Consumers can be forgiven for being totally confused when it comes to choosing the cheapest cellphone call package.<\/p>\n
With the complicated range of cellular packages, it is difficult to determine how much you are spending at what times.<\/p>\n
Things have not been made easier because all three major cellular service providers — Cell C, MTN and Vodacom — are being very cagey about any adjustments to their call rates that may or may not be made this year.<\/p>\n
This could be because of an impending Competition Tribunal trial that was filed last year by the struggling Cell C.<\/p>\n
Last year the Competition Commission referred a complaint, to the Competition Tribunal, about the excessive interconnection charges, which were increased by over 500% in 2002, shortly before Cell C entered the market.<\/p>\n
The current interconnect charge is R1.25 across different networks. Telkom and Cell C are nett payers of interconnection fees, while Vodacom and MTN are nett receivers of fees.<\/p>\n
The reason for this is that South Africans are using less fixed-line telephony than mobile. Vodacom has a 50% market share of the local cellular phone market compared with MTN’s 36% and Cell C’s newly announced all-time high of 14%.<\/p>\n
This week Jeffrey Hedberg, Cell C’s chief executive, announced the company’s maiden year of profitability.<\/p>\n
However, he cautioned that customers would not receive price decreases until Vodacom and MTN decreased their interconnection charges.<\/p>\n
Hedberg said the high interconnection charges were a joint strategy by the market leaders to squeeze Cell C out of market. <\/p>\n
The tribunal has not yet set a date for the trial. Jane Sussens, communications adviser to the tribunal, said: “ It’s a very complicated process and it could be some time before (a prosecution date) is set, as filings still need to be completed by the various parties.”<\/p>\n
The case could cost Vodacom and MTN millions in penalties and bring cellphone rates down as interconnection charges between networks are slashed.<\/p>\n
Khulekani Dlamini, Renaissance Fund Managers director and ICT analyst, said: “We have the highest interconnection charges in the world, and that translates into higher cellular rates.<\/p>\n
“The government needs to step up to its mandate and ensure that basic telephony (both fixed and mobile) prices are decreased. I find it difficult to understand why it is so difficult to complete,” said Dlamini.<\/p>\n
MTN and Vodacom will most likely argue that their capital base is high, which justifies the high prices charged to users of other service providers.<\/p>\n
Ntombizodwa Mhangwani, MTN communications manager, said: “The major cost factors (that contribute to price structures) are the building of a network and the costs of infrastructure, especially for new technologies such as 3G.<\/p>\n
“However, MTN has not adjusted post- paid prices since 2005, and has adjusted prepaid rates down on an annual basis since 2005,” she added.<\/p>\n
Spokesman for Vodacom, Dot Field, said the company’s continued investment in increasing capacity and maintenance contributed to the overall rates.<\/p>\n
Cell C said it was able to save on infrastructure costs on 3G, which the other providers had implemented at great cost.<\/p>\n
In light of this huge expenditure (up to R2-billion to roll out nationally), MTN and Vodacom are unlikely to simply roll over and relinquish the profit margins they gain from interconnection charges.<\/p>\n
In the meantime, South African cellphone users will continue to pay higher prices than most other countries in the world.<\/p>\n