Icasa gives up on cell groups

Johannesburg - The Independent Communications Authority of SA (Icasa) has given up on negotiating with cellphone companies on lowering tariffs.

In a statement released on Friday, the authority expressed frustration about recent negotiations about termination rates, noting that mobile operators had nothing to put on the table.

"As a matter of fact, Vodacom and MTN refused to disclose their bilateral mobile termination rate agreement at the meeting.

"Given that the moral suasion process did not yield positive results, the authority will nevertheless continue with its regulatory processes of developing a framework for competition and cost-based pricing in the voice market as set out in Chapter 10 of the Electronic Communications Act (ECA)."

But on Friday evening, Vodacom and MTN announced that they reached an agreement to cut interconnection rates.

The termination (or interconnection) fee is a charge to enable calls to be transmitted from each other's networks.

They currently charge R1.25 per minute at peak times for their interconnection fee.

Vodacom and MTN have proposed a blended interconnection rate of 78c, which declines to 61c on a glide path. Vodacom earned R8.6bn in interconnection fees in the year to end-March, while MTN received R6.9bn for the year to December 2008.

Cell C has refused to take part in the agreement, insisting that the proposals from its competitors offer no significant changes to the current regime.

Cell C maintains its position on a once-off reduction of 40% in the peak interconnection rate and a flat-rate of 75c.

Icasa has not indicated whether the proposal from MTN and Vodacom is acceptable, but looks set to pursue further "other supplementary regulatory processes" to impose "pro-competitive remedies, including cost based pricing".

The authority wants to conclude the process by end-March 2010.

- Fin24.com and Reuters