The Independent Communications Authority of SA (ICASA) has given the green light to cellular operators to cut interconnect rates by 36c from next month, which it says will benefit consumers.
This week, MTN, Cell C and Vodacom agreed independently with each other to voluntarily cut the peak interconnect rate from R1.25 to 89c. The off-peak cost remains at 77c. The agreements were filed with ICASA on Tuesday and, late last night, it approved the revised proposal.
A previous agreement between the operators was rejected out of hand as it would prevent ICASA from imposing a rate change until 2013, when the proposed glide path down to 80c came to an end. However, the new agreement has no such binding clauses, and has done away with the glide path.
“The authority holds that this reduction in interconnection rates will be passed through to the consumers,” it says.
Vodacom CEO Pieter Uys has said that, for every 10% reduction in peak rates, it will lose R200 million in profit.
More cuts?
ICASA has also warned the three operators that they must re-negotiate all interconnection agreements they have with other licensees, and file these with the regulator.
regulations in March.
Final regulations are set to be published in June, after public and stakeholder input. ICASA says the processes will “at a minimum take a stance on the effectiveness of competition in the wholesale call termination market”.
Yesterday, Independent Democrats leader Patricia de Lille called on ICASA to hold firm on the rate cut and not to acquiesce to the operators until it has completed its own process of investigating termination rates.
Protracted process
In July last year, De Lille laid a complaint with the Competition Commission over the high cost of mobile phone calls and asked the commission to investigate if the dominant players are acting anti-competitively, or are guilty of prohibitive practices.
The process to cut rates was forced into the spotlight late last year when communications minister Siphiwe Nyanda told Cabinet that the operators had agreed to eventually cull the rate down to a 77c flat rate for off-peak and peak times.
Nyanda's announcement followed weeks of private meetings between government and the operators.
However, in an apparent about-turn, the documents initially filed with ICASA indicated the rate would be cut to 89c this year, 85c next year and then down to 80c in 2012.
The agreement also bound ICASA to be hands off, and was rejected by the authority, causing concerns that the entire process would again be delayed.
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