Mobile operators are concerned that cutting termination rates could destabilise the market or damage them financially.
The operators' statements follow a heated Parliamentary Portfolio Committee on Communications meeting, where operators were lambasted for high local interconnect rates.
While none of the mobile players have admitted opposition to the reduction of interconnection rates, they have asked the Independent Communications Authority of SA (ICASA) to approach the issue with caution.
“ICASA would have to apply their minds in such a manner that they do not financially damage any operator by their ruling, since this would simply reduce the extent of competition in the industry and discourage investment in telecommunications infrastructure, which - in the context of SA - generally benefits the poor and marginalised as borne out by the 110% mobile telephony penetration level achieved since the advent of mobile 15 years ago,” says Vodacom CEO Pieter Uys.
Uys released a statement earlier this week, which says cutting interconnect rates would damage Vodacom more than the other operators. “In the first place, mobile terminating rates cannot unilaterally be reduced by Vodacom since we would irreparably damage our business were other operators not to follow with a similar reduction.”
He added that the company would prefer to see a gradual reduction in rates over time to “avoid business model shocks and prevent the scramble by operators for lucrative customers at the expense of the poor and marginalised communities”.
Cell C's executive head of regulatory affairs, Nadia Bulbulia, says the company has been fighting for lower interconnect since it entered the market eight years ago. “We are very pleased that this issue is finally getting the attention it deserves.”
However, she too has cautioned that the process needs to be handled with some sensitivity. “We would like to recommend caution, however, in ensuring that drastic measures do not destabilise the process and the investment climate in SA to the detriment of consumers.”
MTN has declined to provide any details on its stance on the matter, saying only: “MTN has observed the debate at the Parliamentary Portfolio Committee on Communications and has seen the resolution adopted. This resolution will now be reviewed internally.”
Industry watchers all agree that the South African rates need to be cut to boost competition in the local market, particularly for the newly licensed alternative telcos.
It remains to be seen whether a cost reduction will be passed onto consumers.
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