Interconnect Rate Cut
Author: Louis Burger | Date: 13 November 2009 12:20
November 2009 will see the reduction in interconnect rates between cellular providers
The Independent Communications Authority of SA (ICASA) is Set to Cut Rates
When mobile operators were unable to come to an agreement as to what the interconnect rates should be, ICASA had to step in and are now responsible for reducing these rates. ICASA weathered some heavy criticism due to the fact that they initially established this process. The theory stood that mobile companies operating in South Africa should decide on what the interconnect rates should be – something that could lead to collusion. In addition, it has been noted that the rates should be based on concrete figures and facts; and not simply chosen at random.
Why Reduce Interconnect Rates?
The reduction comes due to the simple fact that the interconnect rates are currently very high – highlighting the fact that mobile operators make a profit on these calls, while the user pays premium rates. A review of the cost of making calls between mobile operators led the Department of Communications (DOC) to establish plans that include issuing a policy directive that will force interconnect rates to be substantially lowered. The profits that mobile operators previously made off interconnect rates will be a thing of the past, as these savings are set to benefit the consumer.
What now? ICASA and DOC Take Steps towards Reducing Interconnect Rates
The DOC will now move ahead with implementation of the reduction in interconnect rates, with ICASA as the regulator. The implementation of this rate cut will occur over the coming months as a part of a three-phase initiative which the DOC is rolling-out as an element of the plan to reduce the overall cost of communication in South Africa. ICASA will be issuing regulations in this capacity – which will force the mobile operators to disclose what the interconnect calls cost them, and then reduce the rate to this cost-based level. These draft regulations are set to be completed in March 2010, with the wholesale termination rates to be in effect by the end of June 2010.
What Can Consumers Expect the Interconnect Rate to Be Cut to?
Current talks centre on the mobile operators in South Africa dropping their current interconnect rates to 60 cents per minute during peak calling times, with effect from 1 November 2009. Additional reductions of this rate over an extended period of time should see an annual decrease of 15 cents per annum until 2012. This will assist in reducing the retail cost of telecoms.
For more information on Information and Communication Technology, contact CCS Africa today on info@ccs-africa.co.za or call 0861 22 77 29.
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