Business Day (Johannesburg)
21 October 2009
column
Johannesburg — THE saga of inflated cellphone fees has become ridiculously complex, with several processes under way to force down fees the operators charge to link a call from one network to another.
One agitator for a cut is ECN, a private operator that cannot offer its clients cheap calls as it must hand over R1,25 a minute each time they dial one of the entrenched operators.
Now CEO John Holdsworth has unearthed a dusty old law stipulating that interconnection fees must be based on the actual cost of providing that service.
Industry regulator Icasa seems to have forgotten that the law exists, and the operators certainly haven't reminded it.
If ECN is right, then Parliament's portfolio committee hearings, well-intentioned as they are, are actually unnecessary.
And Icasa's proposal -- that the operators confer, decide how much to claim it costs to run the service, and hike a 50% profit margin on top of that -- is simply iniquitous. The communications minister's belated decree that Icasa impose a cost-based fee is also rendered unnecessary.
Cell C CEO Lars Reichelt agrees the rates are unjustifiably high, and have damaged the economy. He proposes a cut to 75c. Icasa councillor Robert Nkuna, who has seen some of the running costs, declares the cost to be no more than 40c.
ECN has told the relevant authorities about its discovery, and is waiting to see if operators and Icasa adhere voluntarily to those rules. If not, ECN may go to court to force them to.
That should not be required. But, given Icasa's track record of failure, it may be essential.
THE average consumer wasn't too impressed with Trevor Manuel 's assertion this February that, technically, SA was not yet in a recession, meaning the country had not yet experienced two successive quarters of negative growth.
They are obviously even less impressed by economists' predictions that SA will come out of recession in the third or fourth quarter of this year, and those lucky enough to have disposable incomes are keeping spending firmly in check.
Old Mutual Investment Group SA economist Johann Els says SA might come out of recession in the third quarter, with gross domestic product growth of about 2%.
But, he says, this is despite consumer demand remaining weak. Government demand, better exports and the inventory cycle are the main growth drivers.
He says consumers have yet to experience the recovery, as shown by the 7% year-on-year fall in retail sales in August, the 8,8% drop in car sales in September and the contraction of 0,9% in consumer credit over the third quarter.
And on Monday, economists warned that retailers faced their bleakest year-end performances in more than a decade, particularly with no interest-rate cut likely. So we may already be in a period of economic growth , but consumers aren't buying it.
RECESSIONS always haul trade disputes in their wake. The US, the old top dog, and China, the aspirant top dog, are both showing worrying signs of entering into a full-blown trade war. The latest argument is about something that seems innocuous enough, a substance known as polycaprolactam. Few have heard of it, but it's important, and is used to make everything from rope to pantyhose.
The oddity is that it is the Americans, not the Chinese, who are being accused of dumping. China's commerce ministry made a preliminary decision to impose a steep 30% tariff on the material.
The reason this matters on the southern tip has to do with the dollar. The US government has apparently had enough of the Chinese setting their currency artificially at a very low rate, and it is letting the dollar decline. And it's working. Honda said yesterday it might move production of the popular Fit hatchback to the US to offset the effects of a stronger yen. SA is caught in the currency crossfire with a strengthening rand undercutting manufacturing.
The Bottom Line is edited by Colin Anthony
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