These are South Africa’s new call termination rates

Communications regulator Icasa has published final amendments to its termination rate regulations that will see inter-network call rates cut on a slightly less aggressive (but still steep) glide path.

Call termination rates are the regulated fees that mobile and fixed-line operators charge each other for carrying calls between their networks. They have been reduced progressively over for the past two decades with the aim of cutting to the cost of phone calls for consumers.

“Changes to the call termination rates were effected after consideration of oral and written submissions by stakeholders,” Icasa said in the document, which was published in the Government Gazette on Monday.

“To inform the determination of the call termination rates, Icasa examined not only the scope of the cost-modelling results (cost of termination services) but also considered a range of other contributing factors,” it said.

Icasa cited a “skewed competitive landscape”, the effect of technology in converging the fixed and mobile markets, the need to be consistent in its regulatory approach, a comparison with international markets and the objectives of the Electronic Communications Act as some of the factors considered in making the amendments.

The regulator previously intended to cut the current mobile termination rate (for large operators) of 9c/minute to 7c/minute on 1 July 2024 and then to 4c/minute on 1 July 2026. The new amendments propose a cut to 7c/minute on 1 July 2025, moving the rate cut out by a year. A further cut to 5c/minute is scheduled a year later, in 2026, with the cut to 4c/minute only coming into effect on 1 July 2027.

Smaller operators

A similar delay for small mobile operators has been proposed. The cut from the current 13c/minute to 9c/minute that would have taken place on 1 July 2024 will now happen a year later in 2025. In 2026, the rate will be cut to 5c/minute, with a final reduction to 4c/minute scheduled for 1 July 2027.

Fixed-line termination rates were intended to go from the current 6c/minute to 4c/minute in July. Instead, the rates will step down to 5c/minute on 1 July 2025, 4c/minute in 2026 and will then drop precipitously to 1c/minute in 2027.

Read: Telkom warns Icasa call rate cuts will punish smaller players

Icasa intends to do away with “asymmetry” in the rates between small and large operators, saving the privilege for “new entrants” who have less than three years in the market. “Mobile termination rates will move to symmetry within a transitional period of 12 months,” said Icasa.

Smaller operators Telkom and Cell C have previously hit back at Icasa for this decision, arguing that asymmetry in the rates should not be decided based on a “time in the market” definition.

“The proposal to drastically decrease termination rates without maintaining asymmetry will disproportionately benefit dominant players, lead to revenue loss for smaller players and have no direct benefit to the end consumer,” said Cell C CEO Jorge Mendes at the public hearings on the matter in June.

“Asymmetry remains vital to rebalance the distortions in the market and is vital for smaller players to present even a slight competitive constraint on the dominant players,” he said.

Telkom, on the other hand, said Icasa’s use of a “modern technology equivalent” model to determine fixed-line asymmetry rates put it at a disadvantage and punished the operator for “making good technological decisions in the past”.  – © 2024 NewsCentral Media

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