Cutting mobile termination rates (MTRs) by too much or too soon will hinder capital investment in the sector, according to Vodacom, with the main impact to be felt by rural communities currently unconnected.
Shameel Joosub, chief executive officer (CEO) of Vodacom, has warned the Independent Communications Authority of South Africa (ICASA) against acceding to proposals by industry players to cut MTRs even further than the latest 40 cents rate, which became effective as of March 1.
According to the CEO, cutting MTRs too quickly or too much will remove incentives for investment and mean network developments – particularly the rollout of networks in rural areas – will be hampered as investors will turn away.
Vodacom proposes that a market study be performed whereafter a new glide path should be established to regulate any further MTR cuts.
“Operators need to stop hiding behind the fact that they aren’t investing and getting other networks to subsidize them. They need to differentiate and compete on this,” Joosub said.
Although Joosub did not refer in name to rival operator Cell C, ICASA previously confirmed to HumanIPO that Cell C is the only entity that submitted a proposal to the regulator suggesting further cuts to MTRs beyond the March 1 rate.
Cell C also argued for greater asymmetry in the field in order to facilitate the entry into the market of smaller operators – the market currently being dominated by two large entities, with smaller players struggling to hold ground.
ICASA has confirmed that it will be conducting an urgent market review in response to Cell C’s submissions, making note of the possibility that pricing plans currently being implemented by larger operators may amount to “predatory pricing”.
