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SA telecom operators applaud drop in mobile termination rates

February 12, 2014 • Mobile and Telecoms, Southern Africa

Wayne Speechly, executive: cloud and communications at Internet Solutions. (Image source: Internet Solutions)

Wayne Speechly, executive: cloud and communications at Internet Solutions. (Image source: Internet Solutions)

The new wholesale termination rate glide path announced by the Independent Communications Authority of South Africa (ICASA) in January will see the mobile termination rates drop from R0.40 to R0.20 on 1 March 2014, with further decreases in 2015 and 2016.

Wayne Speechly, executive: cloud and communications at Internet Solutions, explains that the interconnect rate will drop to R0.15 per minute next year, with a final drop to R0.10 in 2016. “While this reduction is not as significant as the drops experienced between 2010 and 2013, which saw the interconnect rate drop from R1.25 to R0.40, we feel that ICASA’s decision to continue reducing the rate on a sliding scale over the next three years is a positive move for the local telecommunications industry.”

While these reductions will likely impact on the network-derived revenue of the large incumbent operators, which could stifle their investment into the local market, Speechly believes that the move should continue to promote increased competition in the rest of the industry, which could help to drive down retail prices even further. “However, a reduction in telecommunication costs will only be felt at a consumer level if operators amend or adjust their retail rates in lieu of the drop in input costs as regulated by ICASA,” he says.

“We feel that the greatest value from the latest drop in interconnect rates will come from the increased innovation and subsequent competition it promotes, provided that these savings can be invested in such areas,” continues Speechly. The smaller network operators, for instance, will now benefit from the introduction of bigger asymmetric interconnect rates, which has the potential to drive further competition in the market across both price and product offerings.

“And the greater parity between mobile and fixed termination rates will also support the move to convergence, which we feel will drive more adoption of already mature communication technologies such as voice over IP (VoIP) as well as video and IP-based over-the-top services. “Speechly believes that this will also promote the acceleration for an increased roll-out of alternative telecommunication services for Internet Solutions’ clients, as well as other consumers and businesses, as VoIP-to-mobile and VoIP-services become a clear price advantage.

“Price parity will also force network operators and service providers to differentiate more in terms of their product offerings and value added services. This will offer greater variety to end-users and a range of benefits that include improved operational efficiency and enhanced collaboration capabilities, to name a few. As such, we feel that the local telecommunications industry has the opportunity to utilise these regulatory changes in rates to improve the value that is offered. The power now resides with businesses to take full advantage of the opportunity to embrace IP-led unified communication,” concludes Speechly.

Staff Writer

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