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Mobile Termination Rates Dropping- UCC

The Uganda Communication Commission has over the years regulated interconnection and access systems between operators and users of telecommunication services aimed at regulating rates and charges for communications services to protect consumers from excessive tariffs.

According to UCC, Uganda has consistently enjoyed improvements in interconnection rates evidenced by the fact that the telecommunication sector is one of the few sectors with consistent price drops over the last ten years despite increases in the cost of factor inputs like fuel and forex depreciation.

“The Commission once again welcomes and applauds the move by Airtel Uganda who has responded to the need to drive affordability of communication across networks,”  states UCC.

“The Commission believes that the new Interconnect rates and the prudent response from Mobile Network Operators to drive affordability of communications should take us a long way in promoting industry competition and its associated benefits of improved service affordability, variety, and innovation,” reads part of the text.

What is Interconnection? – This refers to the set of commercial and technical frameworks to enable customers of one telecommunications network to ‘’call’’ or ‘’communicate’’ with customers of another network.

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Interconnection is essential because a well-functioning interconnection regime enhances retail price competition and affordability. Usually, a cost-oriented interconnection rate may directly lead to lower call charges as interconnection costs may present a significant portion of the expenses of a cross-network call.

Previously, it has been approximated that interconnect costs may amount to up to 25% of the cost of an off-net call (Calling across networks).

For example, the market welcomes Airtel Uganda’s move to reduce calling rates to Shs3 per second. This can be partly attributed to the fact that as of 1st July 2019, the interconnect rate was dropped from Shs 65 to Shs 55 as a regulatory intervention.

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Experts say that a Ten Shilling reduction in interconnect pricing may result into a 25% reduction in the cost of interconnection.

The Interconnection regime in Uganda has come along way with Key Regulatory Milestones; In 2005 the Interconnection Regulations in place required timely interconnection of new entrants, and therefore Pre 2010 Interconnection rates were set mainly by market incumbents (MTN, UTL, Airtel). At the time the market average interconnection rate was Shs181.

“Following a detailed costing of network services by the Commission, the determination and issuance of a maximum interconnection rate were made in March 2018. Due consideration was made for network quality of service, traffic and subscription growth projections, network equipment wears and tear as well as a fair return on capital employed in the industry.”

As a result the Commission issued a Maximum Interconnection rate of Shs 65 for 2018, to be followed by further drops to Shs 55 that took effect on 1st July 2018 and expected to drop even further to Shs 45 in 2020.

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