Madam Deputy Speaker, hon members, good afternoon. South Africa's high telephone rates have been of much concern to all in this House, and rightfully so. Telephones, particularly cellular telephones, are the main tools of communication available to our people. Telephones keep us, as South Africans, connected. Our telephones enable us to communicate with people in other parts of the world. Without telephones and Internet, business cannot be conducted. Communication costs in this country are resulting in a potential loss of investment in the economy. High mobile termination rates are impeding any possibility of new entrants into the market.
The intervention I implemented, as the Minister of Communications, has yielded some positive results and it was with the support of my Deputy Minister, the Portfolio Committee on Communications, the staff of the Department of Communications, under the leadership of the director-general, the mobile operators and the South African public at large. This is yet another example that working together we can do more.
I am pleased to announce that the initial reduction of mobile termination rates by Cell C, Vodacom and MTN are as follows. Currently, the situation pertaining to termination rates is the following: At peak hours the rate is R1,25 and off-peak it is R0,77. There is what is then called a blended rate, which is R1,03. What we know of, as consumers, is R1,25 and R0,77. The agreed reduced mobile termination rates are the following: Peak R0,89 and off-peak R0,77. The blended rate has, therefore, been reduced from R1,03 to R0,77. The overall total cost reduction on peak rates is from R1,25 to R0,89, totalling an amount of R0,36. This, hon members is putting money back in the pockets of ordinary South Africans, who need it now more than ever.
With regard to the issue of the effective date of implementation, we have noted that there are various small, medium and micro enterprises, SMMEs, that are reliant on the value chain of interconnection fees. We have, therefore, agreed with Vodacom and Cell C that the effective date for the reduction for them would be February 2010 - this excludes MTN that wants to implement on 1 March 2010. This will allow the mobile operators and the SMMEs to realign their business operations accordingly.
Furthermore, I am glad to report to the House that mobile operators have committed to introduce new and affordable retail products, based on their reduced rates, from 1 December 2009. I have been assured that these developments will also introduce more competition on the retail market. That on its own, hon members, is the big early Christmas and Easter present that we can give to the nation. [Applause.] In the same breath, it is important to emphasise that the commitment we have received is within the parameters of the business imperatives of these operators and that it was voluntary.
In implementing the tariff change, operators are requesting a glide path period that is aimed at facilitating adjustments to their business models, renegotiation of contracts with service providers and, in some instances, changing their billing systems. I will facilitate the process further, by withdrawing the Ministerial Policy Directive on Mobile Termination Rates. A glide path intervention process will, however, be considered for implementation by the Independent Communications Authority of South Africa, Icasa, as it is of a regulatory nature.
My intervention should be viewed as an initial intervention, taking into account the fact that the reduction of the costs to communicate should not necessarily address the wholesale market, but should also make an impact on the retail sector, as this affects end users. Therefore, further consultations between operators and Icasa will still be constituted to conclude the interconnect agreements. It must be recorded that due regard to the principles of nondiscrimination will be applied; therefore, the reduction in rates will be concluded within appropriate interconnection agreements. I will then present the mobile termination rate offers to Icasa for review, consideration and implementation.
In addition to this process, I will be reviewing all other aspects that relate to the cost to communicate; this includes fixed and mobile termination rates for public phones and community service telephones. This is in line with my programme of action on the reduction of the cost to communicate that was recently submitted for approval and approved by Cabinet.
Madam Deputy Speaker, as I promised during my Budget Vote earlier this session, reducing communication costs remains a key priority of mine and the Department of Communications. For this reason, I have elevated it to our Medium-Term Strategic Framework.
Last, but not least, it is important that we should not just celebrate great leaps, but also small steps that make a significant and great difference. I present this report not to sound triumphant, but to acknowledge that small steps can move us forward as a nation and that together we can do more. I thank you. [Applause.]