Interconnect agreement reached

Communications Minister Siphiwe Nyanda today announced to parliament that South Africa’s three mobile operators, namely Vodacom, Cell C and MTN, have unanimously agreed to cut the peak interconnect rate by 36c from R1.25 per minute to 89c per minute. 

For Vodacom and Cell C this cut will be implemented on the 1st of February 2010. MTN has agreed to lower its’ interconnect fee by the 1st of March 2010. 

“I’m glad to report that mobile operators have agreed to introduce new and affordable retail products based on their reduced rates, from 1 December 2009,” said the Minister this afternoon. “I have been assured these developments will introduce more competition in the retail market. That on its own is the big early Christmas and Easter present we can give to the nation.”

The current off peak interconnect rate of 77c per minute will, for now, remain unchanged. 

According the Tech Central the minister said the agreement would put “money back in the pockets of ordinary South Africans who need it now more than ever” adding that the agreement was made “within the business imperatives of these operators and was voluntary”.

In late October both MTN and Vodacom released a joint statement that the companies and reached an agreement on interconnect rates and are pursuing bilateral negotiations with Cell C and other operators.

The proposed agreement will see the blended interconnect rate reduced from the current level hovering around R 1.00 per minute to R 0.78 per minute.  The blended rate is the effective ‘average’ interconnect rate influenced by both the current interconnect rate and call volumes during peak and off-peak rates.  This however excludes the subsidized community phone termination rate of 6c per minute.

Although Vodacom and MTN seemed happy to immediately drop interconnect rates to a level which they find palatable, Cell C was effectively holding back the industry-led cut because it was seeking an asymmetric rate to assist it to grow. 

It appears however that the governmental parties involved and South Africa’s mobile operators have now come to a consensus regarding the initial reduction in peak interconnect rates. 

Interconnect rate reduction – give your views

 

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Interconnect agreement reached