ICASA stuns mobile operators
The Independent Communications Authority of SA (ICASA) surprised mobile operators on Thursday by suggesting significant price cuts to current mobile and fixed line interconnect rates.
ICASA proposed a three-year glide-path for both mobile and fixed service licensees.
Mobile interconnect rates, currently set at R0.89 per minute, were proposed to be reduced to R0.65 from July 2010 and further reduced to R0.40 from July 2012.
Furthermore ICASA proposed that fixed interconnect rates be reduced to R0.15 from July 2010 and further reduced to R0.10 from July 2012.
ICASA said in a statement that a key aspect of regulating interconnect rates was that the benefits filtered down to end-users.
Mobile operators mum
South Africa’s three mobile operators, Vodacom, MTN and Cell C, would not say whether they approve or disapprove of the MTR changes proposed by ICASA.
MTN said that it has taken note of the release of the wholesale call termination regulations on Friday 16 April by ICASA.
“Wholesale call termination is a complex issue and MTN expects that the draft regulations will contain elements that require legal interpretation and analysis of its regulatory and economic impact. Once MTN has reviewed the full set of documents, it will compile its response and file the required submission on the due date,” says Robert Madzonga, the Chief Corporate Services Officer at MTN South Africa.
Cell C also said that it will study the draft publication and make its submission to ICASA by 2 June. “Cell C is particularly interested to unpack the methodology ICASA used to determine the proposed wholesale termination rates and the impact that this might have on the entire industry,” said Nadia Bulbulia, Cell C’s Executive Head of Regulatory Affairs.
Vodacom said that it will review the new draft regulations, when they are published, and will participate in the public consultation process.
No surprise
The lack of meaningful feedback from the three cellular operators is however to be expected as they are under severe social and political pressure to drop prices and embrace interventions to provide consumers with better value for money.
Lower prices and lower mobile interconnect rates however mean lower profits for the cellular operators, and this is not something which will put a smile on any CEOs face.
Vodacom CEO Pieter Uys previously indicated that a 10% reduction in interconnect rates translates into roughly a loss of R200-million per year. MTN is in a similar position, and with increasing pressure on profits drastic wholesale call termination rate cuts will cost MTN and Vodacom millions.
So while the cellular operators can be expected to make bland media statements about their commitment to lowering prices and creating a better life for all in South Africa, one can be certain that their well paid regulatory team is hard at work to halt ICASA’s proposed interconnect price cuts in its tracks.
Hearings related to the draft Wholesale Call Termination regulations are set to be held at the beginning of June, and this will provide a true reflection of what Vodacom, MTN, Cell C, Telkom and Neotel really think of the suggested interconnect price cuts.
The final Wholesale Call Termination regulations are set to be in place by end June.
ICASA stuns mobile operators << Discussion
Related links
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