The "about-turn" the industry has seen on the issue of asymmetry when it comes to mobile termination rates does not bode well for competition, says Cell C, which is currently considering its options following the release of new regulations on Monday.
Cell C feels the Independent Communications Authority of SA (ICASA) has taken a "dramatic U-turn" on its former approach to remedy the current market failure and promote competition in a duopolistic market.
As of today, the standard mobile termination rates proposed in February (20c) remain the same, and will do so until this time next year. The asymmetry ICASA introduced to give smaller players a leg-up, however, is significantly less than it would have been (31c as opposed to 44c).
The mobile termination rate regime proposed earlier this year would have seen challenger networks Cell C and Telkom Mobile paying their larger counterparts four times less than they got in return for call termination on their networks by 2017. That is, before MTN and Vodacom launched legal challenges and ICASA was ordered by the High Court to review and republish its three-year glide path.
Cell C CEO Jose Dos Santos says, after 10 years without regulatory support (since launching in 2001), the initial asymmetry Cell C was awarded from 2011 onwards helped the operator to instigate the price war that saw competitor networks lowering their prices in turn.
"Cell C used this regulatory support to launch its 99c For Real flat rate tariff, a major milestone," says the company. The more significant level of asymmetry of a 24c advantage, proposed for the smaller operators in February, says Cell C, enabled the company to bring down prices even further, first to 66c and eventually to 50c per minute for prepaid and 79c per minute for contract customers.
Cell C says the market failure ICASA has sought to put an end to has not yet been resolved, with Vodacom and MTN together still holding close to 90% of the service mobile revenue in SA.
SA's third operator says the new regulations do not promote competition. "[They] help the dominant players entrench their market position," says Dos Santos.
Cell C says it is currently considering its options - a legal challenge to the new termination rate regulations being one of them - and will act appropriately.
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