Why Telkom will be the winner with lower interconnection fees

If the interconnect rates are dropped will the savings be passed on to consumers or will Telkom, Vodacom and MTN just compensate by fiddling with other prices that are not under scrutiny?

In Telkom's case they will score without having to pass anything on towards the consumer but it's those other two that really bug me.
Yay! Cheaper interconnect rates ... wait why have the call prices increased ... :rolleyes:
 
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We can only hope that the basic call rates drop in lock-step with a reduction in interconnect fees. The fee should be based on a zero-profit cost based system. Of course then they will start dreaming up ways to make the whole thing cost more.
Maybe for once the consumer will not get screwed. Unlike the banks who are unwilling to give up the cash cow they call saswitch.
 
Telkom would increase its operating profit by R1,8bn - this assumes that Telkom reduces fixed-mobile call fees by 10% to 169c/minute from 188c.
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Bad assumption ;) Telkom + reduced = an imaginary number.
 
Maybe I have a warped impression of how the interconnect system works, maybe not.

My understanding, is that Vodacom and MTN and CellC and Telkodemonopolies all use Telkodemonopolies' Digicrap etc links to actually interconnect with one another in the first place, so while the following might be true:
"Fixed-mobile interconnection is asymmetric, meaning that while Telkom pays the mobile operators 129c/minute on average to terminate calls, the mobile operators pay Telkom only 33c/minute for the reverse call," the analysts say in their report, called "SA Interconnect Examined".
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That is still IMO over and above [i.e. in addition to] what Vodacom and MTN and CellC all pay Telkodemonopolies for the Digicrap links that they all use to interconnect with one another and Telkodemonopolies itself...

IMO the whole interconnect saga is a big problem that Telkodemonopolies created - similar to the Peering War that Telkodemonopolies created between itself and Internet Solutions, so it doesn't surprise me that the Cellular Network Operators would charge Telkodemonopolies an average of R1.29 per minute for calls from a Telkodemonopolies landline to a cellular number compared to R0.33 per minute in the opposite direction...

If Telkodemonopolies just lowered its Digicrap prices then things would probably be very different...
 
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This can all be avoided if ICASA demands that interconnect charges must be the same both ways. To get from point A to point B must cost the same as from point B to point A. Telkom also uses this strategy on the SAT/SAFE link: a half-circuit from London to SA costs z amount, while a circuit from SA to London is (z times massive profit) amount.
 
The headline is a little misleading in how it portrays the impact of interconnection fees. For a start, it seems to suggest that Telkom is the only fixed line player...

In general, the purpose of this kind of ex ante regulation is to control "natural monopolies" (monopolies that cannot be broken by competition alone). The largest natural monopolies in this space are Vodacom's and MTN's iniquitous termination rates (and Cell C's, but to a lesser extent).

The biggest winners in this kind of regulation ought to be challengers, particularly fixed line challengers such as Neotel, and the VANS, once this regulation sorts out the current grey market mess created by the mobile operators themselves.
 
ic said:
If Telkodemonopolies just lowered its Digicrap prices then things would probably be very different...
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You make it sound like the poor cell operators are being so hard done by and are really running on slim margins with the interconnects. The reality is, the profits the cellular operators are making on interconnect are orders of magnitude greater than all the infrastructure fees they pay to Telkom.

I would even go as far as saying, by sheer R value, cellular interconnect fees are the the single biggest specific example of profiteering (cost incurred vs. price charged) in the SA ICT industry, eclipsing any specific thing Telkom are doing by a long shot (e.g. overcharging on SAT3).
 
Roman4604 said:
ic said:
If Telkodemonopolies just lowered its Digicrap prices then things would probably be very different...
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You make it sound like the poor cell operators are being so hard done by and are really running on slim margins with the interconnects. The reality is, the profits the cellular operators are making on interconnect are orders of magnitude greater than all the infrastructure fees they pay to Telkom.

I would even go as far as saying, by sheer R value, cellular interconnect fees are the the single biggest specific example of profiteering (cost incurred vs. price charged) in the SA ICT industry, eclipsing any specific thing Telkom are doing by a long shot (e.g. overcharging on SAT3).
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That interpretation of what I posted was not intended.

My point was that up to and including 2005-01-31, Telkodemonopolies had a monopoly on the actually physical links that interconnect the cellular operators with each other and with Telkodemonopolies, and the links that cellular operators use for backhaul, and that the history behind the high interconnect fees charged by the cellular operators can probably be traced back to Telkodemonopolies originally overcharging the cellular operators for those physical links, so in turn the cellular operators probably decided to recoup their losses on the physical links by hiking up interconnect fees with Telkodemonopolies, and in the end consumers ended up on the losing end whilst !CASA and DoC were scoffing doughnuts & didn't even notice how calls to & from cellular numbers had drastically increased...
 
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