- The war of figures is back in the boardrooms, after the Independent Communications Authority of South Africa (ICASA) announced a surprise proposal package for mobile operators to cut on their rates drastically.
The ICASA yesterday proposed a three-year downward route that would force South African mobile operators to significantly cut prices on current mobile and fixed line interconnection rates.
South Africa has always been said to be one of the most expensive countries for mobile services and internet consumers despite its fairly good infrastructure and mature market.
ICASA is proposing an almost 50 percent cut between July this year and July 2012 for both mobile and fixed service licensees. For instance, with the current mobile interconnect rates, of rand 0.89 per minute, the body is proposing a reduction to rand 0.65 from July 2010 and further reduced to rand 0.40 from July 2012.
The body further proposes that fixed interconnect rates be reduced to rand 0.15 from July 2010 and further reduced to rand 0.10 from July 2012, justifying its proposal as a benefit to the end users.
However, South Africa's main mobile operators, Vodacom, MTN and Cell C, have been caught unaware by the announcement, only saying they were yet to look into the proposal and seek both business and legal advice.
Recently investigated for fixing interconnectivity charges, the mobile operators are already saying the new proposed fixed rates could dampen their profits in a huge way and could actually suffocate the mobile business industry in the country. However, there was very little on the offing on the part of the operators to justify their interconnectivity charges.
Some operators have suggested they could actually lose up to 200 percent in profits, if the new rates are applied, but have said more details would be given at the public hearings.
For many market watchers in South Africa, the move by ICASA is seen as a checkmate, with the cartel accused companies having a little more than a month, until 2 June, to respond to the proposals by the regulatory body.
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