It is easy and natural for those who are already connected to forget about the benefits of these access subsidies and focus instead on retail call rates.
In an aggressive submission to Parliament’s portfolio committee on communications, the mobile group called the plan unrealistic and said it would take from the poor and give to the rich.
It warned that operators would reduce price concessions or bump up other costs to compensate for the loss of income if mobile companies were forced to cut the price they charge each other to connect calls across their networks from R1.25 at peak times to 60 cents.
“Any reduction in interconnection prices will require MTN to rebalance its business model so its costs can be recovered from other parts of the business,” the group said.
MTN said the interconnection charge had acted as an effective subsidy from those making calls – especially from the Telkom network – to poor people who mainly receive calls.
It had also subsidised cut-price community services provided by the mobile companies.
“It is easy and natural for those who are already connected to forget about the benefits of these access subsidies and focus instead on retail call rates.
“The answer to this complex policy debate needs a well-thought-through process carefully balancing the consequences – intended and unintended – of a reduction in mobile interconnect so as to minimise the possible impact on competition, investment, penetration and jobs,” the group said.
MTN, the country’s second-biggest domestic mobile service, said the proposed cut would force it to review its capital spending plan and could undermine the viability of the newest player in the market, Cell C.
The group said that with mobile penetration approaching 100%, it might be time to take another look at the business model, but it stressed repeatedly that this had to be done in a measured way and through established processes overseen by the Independent Communications Authority, Icasa.
Vodacom, which has about half of the domestic mobile market, made a similar point on Tuesday, saying talks were already under way to come up with a new price structure.
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