Communications regulator Icasa has proposed slashing mobile call termination rates – the fees operators charge each other to carry calls between their networks – by more than half by next year.
The regulator said in a notice published in the Government Gazette on Friday that it wants mobile termination rates slashed from 9c/minute today (13c for smaller operators) to 7c (9c) on 1 July 2024 and 4c (4c) on 1 July 2025. The rates have been coming down for the past decade, from an historic high of R1.25/minute.
Smaller players Telkom and Cell C will no longer enjoy “asymmetry” with bigger rivals Vodacom and MTN from next year, meaning that from that date they won’t receive a higher rand amount for incoming wholesale calls from other networks than outgoing calls.
The proposed cuts to fixed-line termination rates is even more aggressive: from 6c/minute now, Icasa wants these reduced to 4c from 1 July 2024 and to just 1c from 1 July 2025 – a cut of 83% in just 15 months. (There is no asymmetry in fixed call termination.)
“These draft rates emanate from an intensive cost-modelling process involving the development of an iterative, multi-input, bottom-up cost model, accompanied by extensive engagement with the main voice operators,” Icasa said in a statement on Friday.
“The central feature of this cost model has been the adoption of a ‘long-run incremental cost’ approach in line with global international good practice,” it said. “The outcome of this consultative process has allowed the authority to deduce the appropriate cost levels of wholesale voice call termination services, and therefore to specify what operators should be able to charge.”
Reciprocal
Although Cell C and Telkom will no longer enjoy asymmetry in termination rates, future entrants into the voice services market will qualify for a limited, three-year period of asymmetry from launch.
Under the new draft rules, all operators may charge reciprocal international termination rates for voice calls originating outside of South Africa. The international termination rates charged by an operator must not be less than the South Africa termination rates or higher than the termination rate charged by the international operator.
Read: Cell C claims it still needs ‘asymmetry’ with Vodacom, MTN
“By phasing out asymmetry and providing a transitionary period for new entrants, we aim to empower operators to adapt gradually, all while maximising benefits for consumers,” said Icasa council chair Nompucuko Nontombana in the statement.
| Termination to a mobile device (cents per minute) | |||
| Type of operator | Current | From 1 July 2024 | From 1 July 2025 |
| Large | 9 | 7 | 4 |
| Small | 13 | 9 | 4 |
| New | 7 | 7 | |
| Termination to a fixed device (cents per minute) | |||
| Type of operator | Current | From 1 July 2024 | From 1 July 2025 |
| Large | 6 | 4 | 1 |
| Small | 6 | 4 | 1 |
| New | 4 | 1 | |
“The authority believes that the wholesale voice call termination rates set out in the draft regulations will aid in transitioning the market towards a more competitive landscape as contemplated in … the Electronic Communications Act.”
Operators have until next month to provide their feedback on the draft regulations. – © 2024 NewsCentral Media