Mobile operator Cell C is in talks with Vodacom about renegotiating the 15-year roaming agreement the two companies signed in 2001.
Cell C CEO Alan Knott-Craig says the discussions with Vodacom “are going in the right direction”, but he says he can’t rule out the possibility of filing a complaint against Vodacom at the Competition Commission if the two parties are unable reach a deal that makes sense to the smaller of the two operators.
The roaming agreement, which allows Cell C to roam on Vodacom’s second-generation (2G) cellular network, expires in 2016. The current discussions also revolve around Cell C getting roaming access to Vodacom’s 3G network in areas where it doesn’t have adequate coverage.
Smaller industry players often sign roaming agreements, especially when they are in the early construction phase of their networks. Telkom’s mobile arm, 8ta, has a similar deal with MTN.
Knott-Craig, who was Vodacom’s founding CEO, says “a lot has happened” since the deal was signed in 2001. “All the cornerstones of the basis of that agreement have changed,” he says. “The most profound change has been the drop in mobile termination rates.”
Termination rates are the fees the operators charge one another to carry calls onto their networks. They have fallen from a high of R1,25/minute a few years ago and will reach 40c/minute in March 2013. Further cuts appear increasingly likely beyond next year.
Knott-Craig says that through the process of cutting the rates, the Independent Communications Authority of SA has determined the cost of carrying a call. “Whether you’re roaming or terminating a call, the cost is the same [and this cost] should apply equally to a terminating call or a roaming call,” he says. “A roaming call is just a terminating call in both directions. If anything, roaming costs should be less.”
Talks are continuing with Vodacom, Knott-Craig says, and he doesn’t see a reason to involve the competition authorities yet. “We will take it to the Competition Commission if necessary. Cell C must use whatever forums it can to improve its position, but the best way to get there is through consensus.” — (c) 2012 NewsCentral Media
