South Africa: Mobile operators agree to cut interconnect rates by February 2010


The Independent Communications Authority of SA (ICASA) says mobile operators have agreed to drop the termination rates by the beginning of February 2010.

According to a report released by the authority this afternoon, following an urgent meeting between it, the operators, and the Internet Service Providers Association this morning, operators have agreed to begin a process that will see lower interconnect rates.

“After deliberations, the meeting resolved to embark on the industry-led process to reduce termination rates, with ICASA exercising an oversight responsibility,” the report explains. It is still unclear by how much the rate of interconnection will be cut, and the regulator did not indicate whether it had specifically quantified the rate drop.

According to the report, the operators will have to start implementing a new way of negotiating interconnection rates. The new negotiations will have to also incorporate aspects of competition law.

Operators have agreed to have the new contract agreements in place by the end of December, with full implementation of the new rates as soon as February next year.

The high rate of interconnection has been hot on the agenda over the last few weeks, with local alternative telecommunications companies and parliamentarians calling on the regulator or the competition authorities to put a clamp on the costs.

Last week’s announcement will be a boon for the smaller industry players that have much riding on ICASA's interconnect decisions. Some have argued that the current rates have made it impossible to compete effectively in a big business-dominated industry.

Last week's meeting was also supposed to deal with the definition of market power, which the regulator says little about in its report. However, ICASA does say it will continue its mandate to regulate the industry under the Electronic Communications Act.

“This process will entail the publication of the necessary regulatory framework pursuant to regulations defining the relevant market; evaluating the effectiveness of competition; a declaration of licensees with significant market power and the implementation of pro-competitive remedies,” it concludes.