Nashua Communications MD Andy Openshaw has joined Cell C CEO Alan Knott-Craig in calling for a further substantial further reduction in wholesale mobile termination rates in 2013, when a three-year process of reducing the rates comes to an end.
Openshaw, who heads Nashua Communications following its recent merger with Nashua ECN, says that pushing down the rates will benefit smaller industry players and promote competition.
Knott-Craig has made similar comments. In May, he called for the rate to be reduced to 25c/minute, saying current levels were “still too high”.
Openshaw says the rates — which operators charge each other to carry calls between their networks — benefit only South Africa’s two biggest mobile operators, MTN and Vodacom.
“[Operators of] efficient, next-generation [Internet protocol] networks can compete at much lower prices than the incumbents,” Openshaw says.
He says high termination rates mean Vodacom and MTN enjoy a strategic advantage over smaller rivals. This is because more of their traffic is carried on their own networks, so a smaller proportion of their calls is sent to other operators. Smaller players like Cell C and 8ta, on the other hand, route most of their users’ calls to Vodacom and MTN numbers, attracting termination fees.
Because about half of calls originating from Vodacom numbers are terminated on the operator’s own network, its real interconnect rate is lower, Openshaw says. The lower the termination rate, the more the advantage enjoyed by the big operators is taken away.
The Independent Communications Authority of SA has forced down termination rates each year for the past three years. The rates will reach 40c/minute in March 2013, from a high of R1,25/minute during peak times four years ago.
“What happens when the rate drops to 40c in March will be interesting,” Openshaw says. “We’re starting to get into the pain zone for the big guys.”
He says the rates should fall further beyond 2013, suggesting 25c/minute would be an appropriate new immediate target to set. “If we can get it down to 25c, we are getting into a space where competition takes over.” — (c) 2012 NewsCentral Media
