During the three year process, operators have had mixed feelings on the cuts, with a tug-of-war between the view that a reduction in fees could pass savings on to consumers, and that the fees have no direct impact on pricing.<\/p>\n
In the final round of reductions taking place today, mobile interconnect rates for large operators will drop to 40 cents, while rates for the smaller operators will drop to 44 cents.<\/p>\n
Operators respond<\/h3>\n![\"MTN](\"http:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2012\/03\/MTN-Interconnect.jpg\" "\\"MTN")
<\/a>MTN Interconnect<\/p><\/div>\n
MTN<\/a> told BusinessTech that it would be cutting its termination rates from 1 March 2013, as per regulation, though it emphasised its standpoint that its prices were not directly tied the the interconnect rates.<\/p>\nRobert Madzonga<\/a>, chief corporate services officer at MTN SA, says that pricing changes to MTN’s products have been as a result of competitive pressures felt in the retail downstream mobile voice market, and not directly linked to published wholesale interconnection regulations, “despite the unrelenting claims to this effect that is being played out in the media”.<\/p>\n“This direct linkage between a retail market and a wholesale market is misleading, and MTN has always maintained that the decrease in interconnection fees does not have a direct impact on retail rates,” Madzonga said.<\/p>\n
“MTN continues to offer innovative competitive propositions that provide its customers with reduced effective rates. All of this activity is in the context of effective competitive activity and not as a result of a published wholesale interconnection regulation.”<\/p>\n
![\"Vodacom](\"http:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2012\/07\/Vodacom-yea-or-nay.jpg\" "\\"Vodacom")
<\/a>Vodacom yea or nay<\/p><\/div>\n
Vodacom<\/a> noted that the impact of the last rate cuts in its 2012 financial year versus its 2011 financial year was a reduction of pre-tax profits of R392 million, though the operator said it could not project the impact of the cuts taking place in March 2013.<\/p>\n“MTRs are a net source of revenue for Vodacom, so a reduction in the rate has a negative effect for us,” Vodacom said.<\/p>\n
“In our last financial year, the cuts introduced in that period reduced pre-tax profits by almost R400 million. In other words, there won’t be savings from the latest cuts to pass on to our customers.”<\/p>\n
![\"Cell](\"http:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2012\/05\/Cell-C.jpg\" "\\"Cell")
<\/a>Cell C<\/p><\/div>\n
Cell C<\/a> emphasised that the further narrowing of the asymmetry on 1 March 2013 as a result of the latest MTR cuts will harm Cell C “significantly”, and reduces the prospect of it making further reductions in their retail tariffs.<\/p>\nLast week (21 February 2013), Cell C asked Icasa to hold off on dropping mobile termination rates (MTR) as planned for March 2013 so that an urgent market review could take place.<\/p>\n
Cell C was unsuccessful in delaying the process, but said that it respects the decision by Icasa to continue with the implementation of the MTR glide path as planned.<\/p>\n
“Cell C has been in discussions with ICASA for some time on the matter and the company believes the outcome of the market review will assist the Regulator in encouraging a more competitive landscape and ultimately benefit consumers with more competitive pricing,” it said.<\/p>\n
The operator noted that its 99c call rates were implemented in anticipation of the 40 cent termination rates, and as such further reductions in retail tariffs will not be made as a direct consequence of the 1 March 2013 MTR decline.<\/p>\n
“Cell C will continue to offer the most affordable and transparent tariffs in the market and supports the objectives of government in reducing the real cost to communicate,” it said.<\/p>\n
![\"ICASA\"](\"http:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2012\/03\/ICASA-Broken-Clock.jpg\" "\\"ICASA")
<\/a>ICASA<\/p><\/div>\n
More MTR cuts needed<\/h3>\n
Although it rejected Cell C’s call for a delay to the interconnect cuts, Icasa said that it has noted the concerns raised by various parties and will be initiating a review of the call termination market, looking into the matter of price transparency on an urgent basis.<\/p>\n
Icasa said that it sees no reason why mobile termination rates should not be in the region of R0.15 to R0.25, based on benchmarks set by South Africa\u2019s peers in Africa and the rest of the world.<\/p>\n
“We trust that the Regulator will also use the opportunity of the market review to make a determination on whether on-net vs off-net tariff differentiation and high national roaming charges contribute to the lack of effective competition,” Cell C said.<\/p>\n
MTN added that the last line of interconnect cuts were determined after a rigorous market review process and a year-long consultation in which all operators participated. “By law, any change to these Regulations needs to follow the same rigorous process, MTN is guided by the regulatory in this regard.”<\/p>\n
