Johannesburg - South Africans can expect dramatic reductions in their cellphone accounts from early next year.
But it all depends on whether South Africa's major players can reach agreement on lower interconnection tariffs.
The Independent Communication Authority of South Africa (Icasa) announced this negotiation process on Tuesday. This comes in the wake of substantial criticism of cellphone operators because their local tariffs are much higher than those in other emerging countries.
Many reckon these tariffs excessively raise the cost of calls for consumers and stifle industry competition.
The current interconnection tariff is about R1.25 per call between two different cellphone networks, says Arthur Goldstuck, managing director of World Wide Worx and a telecommunications analyst.
A call from a cellphone network to a Telkom number or vice versa costs an additional 25c-odd.
In other countries operators have already agreed to lower these tariffs so as to reduce call costs. The Namibian industry, for instance, significantly reduced its interconnection tariffs earlier this year.
Icasa will have an oversight role in the process when Vodacom, MTN, Cell C, Telkom, Neotel and Ispa, the Internet Service Providers' Association, negotiate on reducing these tariffs.
The parties must, before December, reach an agreement that takes into account, among other things, competition legislation. Icasa suggests that the new tariff framework should come into operation in February.
According to Icasa, this decision has been taken because of the ongoing public debate on the issue.
Earlier this year Patricia de Lille, leader of the ID, submitted a complaint to the Competition Commission about the high cost of cellphone calls as well as high interconnection tariffs.
Neotel and Cell C indicated their opposition to high interconnection tariffs some time ago.
Minister of Communication General Siphiwe Nyanda indicated in his budget speech that regulations to reduce telecommunication costs should be considered.
"There'll be a lot of opposition. The two largest networks, MTN and Vodacom, have the most to lose and will probably try to keep the tariffs higher," Goldstuck observed.
But he added that these operators should be extremely careful because the competition authorities will be able to investigate the tariffs and won't shy away from imposing fines.
Too late to apologise
Former Vodacom chief executive Alan Knott-Craig in his personal capacity told a panel discussion at a conference earlier this year that interconnection tariffs should have come down at least five years ago.
Knott-Craig said the regulator should negotiate with operators and adjust the tariff to a level that would keep everyone happy and the issue out of court.
He also said the tariff should be the same for cellphone and landline calls. In his view a tariff of 60c might be acceptable.
Interconnection tariffs are the fees that operators pay each other to transfer calls back and forth over the different networks.
According to Arthur Goldstuck, the consequence of these tariffs is that telecommunication costs in South Africa are excessive and smaller operators are disadvantaged.
Clients of a smaller network like Cell C usually make more calls to the bigger networks like MTN and Vodacom. As a result Cell C has to pay its larger colleagues more for interconnection costs. This also means that Cell C finds it more difficult to compete with MTN and Vodacom.
Goldstuck notes that interconnection costs in the 1990s started at 20c a call, but once Cell C entered the market in 2001 they were gradually increased for cellphone operators.
At the time Icasa approved the increases.
- Sake24.com
For more business news in Afrikaans, go to Sake24.com.