Cell C asks for 75c and 65c interconnect rates
Mobile operator Cell C on Wednesday proposed a reduced mobile termination rate (MTR) of 75 cents for major players and 65 cents for smaller operators.
Cell C had consistently called for a reduction in MTR rates and also for asymmetry to allow the smaller players to compete effectively with the bigger players, Cell C CEO Lars Reichelt told the National Assembly’s communications committee.
The committee is currently holding public hearings on what it says are the excessive and exorbitant costs of MTRs in the industry.
The MTR is the fee one network charges another for receiving calls on its network.
Reichelt said Cell C believed the termination rates in South Africa were unjustifiably high, which in turn led to high price levels.
High price levels damaged the entire economy and the poor disproportionately, he said.
“Another point is we believe asymmetry brings competition and competition is what drives prices down.
“So in other words, we are in favour of an immediate move to an all-day mobile termination rate of 75 cents for the dominant mobile players and 65 cents for the mobile challengers, which in this case there is one which is active.
“There’s another one which is hiding in the background, which is Telkom,” he said.
“We believe a once-off reduction is better than a glide-path, for a variety of reasons, the main reason being that it expedites the consumer benefits and it puts a stake in the ground.”
However, the reduction had to be in line with what was “observable in the market”.
Cell C also wanted to see the same MTRs for peak and off-peak times.
“There’s no economic reason why an off-peak call should be cheaper to terminate than a peak call.
“The network is the same. The network doesn’t care if it’s dark or if its eight o’clock or six o’clock.
“And we propose the asymmetry towards dominant market players, which again promotes competition, which again is the most affective way to put pressure on retail rates and to create a downward slope,” Reichelt said.
It was also important that the ultimate interconnect regime be determined by the Independent Communications Authority of SA (Icasa) through the process it was going through.
“Because we truly and strongly believe that it is very dangerous if you want to tinker on the edges, and it is a quite complex process and it is quite a complex economy behind the whole thing.
“So it is very important that we don’t go into a process that is guided by vox populi, but into a process that is manageable and provides the certainty also for investments to be made, which our shareholders intend to do to a very significant level going forward,” he said.
The MTRs should be determined based on the costs. Icasa had to complete its process, but could speed it up.
Reichelt said the intervention needed to be reasonable and measured so as not to eradicate the economic viability of the operators.
“Because, fundamentally, what I think nobody wants to have is, that the things that we do today, and we can do with mobile, are due to the fact that we are economically viable entities.
“The fact that people are investing in mobile networks has to do with the fact that you can make money in these entities.”
Also, South African mobile operators directly employed about 13,000 people and hundreds of thousands indirectly, he said.
Discuss Cell C’s interconnect proposal
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