Vodacom said that it supports Icasa’s drive to ensure that South Africa gets first class affordable communications, however the operator noted that “experience in other markets suggests that implementing ultra low termination rates may not achieve this result”.<\/p>\n
8ta<\/a> had not responded to our queries by the time of publishing.<\/p>\nMore ICASA and MTR articles<\/h3>\n
Cell C calls for urgent interconnect review<\/strong><\/a><\/p>\nMobile termination rates: How does SA compare?<\/strong><\/a><\/p>\n
<\/a>MTN Interconnect<\/p><\/div>\n
MTN<\/a> told BusinessTech that it would be cutting its termination rates from 1 March 2013, as per regulation, though it emphasised its standpoint that its prices were not directly tied the the interconnect rates.<\/p>\n Robert Madzonga<\/a>, chief corporate services officer at MTN SA, says that pricing changes to MTN’s products have been as a result of competitive pressures felt in the retail downstream mobile voice market, and not directly linked to published wholesale interconnection regulations, “despite the unrelenting claims to this effect that is being played out in the media”.<\/p>\n “This direct linkage between a retail market and a wholesale market is misleading, and MTN has always maintained that the decrease in interconnection fees does not have a direct impact on retail rates,” Madzonga said.<\/p>\n “MTN continues to offer innovative competitive propositions that provide its customers with reduced effective rates. All of this activity is in the context of effective competitive activity and not as a result of a published wholesale interconnection regulation.”<\/p>\n Vodacom yea or nay<\/p><\/div>\n Vodacom<\/a> noted that the impact of the last rate cuts in its 2012 financial year versus its 2011 financial year was a reduction of pre-tax profits of R392 million, though the operator said it could not project the impact of the cuts taking place in March 2013.<\/p>\n “MTRs are a net source of revenue for Vodacom, so a reduction in the rate has a negative effect for us,” Vodacom said.<\/p>\n “In our last financial year, the cuts introduced in that period reduced pre-tax profits by almost R400 million. In other words, there won’t be savings from the latest cuts to pass on to our customers.”<\/p>\n Cell C<\/p><\/div>\n Cell C<\/a> emphasised that the further narrowing of the asymmetry on 1 March 2013 as a result of the latest MTR cuts will harm Cell C “significantly”, and reduces the prospect of it making further reductions in their retail tariffs.<\/p>\n Last week (21 February 2013), Cell C asked Icasa to hold off on dropping mobile termination rates (MTR) as planned for March 2013 so that an urgent market review could take place.<\/p>\n Cell C was unsuccessful in delaying the process, but said that it respects the decision by Icasa to continue with the implementation of the MTR glide path as planned.<\/p>\n “Cell C has been in discussions with ICASA for some time on the matter and the company believes the outcome of the market review will assist the Regulator in encouraging a more competitive landscape and ultimately benefit consumers with more competitive pricing,” it said.<\/p>\n The operator noted that its 99c call rates were implemented in anticipation of the 40 cent termination rates, and as such further reductions in retail tariffs will not be made as a direct consequence of the 1 March 2013 MTR decline.<\/p>\n “Cell C will continue to offer the most affordable and transparent tariffs in the market and supports the objectives of government in reducing the real cost to communicate,” it said.<\/p>\n ICASA<\/p><\/div>\n Although it rejected Cell C’s call for a delay to the interconnect cuts, Icasa said that it has noted the concerns raised by various parties and will be initiating a review of the call termination market, looking into the matter of price transparency on an urgent basis.<\/p>\n Icasa said that it sees no reason why mobile termination rates should not be in the region of R0.15 to R0.25, based on benchmarks set by South Africa\u2019s peers in Africa and the rest of the world.<\/p>\n “We trust that the Regulator will also use the opportunity of the market review to make a determination on whether on-net vs off-net tariff differentiation and high national roaming charges contribute to the lack of effective competition,” Cell C said.<\/p>\n MTN added that the last line of interconnect cuts were determined after a rigorous market review process and a year-long consultation in which all operators participated. “By law, any change to these Regulations needs to follow the same rigorous process, MTN is guided by the regulatory in this regard.”<\/p>\n Vodacom said that it supports Icasa’s drive to ensure that South Africa gets first class affordable communications, however the operator noted that “experience in other markets suggests that implementing ultra low termination rates may not achieve this result”.<\/p>\n 8ta<\/a> had not responded to our queries by the time of publishing.<\/p>\n Cell C calls for urgent interconnect review<\/strong><\/a><\/p>\n Mobile termination rates: How does SA compare?<\/strong><\/a><\/p>\n<\/a><\/a><\/a>More MTR cuts needed<\/h3>\n
More ICASA and MTR articles<\/h3>\n