ICASA Announces Proposed Cuts to Interconnection Fees in South Africa

Telecoms

The Independent Communications Authority of South Africa (ICASA) has announced a proposal to regulate mobile interconnection fees by mobile operators. The telecoms regulator has proposed that mobile interconnect rates, currently set at R0.89 per minute, to be reduced to R0.65 from July 2010, R0.50 in July 2011 and further reduced to R0.40 from July 2012.

Interconnection rates are the fees the mobile operators charge each other and other network operators to carry calls onto their networks. Fixed interconnect rates were proposed to be reduced to R0.15 from July 2010 and further reduced to R0.10 from July 2010.

Icasa said in a statement that a key aspect of regulating interconnect rates was pass-through to consumers. It asked to what extent end-users would benefit and had two expectations in this regard. "Firstly, we expect the fixed to mobile retail call rates to reduce as the mobile termination rates are reduced," ICASA said.

It said there had already been a 100 percent pass-through of the recent reduction in mobile call termination rates for fixed line subscribers. It would encourage the practice to continue.

Secondly, Icasa expected some measure of pass-through to a reduction in retail prices of calls between mobile networks. "However, given the nature of product bundling in the provision of retail mobile services we expect that price reductions will be subject to dynamic competition."

A lack of effective pass-through to retail prices indicated there might be a lack of effective competition in the retail market for mobile services. "ICASA will monitor price movements in the retail market for mobile services vigilantly over the coming months to evaluate whether further action is required," it said.

The proposals are to be released today in the Government Gazette. Public hearings into the matter are planned from 9 to 11 June.