THE Independent Communications Authority of SA surprised mobile operators yesterday when it announced that it would be dropping mobile termination rates to 40c by 2012, following years of protest from the public.

Between 2000 and 2002, the duopoly of MTN and Vodacom increased interconnection rates from 50c to R1,25 over a period of 17 months. This, according to former Cell C chief executive Jeffrey Hedberg, was designed to shut out any new competition.

Speaking about the new rates Icasa councillor Thabo Makhakhe said yesterday: "Icasa believes that a glide-path from the current rates to a cost-oriented rate is necessary to secure and support continuous investment in the ICT sector in SA."

Icasa therefore proposed a 3-year glide-path for both mobile and fixed service licensees which would be structured in the following way:

l Mobile termination rates are proposed to be reduced to 65c from July 2010, 50c in July 2011 and further reduced to 40c from July 2012.

l Fixed termination rates are proposed to be reduced to 15c from July 2010 and further reduced to 10c from July 2012.

The biggest receivers (net receivers) of mobile termination fees, Vodacom and MTN are set to lose billions in revenue while smaller operators such as Cell C, Virgin Mobile and Telkom's new mobile service, will pay less.