The impact of lowering mobile termination rates in South Africa

Abstract

In 2010 South Africa reduced the interconnect termination rates from R1.25 per minute peak to R0.89 peak rate per minute. After South Africa announced and implemented the reduction of termination rates in March 2010 there was a lot of speculation regarding the impact to the end–user. The comments came from all corners of the telecommunication industry. Most comments argued that the reduction of interconnection rates will not be filtered down to the end user and the government convinced that the reduction will eventually result in cheaper telecommunication costs in South Africa. Both impact analysis and content analysis methods of research were used in analysing the impact of the lowering of rates in South Africa. The study examined the impact of this reduction by investigating how the packages offered by the mobile operators have changed a year before the reduction and a year after the reduction. The investigation showed that not much has changed in rates and confirming the speculation that nothing will change instead end–users should expect an increase in rates due to what is normally referred to Waterbed Effect. The study showed that the interconnect rates reduction did not benefit the end– user for the period investigated in this mini–thesis, although some operators showed some decrease; these were still less than the expected percentages. The study recommended that the regulator, regulates the enduser rates rather instead of the interconnect rates as this will ensure the benefits of end–user.