SA scores from lower mobile tariffs - TechCentral

SA scores from lower mobile tariffs

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Any doubt that lower wholesale call termination rates have led to a sharp decline in retail mobile tariffs in South Africa should be put to rest, new research shows.

South Africans have benefited directly from a reduction in termination rates — the fees telecommunications operators charge each other to carry calls between their networks — according to a new report by Research ICT Africa.

In the past, high termination rates posed an obstacle to competition. This is no longer the case, the researcher says, even though smaller operators are not receiving the same scale of “asymmetry” benefits they did last year.

Asymmetry refers to price differences for call termination that are skewed deliberately towards smaller operators — in South Africa’s case, Cell C and Telkom’s mobile arm.

“Despite being less favourable to the smaller operators than those introduced in March last year by [communications regulator]Icasa, the latest mobile termination rate of 20c … still allows Cell C and Telkom Mobile to compete with MTN and Vodacom’s on-net prices,” Research ICT Africa says.

However, the short-term cash-flow benefit for Cell C and Telkom is unlikely to be significant, it says.

“The asymmetry may result in higher off-net prices and thus lower off-net call volumes, and not more termination rate revenues as desired by the smaller operators.”

It adds that Vodacom and MTN are able to increase off-net prices for their popular dynamic pricing prepaid products by giving fewer discounts. “Icasa would need to conduct a detailed traffic and effective price analysis to assess the impact of this regulation.”

The reports notes, however, that in 2014, competition heated up significantly, especially between Cell C and MTN. Both companies cut retail tariffs in the second quarter of 2014 through promotions, but then withdrew them in the fourth quarter to replace them with “less generous promotions”.

“Historically MTN matched its prices with Vodacom, but when Vodacom reduced its prices following the first mobile termination rate reductions, MTN maintained its higher prices,” the report says. “This cost it handsomely with the loss of a million subscribers between 2013 and 2014.

“With the haemorrhaging of its subscriber base, much of it to Cell C, which had exploited the reduction in termination rates to increase market share, MTN has reduced prices since the interim and final mobile termination rate reductions last year.”

However, when compared to the rest of Africa, South Africa’s cheapest product is still five times more expensive than the cheapest product in Africa – which is offered by Kenya’s dominant operator, Safaricom.

“Vodacom, the dominant operator [in South Africa], is currently the most expensive operator and Telkom Mobile the cheapest for mobile prepaid voice,” the report says.

South Africa is in 14th position in Africa in Research ICT Africa’s mobile pricing index in terms of the dominant operator and ninth in terms of the cheapest product. “This is a major improvement on their rankings in the 30s in previous years, but they still are not leading on the continent as South Africans have come to expect.”  — © 2015 NewsCentral Media

2 Comments

  1. What South African’s have to come expect is to be totally ripped off by everyone. Ripped off by the mobile operators, our only fixed-line operator, the president-in-thief, our cANCerous government, the large chainstores, construction companies, doctors, medical aids, banks, car manufacturers, municipalities, Eskom, SANRAL, SABC, the receiver of revenue, and just about anyone and everyone.

    It’s a free for all in our banana republic. A big thank F you goes out to all the voters that made this possible. F you very much.

  2. Good to see you back to your usual angry rants. Not only thanks to the voters, but also the consumers, and all who allowed the crooks to get away with it.