The UCC further directs in Mutabazi’s 19th March letter that the interconnection rate shouldn’t exceed Shs65 effective 1st July 2018; Shs55 effective 1st July 2019 and finally Shs45 by 1st July 2020. This is still higher than the Shs25 that UTL and MTN have agreed upon already in their new interconnection agreement. “The Commission believes the rates above shall address a number of termination market concerns like termination rate-cost orientation, ensuring cost recovery in the provision of call termination services, the promotion of fair competition within the telecommunications market as well as enhancing retail service affordability. All licensees [telecom companies] are hereby directed to realign all existing domestic interconnection agreements in line with this directive before 1st July 2018. Amended agreements should be filed with the Commission in line with section 58 of the Uganda Communications Act 2013.” The same letter is addressed to all Public Infrastructure Providers (PIPs), Public Service Providers (PSPs) and NTOs. This is a win for the general public as reduced retail calling rates mean more talk time as Ugandans go about their trade and business transactions many of which are these days conducted on phone.
In his 19th March letter, Mutabazi must have been motivated by the dual process UTL and MTN management had already engaged in resulting into agreement with an MoU according to which the two would reduce their interconnection fees at Shs25 at a time the industry fee, as sanctioned by the UCC, is still Shs112 (ahead of the 1st July deadline). Mutabazi says that on 15th March, Twebaze Bemanya who is the Administrator of UTL wrote to him seeking the UCC’s no objection to the new interconnection agreement between the two telecoms. MTN CEO Wim Vanhelleputte had on 21st March 2018 equally written to UCC seeking Mutabazi’s no objection. Mutabazi on 27th March wrote a joint letter to Bemanya and Win announcing UCC’s no objection to their new pro-people agreement reducing the interconnection fees from UCC-endorsed Shs112 to a mere Shs25. The government was fascinated that at Bemanya’s prompting, the two telecoms would agree on such a generous 60% reduction in the interconnection fees. In his 27th March letter, Mutabazi announces his no objection and reminds Bemanya and Wim of their obligation “to submit the amended [interconnection fees] agreement to the Commission in accordance with section 58 of Uganda Communications Act.”
It should be noted that UCC is obliged to use its regulatory powers to ensure Ugandans are not exploited or cheated by telecom companies and there is no way Mutabazi would simply look on, and see UTL’s Bemanya and MTN’s Wim take the credit, without him doing anything as a regulator. The UCC intervention, prompted by the UTL-MTN agreement, has the effect of diminishing on the huge monies monthly repatriated out of our economy to the foreign shareholders who own some of the telecoms. “This is why HE the President insisted that we as GoU keep a stake in UTL because that is the best way we can influence the cost of the ICTs and thereby enhance the deepening of e-services to our citizens,” said Minister Evelyn Anite who supervises Bemanya and the entire administration team at UTL. “This is all consistent with the President’s written directive that all MDAs must procure their internet services from UTL to ensure the company stays afloat.” Already UTL has walked the talk making its service much cheaper now because of the new agreement with MTN. Prior to this new understanding reducing the interconnection fees per minute from Shs112 to Shs25, UTL customers have been paying Shs300 for every minute they spend speaking to a friend on MTN which the Bemanya administration team has now trimmed to Shs120.
It simply means that every second a UTL customer takes speaking to a friend on MTN line will be charged just Shs2 down from Shs5 of the pre-MTN agreement. In the UTL’s case, this began on 1st April 2018 and it’s widely expected that big-talking MTN will be announcing the same retail calling rate reduction in the near future to reflect this new reality and understanding with UTL. “For you the outsider that means loss of revenue but in actual sense it isn’t. It’s a win-win situation; the service becomes more affordable to Ugandans and the telecom companies cash in on the increased volumes and thereby covering up on the lost revenues in the long run, ”explained one of the telecom industry persons we spoke to for this article.
The new UTL rates became effective the moment the UTL-MTN agreement took effect and that was on 1st April 2018. In his initial discussions with the MTN CEO Wim, who would be accompanied by his interconnection manager Juliana Rwakakoko, Bemanya (being a none telecom person by background) kept saying he was intrigued as to why it was cheaper for Ugandan telecom consumers to make international calls to China (at merely Shs150 per minute) than internally across the network (Shs300 per minute). In his lay man’s approach, Bemanya kept insisting to Wim “there must be something we can do as telecom players to remedy this situation for the good of our people.” It’s this inquisitiveness by Bemanya that is finally yielding all this fruit for the people of Uganda. Story partly adopted from Red Pepper newspaper. For comments, call/text/whatsapp us on 0703164755!