Johannesburg - Analysts warn that the agreed reduction in interconnect rates announced by Minister of Communications Siphiwe Nyanda must reflect in actual call costs.
IT research and consulting firm World Wide Worx has called the announcement "a small victory" and said that there is still much to be done in reducing costs.
The department of communications released a statement late on Thursday announcing the 40% cut that would reduce the standard cellphone interconnect rate - charged by telecoms networks for carrying traffic for each other - to 89c from R1.25.
Said Minister of Communications Siphiwe Nyanda: "We have... agreed with Vodacom and Cell C that the effective date for the reduction would be February 2010, except for MTN. This will allow both the mobile operators and the SMMEs [small firms] to realign their business operations accordingly."
"Further, I am glad to report... that mobile operators have committed to introduce new and affordable retail products based on their reduced rates from December 1 2009," he said.
World Wide Worx MD Arthur Goldstuck welcomed the announcement, but warned that consumers must be able to see how their call costs are affected.
"It's been a long time coming, but it's never too late," he said.
"We welcome the announcement, and believe it is a first step towards more affordable communications. There is still a long way to go, and there are many obstacles to be overcome, but Minister of Communications Siphiwe Nyanda has demonstrated the kind of political will that is needed to address these obstacles," he said.
Goldstuck applauded mobile networks for displaying a willingness to reduce rates.
"We... trust that this heralds the beginning of a new approach to the concerns of the consumer," he said.
Goldstuck warned, however, that the rate cut will have little impact if the networks are not required to be transparent about their cost structure.
'Real cost may be a few cents'
"Under the current structures of call packages, it is almost impossible for the consumer to understand the cost components of various categories of calls, and this is clearly an area of potential confusion and disinformation.
"Across both mobile and fixed line networks, consumers need to be able to see, for each category of call, such as off-peak and peak-time, to mobile and landline numbers, what amount is made up by the interconnect fee," he said.
World Wide Worx has pointed out that the interconnect fee could potentially still come down to as low as 30c and has issued a priority list of further areas that need attention regarding the cost of communications in South Africa. These include the need for clear evidence of the real cost of terminating calls from one network onto another.
"Extravagant claims have been made, but no network has been willing to play open cards on the issue. It has been argued that the real cost may be a few cents, and it is important for both transparency and affordability to clear up the confusion," said the company.
"Transparency of the makeup of call costs to the consumer... is essential for cuts in specific areas to be visible."
World Wide Worx also called for investigation of the requirement by all mobile networks for compulsory caller line identity and itemised billing on all contract accounts to be provided, both of which incur a cost to the customer.
It added that high line rentals for fixed line users also needed to be addressed, along with a requirement by the incumbent fixed line provider for its customers to pay a high deposit fee, which is then held indefinitely or until the account is terminated.
"Fixed line costs should not be immune from the scrutiny of government," Goldstuck said.
- Fin24.com