In 2010, the Independent Communications Authority of South Africa (ICASA) put three interconnect rate cuts in place. The rates are tariffs that one telecoms operator charges another in order to terminate a call on its network. For example, if a Cell C customer calls an MTN (News - Alert) (News - Alert) customer, Cell C would charge its customer a fee per minute (a retail charge). On the other hand, MTN would charge Cell C a fee, which is called a mobile termination rate, or MTR, for terminating calls on its network.
The World Bank recently conducted a study, which reportedly blamed the imposed MTR charges for the excessively high and uncompetitive cell phone call rates that range across all South African mobile operators.
The report also noted that they think the savings that have been incurred as a result of the previous two interconnect rate cuts have not yet been passed on to the consumers.
The last round of rate cuts was scheduled to take place on March 1, 2013, and will lower the price down from the R1.25 it was nearly three years ago, to R0.40. Local fixed-line calls will drop 12c and national fixed-line calls will drop 19c. Competition is expected to be simulated in the local telecommunications sector because of the substantial reductions, making it easier for new companies to enter the market.
The voice over Internet protocol (VOIP) market is believed to benefit significantly from these rate cuts, according to industry experts. The new rate cuts will be a timely benefit for the VOIP market because following the final rate cut, it will no longer be at a price disadvantage. So businesses looking for ways to manage and save costs will be able to do so by adopting new generation technologies such as VOIP, according to Mitchell Barker CEO of WhichVoIP.
Edited by Brooke Neuman