Johannesburg - There was mixed reaction yesterday among the country’s telecommunications providers to new interconnection rates that could set smaller operators on a new course and lower the cost of communication.
The tariffs, announced by the Independent Communications Authority of South Africa (Icasa), represent a decline of more than 80 percent from R1.25 in interconnection rates over the past four years. The intervention was intended to foster competition, said Vuyo Batyi, Icasa’s acting chairman.
Cell C, Telkom Mobile and other providers with a less than 20 percent market share stand to benefit the most. Vodacom and MTN may feel adverse effects.
Icasa ruled that Vodacom and MTN would have their interconnection rates cut to 20c from March 1. Cell C and smaller rivals would pay 20c to them but charge 44c as a result of asymmetry. By March 2017, rate operators would charge each other 10c.
Neotel, a fixed-line and cellphone company, would have slightly greater asymmetry over its nearest rival, Telkom.
Interconnection tariffs are rates providers charge to receive and connect to each other’s networks. Asymmetry, a global practice, allows smaller players to charge more until they have sufficient market share to compete effectively.
Richard Boorman,Vodacom’s spokesman, said it had not assessed the financial impact of the lower tariffs, volatile currency and higher interest rates. “If the rand weakens against the currencies of our other operating companies, it’s a positive.” He added it was unlikely there would be savings to pass on to consumers.
MTN SA did not support asymmetrical rates and would consider “a number of due process concerns” once the regulations were published, chief executive Zunaid Bulbulia said.
Miriam Altman, the head of strategy at Telkom, said it intended to pass on any savings to consumers.
Jose dos Santos, the acting Cell C chief executive, said the move would promote a more balanced and competitive mobile industry.
Greg Cort, a telecoms analyst at Old Mutual Investment Group’s Electus boutique, said: “Greater asymmetry than previously proposed increases the chances of price reductions over the next three years.