Long suffering South African telecoms consumers yesterday got news of impending light relief from the heavy burden of a rapacious and collusive telecoms regime. Communications minister Siphiwe Nyanda announced in a ministerial report to the national assembly that peak hour mobile termination rates will drop from 125c per minute to 89c, while the off-peak rate will stay constant at 70c per minute.

IT Web reports on the news here and Mybroadband also has a take. My take is simple: It’s not enough. The telecoms players in this country have a long profitable history of screwing consumers at every turn – aided and abetted by government in the form of a minister who was incompetent or dishonest or both. Fortunately, that has changed; Apparently.

The bad news is that the new rates only take effect next year – giving mobile operators another festive season to milk the South African consumer. Nyanda said the changes will come into effect through Vodacom and Cell C in February next year while MTN will onlyapply the new rates from March.

In his reaction, local analyst Arthur Goldstuck calls the news ‘a small victory’. He is quoted in a media advisory from his company, World Wide Worx: “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  [the] Minister … has demonstrated the kind of political will that is needed to address these obstacles.”

Quite. International readers might be wondering why the news of such a massive cut in the interconnect fee is being received with such cynicism. It’s simple. The interconnect rate in South Africa was only 25c back in 1999. Then government announced its intention to issue a third cellular license and suddenly, the rate shot up to the current rapacious figure of 125c. That sorry tale is related in this recent story. The move is widely believed to have been an attempt by the duopoly of the time, MTN and Vodacom, to increase the barriers to entry for new players, and thereby maintain their stranglehold on the market.

More than that, it kept retail prices artificially high and ensured a highly profitable mobile cellular industry. It’s also just another example of how the South African private sector conspires with government, and has done since apartheid days, to perpetuate the great South African way: kak en betaal.

Interconnect cut 'a small victory'

12 November 2009:- World Wide Worx has welcomed the announcement by the
Minister of Communications that the interconnect fee that is added to the cost
of calls between mobile networks will be cut, but warned that consumers must be
able to see how their call costs are affected.

independent technology market research organisation was the first to bring
public attention to the high cost of interconnect rates – formally known as the
mobile termination rate – through its annual Mobility research project four
years ago. It initiated the campaign to bring down the interconnect fee in
2005, and published a petition against the high interconnect rate in 2006.

“It’s been a
long time coming, but it’s never too late,” said World Wide Worx MD Arthur
Goldstuck. “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.

“We also
welcome the willingness of the mobile networks to make a meaningful cut in the
interconnect rate, and trust that this heralds the beginning of a new approach
to the concerns of the consumer.”

warned, however, that the rate cut will have little impact if the networks are
not required to be transparent regarding the cost structure to the consumer.

“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.”

World Wide
Worx has pointed out that the interconnect  fee could potentially still come down to as low as 30c. In
their 2006 book, “How to buy a cellphone in South Africa,” Goldstuck and Steven
Ambrose of WWW Strategy published the first petition to bring down the interconnect
rate, and invited readers to lodge their objections with both the Minister of Communications
and Icasa. However, the call was ignored by the authorities until hearings into
the issue were held two years later. Only in 2009, however, when the matter was
raised in Parliament by Independent Democrats leader Patricia de Lille, did the
Government actively step in.

“The cut of the
peak interconnect rate from R1.25 to 89c is a small victory, but it is just the
start,” said Goldstuck.

World Wide Worx
has issued a priority list of further areas that need attention regarding the
cost of communications in South Africa:

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;Transparency of the makeup of call costs to the
 consumer. This is essential for cuts in specific areas to be visible;Investigation of the requirement by all mobile networks
 for compulsory caller line identity and itemised billing on all contract
 accounts, both of which incur a cost to the customer. These do not apply
 to pre-paid accounts;High line rentals for fixed line users, and 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.<link rel="themeData"

“Fixed line costs
should not be immune from the scrutiny of Government,” Goldstuck noted.