South Africa's regulator slammed by govt

Committee also blames “greed” of operators for “socially indefensible and economically unjustifiable” connection charges

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South Africa's regulator slammed by govt South Africans could be in line for cheaper calls if government proposals succeed.
By  George Bevir Published  September 16, 2009

South Africa’s telecoms regulator was yesterday accused of failing consumers over the interconnection fees charged by mobile operators, which politicians described as “excessive and exorbitant”.

Telecom operators charge each other on a calling party pays basis, and the fees charged by operators in South Africa are among the highest in Africa, with the peak rate for mobile-to-mobile calls set at R1.25 (US$0.17).

The South African government’s communications committee said the high fees were “the consequence of apparent historical collusion between dominant mobile operators in the country - which has placed profits and greed above people - and the incapacity of the Independent Communications Authority of South Africa (ICASA) to effectively regulate this matter.”

Last week, ICASA met with representatives of Vodacom, MTN, Cell C, Telkom, Neotel and the Internet Service Providers Association (ISPA) to discuss interconnect rates, and it pledged to oversee an industry-led process to reduce the rates by 1st February 2010.

But the time frame was not acceptable to the communications committee, which called for swifter action. It wants telcos to drop the interconnection rates to R0.60 per minute during peak times by 1st November, and it wants them to be reduced by a further R0.15 on 1st November every year until 2012.

The committee went on to rebuke ICASA further, urging it “to act professionally, effectively and boldly to regulate interconnection rates in South Africa as a matter of urgency”.

Any changes to interconnection fees are likely to have the greatest impact on South Africa’s two largest mobile operators, Vodacom and MTN.

South Africa’s largest mobile operator, Vodacom, collected R8.63 billion ($1.17 billion) in the 12 months to the end of March, while second-placed rival MTN raised interconnect revenue to R6.9 billion ($937 million) in the year to December.

The communications committee said the impact of high interconnection fees had been felt most by citizens, “particularly the poor and marginalised”, and it called for the reductions to be passed on to consumers.

“There is “unanimity in the industry, government, other relevant stakeholders and the regulatory authority that the present situation is socially indefensible and economically unjustifiable”, the statement continued.

The initial interconnection agreement between South Africa’s Vodacom and MTN in 1994 set the rate at R0.20 per minute, but over the course of seven years, the rate has risen by over 500% to R1.23.

Public hearings on the committee’s proposals for interconnection rates are scheduled for 13th and 14th October 2009.

The move towards lower call charges in South Africa has been gathering pace over the past few months. In April, CommsMEA reported on the push for lower charges, when a spokesperson for South Africa’s Ministry of Communications revealed that a series of public consultations on interconnection fees would begin after the country’s general election,  which took place at the end of April.

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