Interconnect cuts means lower mobile calls? Don't hold your breath

I think the idea is it will cause better competition between all the players and this should mean 8ta/cellc can under cut vodacom/mtn more.
 
Yes, Vodacom (and MTN) will make less off calls that terminate on their network and originate on a competitor's network. However, as the dinosaurs are profiteering less from interconnect fees, so the smaller (and apparently more savvy) players are paying less for the same, and thus able to offer us even better deals.

So, do we expect cheaper "total cost of acquiring and using the service" from Vodacom (and MTN)? No, in fact, we've pretty much come to accept that they only how to charge ridiculous prices.

Do we expect cheaper prices from the movers and the shakers, like Cell C? Hell yeah! They've certainly proven it with their data packages.

ps: This article is written as if Vodacom is the only cellular voice provider that matters. A rather uninformed view, methinks.
 
Na-iem said:
Yes, Vodacom (and MTN) will make less off calls that terminate on their network and originate on a competitor's network. However, as the dinosaurs are profiteering less from interconnect fees, so the smaller (and apparently more savvy) players are paying less for the same, and thus able to offer us even better deals.

So, do we expect cheaper "total cost of acquiring and using the service" from Vodacom (and MTN)? No, in fact, we've pretty much come to accept that they only how to charge ridiculous prices.

Do we expect cheaper prices from the movers and the shakers, like Cell C? Hell yeah! They've certainly proven it with their data packages.

ps: This article is written as if Vodacom is the only cellular voice provider that matters. A rather uninformed view, methinks.
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+1 exactly what i was thinking
 
What a silly article. Vodacom won't reduce prices - at first. The smaller operators, who can now finally afford to reduce prices and be competitive without going bankrupt will take advantage of these reductions, methinks. Then MTN and Vodacom will have to respond...
 
Dear Hilton

While I agree with most of what you said, you are wrong in saying that this will not result in lower call rates. You also paint an unncessarily gloomy picture, by focussing only on the negative issues. A one-sided analysis of the situation.

Let me present you with the other side of the coin:

The biggest driving factor here behind cutting interconnect rates is to INCREASE COMPETITION. Yes I agree, dropping interconnect rates will not DIRECTLY affect call rates. This is a given, as ICASA are not forcing call rates to drop, and business will not do so own their own either - they have demanding shareholders who expect huge payouts every year.

However, the INDIRECT result of cutting interconnect rates is huge, and you have failed to mention any of these.

By lowering the barrier to entry for new and smaller operators like Neotel, Cell C, 8ta, Vox, ECN, and the countless other VoIP providers, these operators will be able to compete more effectively against the incumbents like Telkom, Vodacom and MTN. And as we know, competition is the biggest driver to bring down costs, and spur innovation. Cell C, ECN and Vox have been trying for years to lobby ICASA to drop interconnect rates. Do you say that they been doing this all for nothing?

We are definitely not expecting a miracle, a sudden drop in prices due to interconnect rate drops. I'm pretty sure that ICASA are well aware of this too. The price drops will filter down to consumers eventually. Also, even if call rates do not drop, it forces operators to stop taking consumers for a ride, and start focussing on retaining their existing customers, by improving service levels, call quality, customer support, billing and administration.

It forces operators to become efficient, innovative and start treating their existing customers with the respect they deserve, something which is desperately needed in RSA.

Painting such a gloomy picture is unnecessary, ill-informed, and smacks of underhanded paid for journalism by the incumbents.
 
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iCubed.Saajid said:
Dear Hilton

While I agree with most of what you said, you are wrong in saying that this will not result in lower call rates. You also paint an unncessarily gloomy picture, by focussing only on the negative issies.

The biggest driving factor here behind cutting interconnect rates is to INCREASE COMPETITION. Yes dropping interconnect rates will not DIRECTLY affect call rates. It will definitely affect call rates INDIRECTLY, which is good enough for us consumers.

Also, by lowering the barrier to entry for new and smaller operators like Neotel, Cell C, 8ta, Vox, ECN, and the countless other VoIP providers, these operators will be able to compete more effectively against the incumbents like Telkom, Vodacom and MTN. And as we know, competition is the biggest driver to bring down costs, and spur innovation.

