Interconnection saga continues

It has been an interesting process around interconnection rates. First there was a major drive from Parliament to cut costs dramatically, and in time for Christmas. Then ICASA walked away from its discussions with mobile operators in what could only be described as sheer frustration. Then suddenly the two dominant operators, Vodacom and MTN, make an announcement that they will cut these rates to 78 cents (18 cents higher than requested by government...), but that they have been unable to reach an agreement with the smaller operator, Cell C, who is still adament that rates should be asymmetric. The operators have also agreed to cut the rate to 61 cents by using a sliding scale over the next three years. What is interesting to me, is that even when they hit their lowest (after the three year process) it is still 1 cent higher than the original demand.

Now before we as consumers get too excited - these rates are wholesale rates and a lot happens to a price before you as the consumer have to fork out your hard-earned cash. So although there is immediately a 47 cent decrease in the interconnection fee, we as consumers can expect anything between 0 and 47 cents reduction in our tariffs. So the proof of the pudding is really going to be in watching whether the operators pass on some or all of this saving...

My gut feel - out principle they are not going to give consumers much of a saving - at least not initially. Why, you ask? Well think about it - they have publicly stated that consumers would not see a decrease in pricing, stating that these costs would have to be recovered in other areas. That says a lot.

So, where to from here? I believe ICASA is going to follow the regulatory process as outlined in the EC Act and as a result of pressure from Parliament, these costs are going to be legally forced down. One has to wonder however if they will build in a clause around a minimum reduction to the consumer?

Who knows - only time will tell.