MTN and Vodacom have decided to reduce the blended interconnection rate by 19% to 78 cents immediately, but ICASA chairman Paris Mashile and Independent Democrats (ID) leader Patricia de Lille are not impressed.
The country's two largest mobile network operators made the announcement late this afternoon after the morning talks with telecommunications regulator ICASA broke down.
“I am not surprised they decided to go ahead with this announcement as they are trying to recoup the lost PR ground,” Mashile told ITWeb. “But they have not explained what the 'blended rate' is. Ask any lay person and they will tell you the rate they want to see reduced is that 125 cents per minute peak rate.”
Zolisa Masiza, MTN's group executive for regulatory affairs says the new interconnection rate will see the peak charge drop from 125 cents to around 99 cents per minute, the off peak rate will fall from 77 cents to 61 cents per minute, while the community service telephone (CST - part of the mobile operators' social obligations) will remain unchanged at six cents per minute.
Dominic Cull of Ellipsis Regulatory Solutions said the announcements do not necessarily mean that the retail rate for mobile calls will be reduced.
“The announcements are specific to wholesale termination rates and make absolutely no mention of any related commitment to reduce retail rates,” he said.
XHead = Cell C excluded
The agreement excludes the third and smallest mobile operator Cell C, which has stuck to its guns of wanting one rate for peak and off peak of 75 cents and another rate for smaller operators, that includes itself, of 65 cents per minute. It first proposed this last week during the Parliamentary public hearings into the interconnection rate.
During the hearings Cell C CEO Lars Reichelt told Parliament that Cell C only had a nine percent share of the mobile market and that in order to be defined as a dominant player it needed to have between 10 and 20% share.
“We have been a net beneficiary of the interconnection rate, but we are willing to take a hit now and then grow our market share,” he told the legislators.
However, Vodacom said in its statement today that it does not believe that Cell C is a new entrant to the market and therefore does not support Cell C's assertion.
Vodacom and MTN both say that they are continuing with bilateral discussions with Cell C and other operators about the rate reduction. However, this process does not sit well with ICASA either.
Tell everyone
“We want them to have multilateral discussions and get everyone to agree to a number, based on cost causation, that they are comfortable with. Not this A talks to B and B talks to C and then C talks to A situation,” Mashile said.
He said that is why this morning's meeting between the mobile operators, ICASA and the Internet Service Providers Association (who represented other small industry players) was cut short.
“Now we have to go forward with our regulatory process,” Mashile said.
XHead = Parliament means business
De Lille, whose party spearheaded the proposal that Parliament holds the interconnection rate hearings, said she was disappointed by MTN and Vodacom's announcement.
“They are really insulting the intelligence of the South African consumer with this. At least they have agreed that the interconnection rate needs to be cut, because when we started the hearings they said it did not,” she said.
De Lille said the ID still supports Parliament's proposals that the interconnection rate be cut to 60 cents per minute from 1 November and that it be reduced by 15 cents on the same date for the following three years.
She said “... the ball is now in ICASA's court and it shows that its moral suasion efforts have failed.
“Icasa has to do what it has been told to do as the members of Parliament really mean business,” De Lille said.
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