AIS and DTAC strike an agreement on interconnection charges

AIS and DTAC strike an agreement on interconnection charges

DTAC CEO Sigve Brekke, left, and AIS president Wichian Mektrakarn huddle during the signing ceremony.

Two major cellular operators, Advanced Info Service (AIS) and Total Access Communication (DTAC), signed a bilateral agreement on interconnection rates amid attempts by some parties to delay the industry's charge enforcement.


The signing, which took place yesterday, follows DTAC's forging of a similar deal with True Move on November 17.


AIS and DTAC agreed on a termination rate of Bt1 per minute. The rate takes effect immediately, and the two companies will start billing each other next February.


If DTAC transits its call via AIS to a third network, it will pay Bt1 per minute to AIS. The rate will be 50 satang a minute in reverse. Both termination and transit rates will be reviewed each year.


Both declined to reveal their expected gain from interconnection fees, but a telecom analyst estimated that AIS would earn about Bt3.5 billion annually from interconnection fees from all telecom operators.


AIS, DTAC and True Move each have more than 17 million, 11 million and 5 million customers, respectively.


The interconnection regulations of the National Telecommunications Commission (NTC) mandates that all telecom firms share voice and data revenues between any two networks involved in a call on a fair basis.


DTAC chief executive Sigve Brekke said the signing marked another step forward toward liberalisation, while AIS president Wichian Mektrakarn said his company expected to sign a similar deal with True Move in the next two weeks. CAT Telecom has already asked AIS to negotiate with it on a similar deal.


The NTC's interconnection-charge regime covers origination, transit and termination charges.


The termination charge is what a service provider pays to another provider for receiving its call, while the transit charge is what a service provider pays to an intermediate network for passing its call on to the receiving network.


The origination charge is what the service provider that receives a call pays to the network from where the call originated. The charge is for CAT, which must share its revenues from international calls with the operator that transfers the calls from its subscribers to CAT.


DTAC and True Move agreed on a termination rate of Bt1 per minute and a transit rate of 20 satang a minute.


All telecom operators, except TOT, are currently in talks on a bilateral basis to finalise the interconnection rates, and all are expected to reach an agreement next month. The NTC is expected to start approving its finished rates next week.


However, a Rangsit University lecturer yesterday filed a petition with the Central Administrative Court, asking that the NTC's interconnection charge be terminated, citing its impact on the national interest. The NTC has already promulgated the interconnection regime in the Royal Gazette, in May.


TOT has also made it clear it wants the interconnection charge to be delayed for one year, saying it was not ready to comply with the regime.


A report in a local newspaper this week said the NTC agreed to fix all interconnection rates at zero for one year, in order to pave the way for the Information and Communications Technology Ministry (ICT) to resolve the dispute on access charges and interconnection rates.


ICT Minister Sitthichai Pookaiyaudom yesterday said the zero rate was just a proposal to the NTC, adding that Prime Minister Surayud Chulanont yesterday asked TOT, CAT and the NTC to set up a joint panel to clear up the access-charge conflict.


The NTC and the ICT Ministry met the premier yesterday to discuss a plan to end the access-charge conflict between TOT and CAT's private cellular concessionaires.


DTAC wants to pay only the interconnection charge instead of both interconnection and access charges.


But TOT has yet to grant the request, out of concern about losing access-charge revenue. The state agency has earned Bt14 billion a year in access charges from all of CAT's cellular concessionaires.


All of CAT's cellular concession holders, including True Move and DTAC, have paid the access charge to TOT as the cost of connecting different networks via TOT's facilities.


"We cannot move backwards, as now the two largest cellular operators have already signed the deal," said Brekke.


Meanwhile, both AIS and DTAC have shared a common view that if they must pay the additional excise tax to the government, they might have no choice but to pass on the higher cost stemming from the tax to consumers.


Another possible choice is cutting business costs, resulting in a slowdown of its network investment that would in turn affect consumers.


Wichian said the government should terminate any telecom excise tax if it wanted to promote fair competition.


Sitthichai has already proposed to the Finance Ministry that amendments be made to a Cabinet resolution from the time of the ousted Thaksin government that would allow private telecom operators to deduct part of their concession fees for payment of excise tax.


The amendment will see private telecom operators pay the full concession fee to their state concession owners - TOT or CAT Telecom - and excise duty to the government. They will not be able to deduct part of the concession fee for payment of excise tax.


Under a 2003 resolution by the Thaksin Cabinet, all private cellular operators must pay 10 per cent of their concession fees as excise duty to the government first before sharing the remainder with TOT or CAT.


Likewise, all fixed-line operators pay 2 per cent of their concession fees to the government before sharing the remainder with TOT. This has resulted in a reduction in the two state agencies' concession revenues, while they are also subject to excise payment like all other operators.


Sirivish Toomgum


The Nation