Cheaper phone rates for SA


South Africa’s lawmakers want mobile
phone operators to cut the interconnection
fees by more than half.
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• Josias Mathiba
Independent Communications Authority
of South Africa
+27 83 377 1493
+27 11 566 3459
• Tiyani Rikhotso
Department of Communications
+27 12 427 8010
+27 83 800 9936

Nosimilo Ndlovu

This festive season will be lighter on South Africans’ pockets as the country’s lawmakers put pressure on mobile phone operators to slash interconnection fees by more than half before the end of 2009.

Users pay interconnection fees to enable mobile phone calls to be transmitted from one network to another.

On 13th October, the first of a two-day public hearing session in parliament, Communications Minister Siphiwe Nyanda ordered the Independent Communications Authority of South Africa (Icasa), responsible for licensing and regulating electronic communications and broadcasting services, to implement a policy of cheaper fees by 30 November.

Mobile phone operators MTN, Vodacom, Cell C and Virgin Mobile were also present and invited to make written submissions stating their case.

These companies currently charge an interconnection fee of R1.25 per minute in peak time, but the proposal is that they cut this to 60 cents a minute, and then reduce fees by a further 15 cents over the next three years.

Parliament’s portfolio committee on communications is now putting significant pressure on operators and Icasa to effect this after four years of failed talks.

According to Communications Department spokesperson Tiyani Rikhotso, they may call on Icasa to force operators to cut their rates if it feels discussions between the companies and the regulator aren’t proceeding fast enough, referring to the 30th November deadline.

Rikhotso said due to the unproductive talks “we, as a department, would like to see this issue resolved as soon as possible”.

Mobile phone charges in South Africa are the third highest in the world after Mexico and Turkey, according to Icasa. This is a big concern of the government, as it feels high rates result in a less competitive telecoms environment.

“There is no dispute that costs are too high,” Rikhotso said. “The question is how much should costs be slashed by. We want these reductions to come into effect by Christmas. Consumers are being hard hit by these high prices.”

The day before the public hearings mobile phone operators met with Icasa to discuss the much-disputed fee issue. “Icasa will make recommendations on pricing to lawmakers following the meeting,” said acting Icasa spokesperson Josias Mathiba.

Public upbeat

Consumers have welcomed the move. National Consumer Forum (NCF) chairperson Thami Bolani said: “Having a cellular [mobile] phone is a necessity not a luxury for many people living in rural areas. We need reasonable, affordable telecommunications.”

The NCF is an independent non-profit organisation committed to raising vital consumer issues, and the protection and promotion of consumer rights and interests in South Africa.

Independent Democrats leader Patricia De Lille, who in June 2009 launched a campaign for cheaper telecommunications prices and was later joined by other political parties, is also pleased. “After years of being ripped off by the cellular phone operators, this is the Christmas box we all deserve,” she said. De Lille accused operators of stalling so they could rake in more money.

Advocate Johnny de Lange of the African National Congress has also slammed mobile phone operators for their high interconnection fees. “They have done terrible things to the South African people,” he said.

Operators warn government

Mobile phone operators have warned the government that drastic cuts could destabilise the South African mobile phone market or even discourage future investment in telecommunications infrastructure.

At the hearings Vodacom warned parliament that the government’s plan to force a cut could negatively affect a significant segment of the company’s usership.

“An arbitrary and ill-considered intervention could have unintended consequences, which could result in the disconnection of marginal customers who make up at least 30% of our customer base,” Vodacom chief executive Pieter Uys said in a written submission.

MTN, Africa’s biggest mobile phone operator, said the government’s plans may force it to cut its expenditure and raise other fees.

“While there may be pressure and dire need for drastic reductions in interconnection rates, there is no sound basis to determine the extent of this reduction,” the company said in their submission.