Telkom has urged communications regulator Icasa to consider scrapping call termination fees – the regulated amounts operators charge one another to carry calls between their networks – the next time they are up for review.

Icasa this week gazetted final call termination rate regulations for the next three years, which will see the rates continue their more than decade-long downward trend from an historic high of R1.25/minute.

Telkom said it welcomed Icasa’s decision to cut the rates in a more gradual fashion than it had proposed earlier this year, and lauded the regulator for narrowing the gap between fixed and mobile rates over the next two years.

“Overall, we believe Icasa has struck a reasonable balance between enabling effective competition for smaller players and new entrants while helping to create a sustainable and competitive telecoms sector in South Africa. These changes to the regulations support Telkom’s data-led strategy and are positive for market growth in the telecoms sector,” said Telkom.

“The extension of the phased-in implementation of the glide path, from two to three years, aligns with historical approaches to call termination rate reviews and provides for a more measured transition period,” it said.

“Looking forward, Telkom believes that Icasa should consider reducing termination rates to zero in its next review, recognising the market’s evolution towards data-led over-the-top and internet-based voice services. This would further level the playing field, while acknowledging changing consumer behaviours and technological trends.”

Robocall epidemic

Telkom said it supports Icasa’s decision to align the rates more closely between fixed and mobile calls, but criticised the planned 1 July 2027 rate cuts that will see the gap widen again to 3c/minute.

Petrus Potgieter, Unisa professor of decision sciences and an associate partner at telecommunications consultancy Strand Consult, said termination fees are now so low that Icasa ought to justify why it hasn’t already slashed them to zero. He said the methodology applied by the regulator relies on a long-term incremental cost outlook that none of the operators experiences in reality.

Read: Spam robocall epidemic in South Africa

However, a major concern for Potgieter is that slashing termination fees to zero could worsen the robocall epidemic in South Africa as spam callers would not have to pay termination fees on calls to unsuspecting consumers.

“Popia (the Protection of Personal Information Act) has done nothing to deal with spam calls, and if spam calls really get out of control, then people might stop answering calls altogether,” said Potgieter.

He said it makes sense for smaller operators like Telkom to be in favour of scrapping termination fees because they generally terminate fewer off-net calls than their larger rivals. He added, however, that the voice market has and will continue to shrink due to the migration to internet-based calling services like WhatsApp, and that the issue of termination rates will “take care of itself” in the next few years.

Alison Gillwald, executive director of Research ICT Africa, said its data shows that some 30% of South Africa’s population is still reliant on older voice calling technology, but even that market is increasingly getting access to WhatsApp and similar tools.

“The fixed and mobile voice market is so redundant in an internet-based world that the number of people being impacted by call termination rates is rapidly shrinking. There are so many other big issues about getting people connected to the internet where operators have a peering arrangement and termination rates are a non-issue,” she said.

Potgieter agreed. Call termination rates were a major issue a decade ago when voice calling was the major communication channel and their impact on the cost of communications was significant. Now Icasa seems to have “over-solved the problem”, he said.

Telkom, meanwhile, welcomed Icasa’s decision to set the review of internation call termination rates aside, to be dealt with in a separate process. The regulator had initially proposed that South African mobile operators charge symmetric termination rates for international calls, meaning calls from some jurisdictions would attract termination fees lower than domestic rates, while others would be higher.

The operators, including Telkom, argued that they should be given the leeway to negotiate international termination fees and set them according to commercial arrangements, rather than the fees being mandated by Icasa.

Read: MPs send Icasa council shortlist to Malatsi

Icasa spokeswoman Ramasela Matlou said call termination rates will be reviewed again when the regulator “deems it necessary”, but not sooner than three years after the after the commencement of the current amendments to the regulations on 1 July 2025. — (c) 2024 NewsCentral Media

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