How low can you go?

It's Friday the 13th - and the cellular operators have finally agreed on a lower interconnection fee. The only problem with this is that the cut is not nearly enough and it will only come into effect next year.

What I find highly amusing is the fact that Vodacom and Cell C (who incidentally wanted asymmetric rates to give them a bit of a boost) have agreed to lower their rates by Feb 2010. MTN on the other hand will have a whole extra month to rake in the profits as they are only lowering rates by March. What a joke.

Secondly - the rate they agreed upon is still 18 cents higher than the rate proposed by government.

Now, obviously ICASA will continue their regulatory process based on Section 10 of the EC Act. Their deadline is June 2010 - and it's going to be very interesting to see whether they make that deadline or not. If they don't heads are going to roll. Not that that means much to the consumer. And it's not like their current deadline is impossible to meet. Most of the groundwork was done 18 months ago, all they need to do is use the next 6 months wisely and get it done! It makes you wonder what on earth they've been doing for the last 18 months...

We can still hope that this process will determine that the rate must be lowered even further. What many people don't realise is that high interconnection rates are basically creating an artificial price floor. Think about it - if you have to pay out a certain amount of money, you're never going to drop your price below that level, because it just doesn't make business sense. We're never going to see shifts in market share unless this rate is lowered enough to allow for actual competition in the marketplace. Then again, why would the operators want more competition?