Nyanda says 89c per minute is fair

The Minister of Communications (DoC), General (Ret) Siphiwe Nyanda, today said that he has ‘noted the decision by ICASA to reject the proposal by mobile operators with regard to the reduction of interconnect fees.’

The Independent Communications Authority of South Africa (ICASA) earlier this week dropped a bombshell when it announced that it will not review the interconnection amendment agreements as submitted by the mobile operators.

ICASA said in a press statement that they received interconnection amendment agreements between Vodacom, Cell C and MTN on the 25th January 2010, but that these agreements sought to bind the regulator to an undertaking not to review mobile termination rates until 1 March 2013.

“The mobile operators made a submission to ICASA to reduce the interconnection rate conditional upon on a 3 year glide path period, which ICASA has turned down. It’s also the Minister’s view that the proposed three year glide path period is long and unfair to consumers who have been affected by high telecommunication costs for too long,” the Communications Ministry said in a press statement.

“The Minister respects the independence of ICASA and had indicated in his report to parliament last year that the final decision on this matter rested with the regulator,” the Department of Communications said.

“The Ministry believes that the 89/77 cents (peak and off-peak respectively) are reasonable were they to be implemented within a shorter period than that suggested by the mobile operators,” the DoC concluded.

It is however uncertain what exactly Nyanda and the Department of Communications mean by the statement above.  The mobile operators are planning to implement the proposed ‘89/77 cents’ interconnect rate with immediate effect, and the glide path actually refers to a peak interconnect rate cut of an additional 4c in October 2011 and another 5c in October 2012.

ECN CEO John Holdsworth however says that 89c per minute is certainly not a fair value.  “ECN unequivocally supports ICASA’s decision not to endorse the mobile operators’ seemingly collusive agreement on a peak rate of 89 cents dropping to 80 cents in 2012 which bears no relation to the actual cost of interconnection,” said Holdsworth.

“ECN is appalled that the Department of Communications can even contemplate such an agreement when market studies in other African countries such as Namibia, Nigeria and Uganda have shown that the cost of interconnection is no more than 30 cents. The law requires that interconnection pricing be cost based and consumers should not accept interconnection rates of anything above 30 cents.”

Mobile interconnect rates – is 89c per minute reasonable?

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