“This is good for Vox Telecom as a Group and for our customers,” said MD Douglas Reed. “We are coming ever closer to being able to compete on a level playing field, especially with Telkom. It will take a bit longer with the cellular networks, but for the first time ever we’re competing without both hands tied behind our backs.”<\/p>\n
“Until now we’ve had to find niche markets and niche products to stay in the game,” continues Reed. “This latest step towards fair competition will enable us to introduce more products, grow our market share and become a more significant player. That in turn means more pressure on the incumbents to drop their prices.”<\/p>\n
Mobile operators are not expected to drop their retail prices as a result of the lower termination rates.<\/p>\n
Vodacom and MTN have already indicated that they will not reduce retail voice rates due to the recent mobile termination rate price cuts because there is ‘no link between interconnect rates and retail voice rates’.<\/p>\n
Reed however argues that the mobile operators are not going to drop their prices until they’re forced to. “That will only happen if their customers start going elsewhere because there is serious competition,” said Reed.<\/p>\n
“What the regulator has done is drop the floor which kept the costs up. Now it is just a matter of time before niche operators and new entrants drop their prices to gain market share which will bring in market forces to bear.”<\/p>\n
Reed added that the argument that there is no link between interconnect rates and retail costs – as argued by MTN – is not true for the entire industry.<\/p>\n
“It’s the biggest component of a new entrant’s costs. We believe that as companies like Vox start to put pressure on the incumbents, call costs will come down by about 10-15% a year over the foreseeable future. We’re also looking at cutting our data rates further right across the board.”<\/p>\n