MTRs a boost for VoIP
Internet Solutions says that the final interconnect rate cut, planned for 1 March 2013, will help foster a more competitive telecoms market, with VoIP in particular set to gain.
The cut in mobile termination rates (MTRs) will bring the price down to R0.40.
According to recent study conducted on behalf of the World Bank, high prices across all of the South African mobile operators are a result of interconnection charges.
In March 2012, the last round of interconnect rate cuts kicked in, taking peak mobile termination rates down from R0.73, to R0.56 per minute; and off-peak mobile termination rates down from R0.65, to R0.52 per minute.
Operators Vodacom and MTN claimed that the rate cuts have had a significant impact on their bottom line.
While further cuts, in line with the glide path set out in 2010 by the Independent Communications Authority of SA (Icasa), will continue to hamper SA’s listed operators, Internet Soultions believes the cut will spur competition in the market and be a big boost for the voice over IP (VoIP) telecoms market.
“This price reduction in the interconnect rate is significant, and will prompt businesses looking to better manage cost to adopt IP-based communication and embrace more innovative technologies,” said Wayne Speechly, executive for communication services at Internet Solutions.
“Lower termination rates stimulate competition by making it easier for new entrants in the market, as witnessed with the recent announcement by Orange.”
“This is one of the primary mechanisms that drive a reduction in call charges and the delivery of more affordable telecommunication services,” Speechly said.
The executive also predicts a migration from mobile networks to next generation VoIP services, as these will no longer be at a price disadvantage.
The next step
Speechly said that Icasa should now finalise the next phase of regulations that govern the wholesale termination rates for the market.
“The regulations promulgated on 29 October 2010 have now come to an end, and further intervention is required to continue wholesale interconnect rate reductions post 2013.”
“Icasa needs to ensure that the industry can continue to rationalise the wholesale cost base, so that competitors can maintain a sustainable business.”
“Levelling the input cost drives a more competitive market and ensures monopolistic behaviour is managed as best as possible,” Speechly said.
More on the South African mobile landscape
World Bank takes swipe at SA mobile prices
Mobile voice the next price war – analyst
MTN and Vodacom continue record surge
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