Lower call rates won’t be easy to achieve

Rudolph Muller

Rudolph Muller is the editor at MyBroadband and covers telecoms and broadband news. Rudolph comes from an academic background, but left the University of...

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The debate surrounding lower interconnect rates is gaining momentum with Independent Democrats leader Patricia De Lille and former Vodacom CEO Alan Knott-Craig joining the call for reduced wholesale call termination rates.

De Lille recently met with ICASA and the Competition Commission, saying ‘South Africans can be satisfied that there is a new urgency in our fight for fairer cell phone call rates, the regulation of interconnect rates and healthy competition in the market.’

According to De Lille ICASA has agreed that there is a need to look into the high interconnect rates and that they will engage with cell phone operators in this regard.  The regulator further offered to cooperate with the Competition Commission in their investigation into possible collusion and anticompetitive behaviour.

While some consumers may be encouraged that ICASA and the Competition Commission are investigating the high interconnect rates, Knott-Craig argues that regulatory intervention may not be the best or most effective method to address this problem.

The former Vodacom CEO recently said that he feels that interconnect rates should have been dropped five to seven years ago, and suggested a symmetrical interconnect rate of 60c per minute.  According to Knott-Craig a better route than legislation is to meet with the telecoms operators and get them to agree on a lower interconnect rate.

This may however be easier said than done.  Vodacom, MTN and Telkom are all generating a great deal of revenue from high interconnect rates, and they are unlikely to reduce interconnect rates without a particularly good reason to do so.

One such reason may come from the Communications Minister who reportedly met with the cellular operators and is putting pressure on them to reduce interconnect rates.  If this political intervention however does not reap rewards, it is unlikely that a polite request from ICASA will do much better.

There does not appear to be a particularly strong will from local telecoms operators to drop interconnect rates, something which quickly becomes clear when confronting companies about Knott-Craig’s suggestion of a symmetrical interconnect rate of 60c per minute.

Vodacom would not answer the question, merely saying that the matter is currently under investigation by the Competition Commission and is therefore sub judice. 

MTN did not bother to provide feedback on Knot-Craig’s suggestion, which may either indicate failure on the part of their communications department or the fact that they don’t want to appear to want to keep the interconnect prices as high as possible.  Telkom also did not comment on the suggestion of a symmetrical 60c interconnection rate.

Cell C, which is typically quite vocal in their support of lower interconnect rates, seemed to have lost their voice when a lower interconnect tariff model is posed to them.  Neotel was also silent, leaving doubts as to how dedicated the company really is to reduce the rate of voice calls in the country. 

Without the support of the big telecoms operators in South Africa it is unlikely that consumers will see voice call rates drop soon, and if the lack of feedback from MTN, Cell C, Telkom and Neotel is anything to go by, decisive regulatory or political intervention may well be the only way to force these companies to lower their rates.

Lower interconnect rates – what should be done?