DoC promises big telecoms savings next year

The National Treasury yesterday released its Medium Term Budget Policy Statement 2010, increasing the country’s growth forecast and putting measures in place to crack down on tenderpreneurs.

As part of the treasury’s medium term budget the Department of Communications (DoC) also released their adjusted budget estimates, showing a fair performance in some areas and poor performances on others.

Bad news for consumers is that the DoC faired particularly poorly in two areas which directly affect their pockets:  Mobile and fixed line telecommunications and voice costs.

In its statement the DoC said that there have been no reductions in per minute costs of mobile or fixed line telecommunications “because the process was delayed to avoid litigation from the operators”.

This gives a strong indication that the DoC, and the telecoms regulator ICASA, was unable to reign in the big telecommunications players in South Africa and that the threat of litigation is as effective as ever to delay or change regulations which may cost them money.

The DoC did however promise that “substantive reduction will happen between January and March 2011”, most likely referring to the imminent Call Termination Regulations.

ICASA yesterday announced that it has finalized its investigation into local call termination rates and is set to publish the regulations on Friday.

“Amongst other objectives, these regulations intend to reduce the wholesale price licensees charge each other for reaching their customers from the current commercially agreed upon scenario to a regulated rate based on the cost of providing such a service,” ICASA said in a press statement.

Reducing wholesale termination rates – aka interconnect rates – is however only one facilitator of a more vibrant and competitive telecoms market in South Africa, and many industry players have warned that lower interconnect rates don’t always translate into lower retail call costs.

It is currently unclear whether the DoC has other strategies in the pipeline to ensure that the retail rates get slashed early next year as they promised.  One would hope this is the case as the DoC has a track record of talking much and doing very little which unfortunately has not translated into cheaper calls or broadband thus far.

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DoC promises big telecoms savings next year