Interconnect rates

Yesterday the Gauteng High Court ruled on the much publicised interconnection battle between MTN, Vodacom (working as a team ironically) versus Icasa who are trying to drop these rates to 20c per minute (what MTN and Vodacom would charge Cell C and Telkom mobile). The ruling was bitter sweet for all parties involved and in my mind makes no sense. The court said that yes the new Icasa installed interconnect rates were unlawful and invalid but the order to stop them will be suspended for 6 months.


So basically MTN and Vodacom will be forced to lower the rates while Icasa is given the time to reevaluate what is fair. What is even more unfair is that MTN and Vodacom have to pay their two smaller competitors more than double, 44c for the same service. That is anti competitive and not business friendly. Sasha makes a good point, Cell C have been around for more than 14 years. They are not exactly new, why the big regulatory helping hand now? Telkom Mobile also have the benefit of a big corporate backer, they aren't exactly starting off from scratch.


As investors in both MTN and Vodacom we find the ruling encouraging but I will be interested to see what Icasa come up with. I am guessing they will have to up the rate a bit and close the gap between what the competitors have to pay. Surely it should be all equal. Eskom don't charge smaller businesses lower electricity rates because they are small compared to their competitors. Competitors need to find an edge and be worthy of their growing market share, that is what keeps the economy ticking. For example Cell C should draw in new clients because they offer a better data service, now that would benefit consumers.