Vodacom: Consumers won’t benefit from call rate cuts
Vodacom CEO, Shameel Joosub says that the new regulated rates for call termination, announced by Independent Communications Authority of South Africa (Icasa), is not a victory for the consumer.
A termination rate is the money networks pay to each other for connecting a call. MTRs have declined from R1.25 in 2009 to a current price of 40 cents.
According to the new regulations, the rate will drop to 20 cents as from 1 March 2014, with a further drop to R0.15 in in 2015, and R0.10 the following year.
In a press statement on Wednesday (29 January) Vodacom maintained that it is supportive of lower mobile termination rates.
“Our key request to Icasa has been to consider the adverse impact of lower termination rates on our customers, our partners and our suppliers. To this end, we had proposed a reasonable reduction glidepath,” the operator said.
“Our recommendation has not been accepted and we will be reviewing the potential impact both internally and externally. We will be in a better position to comment on the steps we will need to take to adjust our business model once that review has been completed.”
CEO Shameel Joosub said: “I wish I could say this is a victory for the consumer, but it is far from it. This is a subsidy which, in effect, means that Vodacom will be charged more to call Cell C and Telkom Mobile than the latter will be charged to call Vodacom.”
“This prejudices Vodacom’s customers, and rewards those who have not invested in their networks at the expense of those who have.”
“We will consider our options in order to do our best to protect our customers and ensure that South Africa continues to get the network investment that it needs and deserves.”
Asymmetry will remain at R0.44 under Icasa’s new regulations.
Vodacom said it had also made representations to the watchdog about the proposed asymmetry structure, which is now more aggressive to the detriment of Vodacom’s customers and business.
“We feel that the level of asymmetry is unjustified and that there is no clear basis for the differential. This asymmetry is clearly a subsidy for the smaller operators,” the network said.
Vodacom also stated that it believes that Icasa’s decision was reached without following due process.
“A cost-based study, which is a prerequisite before reaching this type of decision, has not been conducted and shared with us. We will be considering our options in relation to this,” Vodacom said.
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