Cellphone cuts offer no relief yet to users

CELLPHONE companies have dashed South African cellphone users’ hopes that last week’s cut in interconnection fees will be seen in price cuts in the short term.

All South Africa’s cellphone companies argue that there is no link between the regulated wholesale termination rates they charge each other and the prices customers pay.

Last week‚ the Independent Communication Authority of South Africa (Icasa) halved – to 20c a minute – the price that the smallest cellphone operators will pay their larger competitors to connect calls to the phones of their customers.

That followed a decision by the High Court in Johannesburg on Monday last week that declared Icasa’s regulations unlawful but suspended its order for six months to enable Icasa to regulate in accordance with the law.

The biggest beneficiaries of the change‚ Telkom’s fixed-line and cellphone businesses and Cell C‚ were noncommittal when approached on their plans for lowering call charges.

The companies will pay their larger rivals the 20c-a-minute rate when their customers phone Vodacom and MTN users. When the calls are reversed‚ however‚ Cell C and Telkom will be paid 44c a minute – or 120% more than the small operators – a situation referred to as “asymmetry”.

Vodacom said the new termination rates could amount to a R1-billion annual cost to shareholders.

“We are busy reviewing how

the financial impact from the rate cuts will translate in terms of our investment plans‚ and how to minimise the impact on our customers‚” Vodacom spokesman Richard Boorman says.

Cell C says the lower fees are “a step in the right direction” and “positive for the consumer and the economy as a whole”‚ according to acting CEO‚ Jose dos Santos. He would not spell out the benefit to the consumer.

Telkom says it “believes the ruling is in the best interest of the industry and will go far in reducing the cost to communicate for consumers and stimulating competition in the industry”. It has not‚ however‚ committed to passing the benefit on to its customers.

“. . . an ideal outcome for the company would be one that optimises shareholder value while delivering quality and service to its customers – and we will not speculate what these rates should be at this stage,” Telkom said. That means it has not decided to change its call rates.

While the operators are not obliged to reduce the prices they charge consumers‚ the regulator “would like to see some pass-through in the pricing”.

Vodacom and MTN turned to the court and objected to the lower fees‚ saying there was no scientific basis‚ or due process‚ on how Icasa had arrived at them. The court gave the regulator six months to formulate a costing exercise that will comply with the law. Icasa will also work on a tariff plan for the years to 2016‚ which was withdrawn after the court objection‚ Maleka said. — BDLive