SA's biggest mobile operator, Vodacom has pledged support for the Independent Communications Authority of SA's (ICASA) proposal to drop interconnect termination rate costs, noting that it is aggressive, but not unreasonable.
regulations, in Midrand, the operator raised concerns about the timeline of ICASA's proposed glide path implementation.
Vodacom proposed that the commencement of the glide path, set for July, be delayed to 1 March 2011, arguing that it had already dropped the cost of its own interconnect termination rates voluntarily earlier this year. This has cost the operator R200 million in lost interconnect revenue.
The draft regulations call for a rate cut to 65c per minute in July, with a glide path leading to 40c by July 2012. Should ICASA proceed with the proposed glide path, mobile operators will be forced to drop the interconnect rate by 50% this year alone, including the voluntary rate cut in March this year.
“The proposed glide path is steep and unprecedented, to such a striking degree that, if not modified, the shock to existing business models will be devastating,” argued Vodacom MD Shameel Joosub.
Joosub explained that an eco-system exists around the current mobile termination rates, noting that further cuts this year do not create space for business plans or planned capital expenditure programmes to be revisited.
Vodacom supports the rate cut down to 40c, however, its proposed glide path would give the industry a chance to deal with the current reduction, concluded Joosub.
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