We are definitely not expecting a miracle, a sudden drop in prices due to interconnect rate drops. I'm pretty sure that ICASA are well aware of this too. The price drops will filter down to consumers eventually. Also, even if call rates do not drop, it forces operators to stop taking consumers for a ride, and start focussing on retaining their existing customers, by improving service levels, call quality, customer support, billing and administration.

It forces operators to become efficient, innovative and start treating their existing customers like gold, something which is desperately needed in RSA.

Painting such a gloomy picture is unnecessary, and is ill-informed.
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That's pretty much what the article stated :rolleyes:
 
The writer is exactly right when he says that it does'n mean necessarily any cuts for us. Vodacom and MTN keep harping on about the loss they are going to make on their interconnect billing but nobody mentions the increased portion of call revenue they are now retaining when their own subscriber makes a call to another network. In a world where eg. Vodacom and MTN are terminating the same amount of calls on each other's networks, the net effect should be zero if they keep their current call rates the same. So what this in fact means to the industry is that smaller players with new/alternative technology (which means they have lower cost to cover per call) can now decrease their call rates because they now pay less for termination. By introducing new small telecoms operators (not necessarily mobile) at very competitive rates, additional competition for caller minutes is introduced across the board and will cause everybody to have to compete. An example of this is that I have long since gotten rid of my telkom line, I only rely on my mobile phone but, if I can get a much cheaper VOIP line, I might make a portion of my mobile calls on the VOIP line. Therefore my mobile operator needs to compete to win my minutes back.
And then only will Vodacom and MTN lower their prices.
 
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Shake&Bake said:
That's pretty much what the article stated :rolleyes:
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Really?

Like when the author says this:
Icasa's aggressive glide path for cuts means almost nothing for you and I.
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or how about this part:
ICASA (mistakenly) believes that lower interconnect charges will translate into lower retail tariffs (ie, the price you and I pay for calls). Councillors have stated that they would hope to see lower call charges in the years ahead.
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The only comment I have on that is: Wrong and Wrong (as iCubed.Saajid already explained).

Have you perhaps been reading a different article... :confused:

EDIT: This is my post number 666 :eek:
 
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Na-iem said:
Really?

Like when the author says this:


or how about this part:


The only comment I have on that is: Wrong and Wrong (as iCubed.Saajid already explained).

Have you perhaps been reading a different article... :confused:
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Or perhaps the part where the author says:

What does this mean for operators?

Cell C and Telkom's new mobile business 8ta are the big winners here. Because ICASA classifies them as smaller operators, they are able to charge the big two (Vodacom and MTN) 20% more for interconnect (this percentage also glides downward to 10% in 2013)
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The only companies that can make a difference (if they really wanted) is the smaller operators (Cell C, 8ta and perhaps Virgin Mobile one day)

I feel this article has been realistic in the way it's been structured and giving us "face value" thoughts on what is happening in the market currently. With the previous MTR cut, the consumer basically saw no real value to it. The incumbents are feeling it and as stated in the article, they are going to be making it up elsewhere.

It's up to CellC and 8ta to be the "3" network of this country, now that they've been given a bit of a head start.
 
Yes competition will bring lower prices but I seriously doubt if Icasa has the collective ability to even begin thinking that far ahead. A more likely motive for their pushing of the interconnect rates issue was to pave the way for the launch of Telkom mobile. Icasa does not have the consumer in mind, their only purpose is to serve their ANC masters.
 
Rouxenator said:
Voice calls? Do people still make those?
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Still buckets loads of us that do.

Though texting is a big thing too, by the end of 2010 it's estimated that there'll be 6.1 trillion text messages will be sent globally.

A new study from the International Telecommunications Union (ITU) has found.

According to the United Nations-run organization, a whopping 6.1 trillion text messages will be sent by the end of 2010. That figure, which has tripled in the past three years, means people around the globe are sending 200,000 text messages every second.
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It's going to take a robust 3G network(s) and lower data costs and better/cheaper wifi agreements for Skype calls on mobiles to become a reality in The Banana Republic of South Africa.
That and phones with great battery life :p
 
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