South Africa was the first to reduce interconnection charges after the Independent Communication Authority of South Africa (Icasa) issued regulations regarding interconnection fees, followed by Uganda, which introduced fixed interconnection charges in December last year.
Last week, the Nigerian Communications Commission (NCC), the country's telecom sector regulator, issued a new set of interconnection rates for the communication industry.
African countries fear that unregulated interconnection fees stifle competition, kill innovation, hold back telecom penetration and prevent additional investment in the sector, while customers get exploited in the process. A fixed interconnection rate is, however, an international practice that many African markets are yet to adapt.
High termination prices -- the fees operators charge each to allow inter-network calls -- tend to favor the bigger players, while regulated interconnection fees allow smaller companies to compete based on quality of service.
The move by Nigeria, South Africa and Uganda to reduce interconnection rates is likely to have ripple effects in Africa as the three countries are leaders in the African telecom market.
A press statement from the NCC's head of media and Public Relations Reuben Muoka said the new rates, which replace the 2006 rates, present many improvements over the old regime. The new rates apply the Asymmetric Interconnection method, where new operators enjoy higher termination rates than the older operators, Muoka said.
With the new interconnection rates, call termination for new entrants' networks are graduated from 10.12 Nigerian naira (US$0.07) from Dec. 31 to 8.20 naira in the year 2012 while call termination for older operators' networks is fixed at $0.05 over the same period.
In Nigeria as in many African countries, new mobile service competitors coming into the market have in the past been very critical of the existing policies of leaving the issue of interconnection to the players themselves, all of which charge different rates.
The term interconnection refers to the commercial arrangements under which service providers connect their equipment, networks and service to each other in order to allow their customers to access their services and networks of other service providers. Telecom companies in the region charge a "calling party pays" basis but customers are complaining they are paying too much for the calls.
Kenya, Zambia and Namibia are also set to introduce interconnection rates.
"The Zambia Information and Communications Technology Authority will soon start regulating interconnection fees in order to level the playing field in the communication sector," said Zambian minister of Communications and Transport Geoffrey Lungwangwa.