Interconnect rate drop to boost telecoms

The mobile termination rate glide path implemented by the Independent Communications Authority of South Africa (ICASA) in 2010, will see a final drop in wholesale interconnect rates.

On 1 March 2013, these rates will be slashed to R0.40, from a high of R1.25 three years ago.

‚”This latest price cut will be a key driver in enabling the next evolution of user centric telecommunications in enterprise mobility, collaboration and unified communications,‚” explains Wayne Speechly, Executive for Communication Services at Internet Solutions. ‚”This price reduction in the interconnect rate is significant, and will prompt businesses looking to better manage cost to adopt IP-based communication and embrace more innovative technologies.‚”

In addition to driving innovation, the rate drop will spur competition in the local telecommunications market. ‚”Lower termination rates stimulate competition by making it easier for new entrants in the market, as witnessed with the recent announcement by Orange. This is one of the primary mechanisms that drive a reduction in call charges and the delivery of more affordable telecommunication services,‚” he says. ‚”This is an important economic driver, especially as South Africa is still unable to provide suitable services to the population at large, whilst remaining one of the most expensive telecommunications markets in the world.‚”

Speechly also predicts a migration from mobile networks to next generation Voice over IP (VoIP) services. ‚”VoIP-to-mobile and VoIP-to-fixed-line calling is no longer at a price disadvantage, and the service level agreements offered for such services now supersede traditional time-division multiplexing (TDM) and GSM offerings,‚” he continues. ‚”It will also begin forcing providers to differentiate more on services and value adds, as the lower input costs will commoditise voice minutes across both fixed-line and mobile networks, which will greatly benefit end-users.‚”

Last year’s drop in the interconnect rate was substantial enough to make IP-enabled technologies a more attractive and mainstream proposition, says Speechly. ‚”This also signalled the ‚’beginning of the end’ for traditional TDM communication technologies and previously popular GSM least cost routing,‚” he says.

‚”The adoption of an IP-based communications infrastructure will offer businesses greater flexibility as it enables the integration of various services and mission-critical applications. It also enhances mobility and business agility, which improves workforce efficiency and productivity.‚”

‚”These are key elements in providing strategic advantage to organisations in the increasingly complex and competitive business environment in which we operate today.‚”

Speechly feels that ICASA should now finalise the next phase of regulations that govern the wholesale termination rates for the market. ‚”The regulations promulgated on 29 October 2010 have now come to an end, and further intervention is required to continue wholesale interconnect rate reductions post 2013.

ICASA needs to ensure that the industry can continue to rationalise the wholesale cost base, so that competitors can maintain a sustainable business. Levelling the input cost drives a more competitive market and ensures monopolistic behaviour is managed as best as possible,‚” says Speechly.

‚”Regardless of future regulation, this is the decrease the market has been looking for to drive significant change in the industry. It is now up to local businesses to take full advantage of the situation and future-proof their telecommunication capabilities by embracing value-adding architectures as seen in most developed markets,‚” concludes Speechly.

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