MTN, Vodacom interconnection fees cut

1 Apr 2014

Interconnection fees for mobile operators MTN and Vodacom have been cut in half‚ despite a declaration by the high court that the regulations were unlawful.

While the court found in favour of the two mobile giants‚ the big winner in court was actually Icasa‚ as the judgment enabled it to implement the planned reduction of interconnection fees for the 2014 year to 20c.

Judge Haseena Mayat said she was suspending the order for six months in the public interest.

Icasa will then have six months to regulate in accordance with the law. The order is also good news for smaller operators Cell-C and Telkom Mobile who were relying on the regulations coming into effect to give them a competitive boost. In terms of regulations‚ the smaller operators can charge 44c.

Icasa has‚ since 2010‚ been trying to drive down interconnection fees through regulation‚ saying this would reduce costs for consumers. Interconnection fees‚ or "mobile termination rates"‚ are the fees that networks charge each other for calls made between them.

The idea of the regulations was that operators gradually reduce their termination rates every year in what Icasa calls a "glide path" to eventually arrive at an amount based on the actual cost of interconnection.

The regulator has also been seeking to create a more competitive environment by making the big players‚ Vodacom and MTN‚ drop their rates faster than the smaller operators‚ Cell C and Telkom Mobile‚ through "asymmetrical rates".