Mobile price cuts? Not likely!

Communications Authority of South Africa (ICASA) last year announced that peak mobile termination rates will be reduced from 89c per minute to 73c per minute in March 2011. Off-peak mobile termination rates will also be reduced – from the current 77c per minute to 65 c per minute.

Furthermore fixed line termination rates will be reduced as well on 1 March with the new peak and off peak rates depending on whether the calls terminate within an area code or outside an area code. The new ‘national’ fixed line interconnect rates will be R0.28 during peak times and R0.19 during off-peak times.

Good news for Neotel subscribers is that the company announced that they will reduce their voice call rates to mobile phones after the interconnect rate cuts kick in.

Telkom has not committed to passing on the latest wholesale termination rate cuts as they did previously, but it is expected that the fixed line operator will reduce prices again loosely in line with the interconnect price cuts.

The mobile providers however look less likely to cut their call rates after the interconnect price cuts kick in.

Vodacom confirmed that they will not reduce their retail voice prices on the back of MTR price decreases. “As you know, reductions in termination rates do not produce savings for Vodacom to pass on to customers – in fact, the opposite is true,” explained Vodacom spokesperson Richard Boorman.

“Over time, lower termination rates do stimulate competition and experience has shown that this is the mechanism that drives a reduction in call charges,” Boorman added.

Cell C said that they are still reviewing the various pricing models, and would only be able to make an announcement about retail call rates once this process is finalized.

MTN and Telkom/8ta did not respond to questions as to whether they are planning any price reductions to their retail voice rates when the interconnect rate cuts kick in.

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Mobile price cuts? Not likely!