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New MTRs herald end of era

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 30 Sept 2014
ICASA's latest asymmetry rate is less favourable towards smaller players than originally proposed, easing up on Vodacom and MTN's bottom lines.
ICASA's latest asymmetry rate is less favourable towards smaller players than originally proposed, easing up on Vodacom and MTN's bottom lines.

While the Independent Communications Authority of SA's (ICASA's) final three-year termination rate regime marks the end of a long and important battle, it also marks the beginning of a new era that is driven by data and where the cost of voice calls is next to null and void.

This is according to industry observers, following the issuing of the final mobile termination rate (MTR) regulations yesterday. The new inter-network fees kick in tomorrow and relieve the market of further debate until at least September 2017, when the 13c MTR will be reviewed and asymmetry (set to be 19c by then) will fall away.

ICASA has, as expected, introduced a significantly less aggressive asymmetry rate for smaller players Cell C and Telkom Mobile than previously proposed, while the regulator's initial aim of 10c MTRs by 2017 has been slightly upped, to 13c.

The final decision, says ICASA, comes after "a lot of hard work and consultation" over the past six months, which the regulator was given by the South Gauteng High Court, which in March determined its dramatically uneven asymmetry rates invalid.

It also brings to an end a protracted war of words that has been raging between Cell C - which has been most outspoken on the issue of asymmetry - and MTN in particular, as well as between SA's mobile operators and the body that regulates them.

ICT veteran Adrian Schofield says, while the MTR battle has been important, the future is about converged, always-on services - not call terminations. "Consumers want high-quality, high-speed and affordable access. Who cares if it is a voice, video or data connection? Only the operators, as they look for how to transition revenues and profits into the new environment.

Independent telecoms researcher Samantha Perry says, in years to come, MTRs will not be a consideration. "Realistically, we are looking at a market where voice is going to be zero-rated. That is where the market is going, partly due to over-the-top players like WhatsApp and Skype offering calls across their infrastructure.

"The market is shifting to data and that is where players will secure their focus going forward, because they have to. Average revenue per user for voice has been declining for years and, although voice is not dead yet, the future is about data. Internationally, voice calls are free - it's becoming standard."

Yesterday, ICASA chairman Stephen Mncube said the regulator would start looking at the cost of data.

As far as acceptance of the latest MTRs goes, Africa Analysis analyst Dobek Pater says they seem to be the product of compromise, and he expects them to hold. "[The MTR fight] demonstrated that ICASA cannot formulate regulation on an ad hoc basis, but needs to base regulation on thorough market analysis and a more 'scientific' approach to the market. The sector is settled for the next three years in this respect. All operators know where they stand and how the new MTRs are likely to impact them."

Don't get your hopes up

Meanwhile, ICASA is warning consumers - as Vodacom and MTN have in the past - that a drop in MTRs does not necessarily spell lower retail prices for them.

ICASA councillor Nomvuyiso Batyi says, while the lower rates represent a "significant step towards making voice services more accessible to all South Africans", consumers must not expect call rates to come down in all instances. "The extent to which retail rates drop is operator dependent."

ICASA based its latest rates on market conditions, prevailing economic conditions, the state of competition in the market and the cost of providing voice services for operators. The authority says SA's mobile market - a Vodacom and MTN duopoly since 1994 - has been determined to be uncompetitive and, for that reason, asymmetry for the smaller players will remain until 2017.

While Vodacom has welcomed the process ICASA underwent the second time around in determining the final MTRs, the operator has also expressed concern around the asymmetry granted to "certain companies", and the impact this could have on its business.

Cell C previously expressed disappointment in what it said was a "U-turn" on ICASA's part. Had the regulator's initial rates been implemented, Cell C would be receiving four times more than it would be paying its bigger counterparts back, from March 2016. Telkom says it supports ICASA's efforts to lower the cost to communicate.

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