Vodafone Fiji : Interconnect Price Determination

Vodafone Fiji : Interconnect Price Determination (8 Nov 2011)

The price determination by Commerce Commission on interconnect call termination rates for calls generated and terminating locally is in line with the glide path reduction in the interconnect rates agreed earlier between the Commission and the operators. Accordingly, there is no real surprise in the local interconnect price determination. The new rates come into effect from the 17th of November. Vodafone is technically ready to make appropriate changes in its interconnect billing meters to reflect the new charges from the effective date.

The changes in the interconnect rates are applicable at the wholesale level and will definitely have a negative impact on Vodafone revenues. Vodafone will conduct its own analysis on the level of this impact before it finalizes any new tariffs and plans going forward.

For inbound international calls, there has been an increase in the termination rate from US16.5 cents to US22.00 cents. These changes really do not impact Vodafone in any way because Vodafone Fiji as an operator does not bring in international call traffic into the country. However, the 9 cents call handling charges payable to network operators in the country on whose network the international traffic is terminated is welcomed by Vodafone. The decision by the Commerce Commission to levy such charges on those bringing in international traffic but not owning any network in the country is welcome given the huge investment required to maintain network infrastructure. Benefitting from market arbitrage due to pricing disparity between different markets without real investment in the network, if not corrected could have debilitating effect on network infrastructure owners.

We also note that the Commission has changed the proposed interconnect rate on local calls agreed to earlier from 11.5 cents to 10 cents for the period 17th November 2012 to 16th November 2013. Whilst, we would have preferred this to remain at 11.5 cents for more measured price adjustments, we nonetheless have to start gearing for a steeper decline next year.