Mobile operators play ball

2009-11-14 13:24


The move means Communications Minister Siphiwe Nyanda will withdraw his stern ministerial policy directive issued a month ago.

The directive would have forced MTN, Vodacom and Cell C to slash interconnection rates, after the parties could not reach common ground.

Interconnection rates are what mobile operators charge when customers call from one network to ­another. At R1.25 a minute during peak hours, South Africa has one of the highest rates in the world.

Nyanda says an intervention process will be considered for implementation by the Independent Communications Authority of SA (Icasa).

“My intervention should be viewed as an initial step, taking into account the fact that the reduction of cost to communicate should not necessarily address the wholesale market only, but should also make an impact in the retail sector, as this affects end users,” says Nyanda.

His announcement of the reduction comes as a surprise as the industry had expected a change only in June 2010 as Icasa had earlier ­indicated. The reduction means a move from R1.25 in peak to R0.89.

Nyanda says the reduction “will put money back into the pockets of ordinary South Africans who need it now more than ever”.

World Wide Worx managing director Arthur Goldstuck warns that consumers must be able to see how their call costs will be affected. He says the cut is a small victory and “is just the start”.

Goldstuck says: “We welcome the announcement and believe it is a first step towards more affordable communication.

“There is still a long way to go, and there are many obstacles to be overcome. But Nyanda has demonstrated the kind of political will that is needed to address these obstacles.”

Goldstuck would also like to see the mobile networks being more transparent about how they structure their costs.

Neotel’s communications head, Wandile Zote, says there are still many issues that need to be resolved to level the telecommunications playing field.

Independent media and broadcast analyst Avhasei Mukoma says ­although it was not expected, the surprise cut will reach the desired level “as long as government keeps pressurising the operators to reduce the rate”.

He expects further reductions to take longer as operators will need time to remodel their business strategies, since interconnection is part of their revenue.

Industry watchers believe that a R0.60 rate will be competitive and fairer to new entrants.

Vodacom and Cell C are expected to introduce the new cost structure in February, with MTN following suit a month later.

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