Next week was likely to be “make-or-break” for affordable mobile communications in South Africa for the next 20 years, predicted Cell C CEO Alan Knott-Craig on Monday.

The Independent Communications Authority of South Africa (Icasa) planned to implement on April 1 its new mobile termination rate (MTR) glide path – a “new, bold regulation” that would “constrain the ability of Vodacom and MTN to continue to charge high retail rates”.

“It will do this directly by reducing their termination rates – a de facto floor below which retail tariffs cannot fall – and also indirectly by providing a significant procompetitive support [through asymmetry] for the smaller operators,” Knott-Craig commented in a statement.

However, Icasa spokesperson Paseka Maleka told Engineering News Online that the outcome of the Vodacom and MTN legal challenge on Tuesday and Wednesday would determine whether Icasa would continue the rate cut implementation as planned or if it would be postponed.

Icasa’s revised glide path had attracted legal challenges from MTN and Vodacom just under a month before its initial implementation on March 1.

Vodacom and MTN stated that Icasa failed to follow due process in determining termination rates, while Cell C stood firm in its belief that the MTR cuts were “fair, reasonable and inevitable” and that the larger operators’ costs were “far lower” than the current termination rate of 40c.

The final glide path, which largely favoured the smaller players such as Cell C and Telkom Mobile, would see the rates charged to operators to carry calls between their networks halved to 20c this year, before declining to 15c in March 2015 and 10c by March 2016.

Maleka noted that following a review by an external expert economist, Icasa felt it could justify a termination rate of 20c. However, the rates for the “outer two years may need [to be] reviewed”, he admitted.

“In this case, we will review [the] 2015 and 2016 termination rates, mainly in [an effort] to avert a very lengthy legal challenge. We will be reconsulting for those years,” Maleka explained.

The asymmetry would be set at 44c, before declining to 42c in 2015, 40c in 2016 and 20c in 2017.

“This asymmetry, although less than one-third of the asymmetry granted to Vodacom and MTN [through a subsidy from Telkom] to enable their businesses to compete, is still sufficient to provide a fighting chance that will see a long-term and sustainable shift in the established duopoly of the past ten years,” Knott-Craig explained.

Twenty years after the April launch of Vodacom and MTN’s telecommunications services – a launch that was brought forward to support the Independent Electoral Commission in managing the first democratic elections in the history of South Africa – the duopoly remained the dominant telecommunications operators, having “eclipsed Telkom with the massive assistance of a R1 asymmetry for the first 15 years of their operations”.

“I believe that April 1, 2014, could prove to be almost as significant as April 1, 1994 – both pivotal moments in the history of our industry and our country,” he added.

Knott-Craig claimed that the cuts would enable a “profound change” in retail prices and could deliver enormous benefit to all consumers, the South African economy and smaller players such as Cell C.

“If a change is inevitable, the only option left to Vodacom and MTN is to delay – and that is exactly what this fight is about,” said Knott-Craig, who was in the final stages of recovery after suffering a stroke late last year.

He hoped to return shortly to an industry that looked “very different” from what it had been for the last 20 years.

“I want to come back to an industry that reflects our 20 years of democracy. I want to come back to a competitive industry, an industry ready to provide services to everyone, at a good rate. I would like the next ten years of the industry to be about honest, good-value service, delivered in a way that consumers understand – a fair price for a good service,” Knott-Craig said.

The founding CEO of Vodacom admitted that he had played a role in creating the current market dominated by the duopoly but, at the time and during the first ten years of the industry, it was the “right thing” and the industry was about building high-quality networks.

“However, it should never have lasted this long – the second ten years of the industry appear to have been more about reaping extraordinary profit than about telecommunications,” Knott-Craig concluded.