“Middleman” weighing down Competition in Telecommunication Sector

31/07/2009 14:59

Consumers in Fiji are paying higher call charges for international mobile call charges because of a ‘middleman’ system that is compelling retailer service providers like Vodafone to hook up through a third party network for international access. Similar arrangement is seen with Connect Fiji Limited’s internet service where again TFL is the middleman who is accessing linkage from FINTEL and supplying this to Connect (its subsidiary company).

The exclusive license for the international telecommunication link held by Fiji International Telecommunications Limited (FINTEL) ended on 18th July. The cessation of this monopoly on international calls should bring about relief for consumers who for many decades have had to live with high international call charges. However, the Council finds it strange that Vodafone Fiji had been using Telecom Fiji’s network for international calls before linking up to FINTEL’s gateway. From tomorrow, again it will revert to Vodafone hooking up to TFL and TFL with FINTEL. TFL is the middleman for reasons best known to the operators.

The Consumer Council expects international mobile phone (and landline) call charges to be reduced significantly with the opening up of the international telecommunications market. This is possible for consumers as proved through one-off promotion by Vodafone that ends today where consumers were paying 29cents for international calls instead of normal retail price of 70 cents, where Vodafone was directly accessing service from FINTEL.

Vodafone was already in a position (since its establishment) to reduce its costs and consequently drop retail international call charges by going directly to FINTEL, but instead continued to be hooked through Telecom Fiji, its parent company (and perceived rival), but all under the ATH mechanism. If the middleman like TFL is removed from the equation, the Council firmly believes that consumers would not be paying higher international call rates because another player would not take its cut of the cake.

The Council understands that FINTEL provides wholesale telecommunications services to domestic service providers and these companies have the option of purchasing larger bandwidth, which should have the desired effect of reducing retail rates.

The opening up of the telecommunications market and removal of exclusive dealings means Vodafone Fiji can hook directly to FINTEL for international calls instead of having to go through Telecom Fiji’s network. This should essentially result in reduced charges for standard international calls rather than just one-off promotions.

Vodafone and other subsidiaries have the right to act independently and not be bonded to the ATH club of “middlemanship”. In the interest of its customers and to ensure fair prices, Vodafone should be free to choose a direct route to the international gateway instead of having to go through TFL.

The quicker this “middleman” system is removed, the better it would be for consumers in terms of call charges.

In the best interest of Vodafone customers, we leave it to Vodafone to explain why they prefer to revert to the old arrangement via TFL linkage when they have a sensible commercial and technical option that is also financially feasible in the operator’s interest to save money (about 7cents) when linking directly from FINTEL. Is there any reasonable justification that consumers do not know about?