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Vodacom supports mobile calls rates cut

By unknown | Sep 17, 2009 | COMMENTS [ 0 ]

VODACOM chief executive Pieter Uys said the company was ready to reduce interconnection rates.

VODACOM chief executive Pieter Uys said the company was ready to reduce interconnection rates.

"The current debate on interconnection rates seem to suggest that Vodacom is opposed to see these Icasa-approved interconnection rates reduced.

"Vodacom is not opposed to the reduction of interconnection rates. In line with international best practice, interconnection rates (or mobile terminating rates, as they are referred to) should be based on the demonstrable cost of terminating another party's call plus a fair profit. The only issue is, therefore, how this should be done," he said.

Uys said mobile terminating rates cannot unilaterally be reduced by Vodacom as it would irreparably damage the business were other operators not to follow with a similar reduction.

"The reduction of mobile terminating rates must therefore be orchestrated by Icasa, which derives its authority to intervene from the Electronic Communications Act of 2005. Last week Icasa initiated such talks, and strong progress is being made," he said.

Contrary to generally expressed opinions, the mobile terminating rate only affects the price of off-net calls, that is calls between Vodacom, MTN, Cell C and Telkom. Mobile terminating rates do not form a cost element in on-net calls, that is a Vodacom to Vodacom call.

"The biggest single operating cost component for every mobile call is the cost of transmission lines, which mobile operators have been obliged to hire from Telkom over the past years. This cost must also be taken into account when interconnect rates with Telkom are renegotiated," Uys said yesterday.

"Vodacom has always and is always keen to engage the policy makers and the regulator on the interconnection debate in South Africa," said Uys. - I-Net Bridge


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