Telkom welcomes Icasa MTR reduction

2014-01-29 13:35
Sipho Maseko, Telkom CEO. (Muntu Vilakazi )

Sipho Maseko, Telkom CEO. (Muntu Vilakazi )

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Cape Town - Telkom has welcomed the regulator's announcement on the reduction of Mobile Termination Rates (MTRs).

On Wednesday Icasa (the Independent Communications Authority of South Africa) announced that MTRs in SA would be further reduced to facilitate competition and lower prices for consumers.

Icasa said the costs would be cut to 20c from 40c from 1 March.

The costs will be further cut to 10c by March 2016, while the costs to fixed lines will also fall over the next three years, the regulator said.

"This brings the market closer to parity in termination rates, supporting the move to convergence between fixed and mobile services," said Dr Miriam Altman, head of Strategy at Telkom.

Skewed pricing

MTRs are a cost that operators charge each other for rival traffic on the networks.

In SA, Icasa has been trying to drive down the cost of voice and data traffic and the regulator has used the reduction of MTRs as a mechanism to achieve this.

The MTR reductions announced are skewed to allow operators which have less than 20% of the market - namely Cell C and Telkom Mobile - the opportunity to be more aggressive on pricing than major players Vodacom and MTN.

Telkom said that the reduction in rates would result in telephony cost savings for consumers.

"Telkom has for many years subsidised the dominant mobile operators, and this move will begin to level the playing field.
Telkom will pass on reductions to consumers and will communicate these savings once it has fully assessed the impact of the regulations," said Altman.

Junior mobile operators Cell C and Telkom Mobile will not be required to reduce their rates from 44c, potentially giving them leverage to be more aggressive in their pricing offerings.

The regulator is also responding to the Draft National Broadband policy finalised in late 2013 and due for implementation at the end of the first quarter 2014.

"While there is some vigorous competition among mobile operators in the sale of retail mobile data, and some resale by some of the larger ISPs, there is not significant scope for price competition without serious wholesale access regulation, and service providers tend to focus as a result on their valued added services to compete," the document says in relation to both mobile and fixed line broadband access.

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