[February 03, 2010] Cellphone Rates Cut in Doubt After Icasa Steps in Tweet Johannesburg, Feb 03, 2010 (Business Day/All Africa Global Media via COMTEX) -- A PROPOSED cut in cellphone interconnection rates by next month looked in doubt yesterday after regulator the Independent Communications Authority of SA (Icasa) refused to endorse the operators' proposal for a 29% reduction. Vodacom, MTN and Cell C submitted a draft agreement to Icasa on January 25, which would have seen the peak cost of connecting between networks fall from R1,25 to 89c a minute by March 1. High interconnection rates are widely considered a key factor behind SA's steep cellphone charges. The delay is likely to embarrass Communications Minister Siphiwe Nyanda, who mediated the initial agreement in tense talks with the three cellphone companies in November. But Icasa said on Monday night that it would not support the agreement, complaining that doing so would have bound it "to an undertaking not to review mobile termination rates until March 1 2013". The operators warned yesterday they could not go ahead with the planned cuts without the regulator's approval, but said they would address Icasa's concerns. Icasa's short statement gave little hope of this, however, saying it was "committed to releasing draft regulations on the effectiveness of competition in the wholesale call termination market in March". Nyanda's agreement would have seen off-peak interconnection rates kept at 77c. Peak rates were to be cut to 89c from March, falling to 85c next year and 80c in 2011. Those reductions were evidently too little for Icasa, which has estimated the real cost of interconnection at 40c. An Icasa source told Business Day yesterday that regulators had felt the cellphone operators were "trying to tell us what to do". While Nyanda had attempted to find a quicker way of reducing costs, "the operators wanted a quid pro quo in exchange for the initial reduction". Icasa's regulation of interconnection rates would be "a process that is not determined arbitrarily, not determined by collusion, but determined by proper analysis of the market", it said. Vodacom CEO Pieter Uys denied the operators had sought to tie Icasa's hands. He said they simply wanted to achieve rate reductions while avoiding unnecessary disruption. Vodacom supported Icasa's efforts to identify a reasonable target figure, Uys said, but he emphasised that the regulator should allow operators to lower their charges gradually over the next few years. "We're ready to introduce the rate changes on March 1, but we can't do it without formal agreements signed (with Icasa)." MTN's Robert Madzonga echoed that message, saying the company would "address (Icasa's) concerns in the next few days". But Frost & Sullivan analyst Spiwe Chireka said it was "very unlikely" the planned changes would go through. "It's about maintaining Icasa's credibility - it shouldn't be the operators writing the rules." [ Back To TMCnet.com's Homepage ]