Operators asked to further lower interconnection fees

South African telecoms regulator, The Independent Communications Authority of South Africa (Icasa) has urged mobile operators to further reduce their interconnection fees by July.

The regulator has approved a new interconnection fee of 65c from July onwards and an off-peak mobile termination fee of 77c, according to local Business Day publication.

Earlier this year, in March, Vodacom, MTN and Cell C agreed to lower the call termination fee from R1,25 to 89c, thus lowering call rates in the country.

Previously criticized for delaying process, Icasa is speeding up the process, announcing further reductions to 50c by July 2011 and to 40c before July 2012.

“Given the nature of product bundling in the provision of retail mobile services, we expect that price reductions will be subject to dynamic competition”, said Icasa councilor, Thabo Makhakhe.
He added that failure from operators to comply with the new rates would force Icasa to look at regulating retail prices.

The operators must now proceed to study the draft regulations and submit their responses to ICASA. The drafts are issued as of today for public comment and the hearings are expected to take place in July.

Mobile operators expect declining earnings for this year, following the reductions in interconnection fees from the initial R1,25 rate. Vodacom has estimated a loss of R200 million for every 10% decline in call termination fees, while Telkom said it would save up to R1 billion a year and pass these savings on to its customers.