Subscribe

Shot in the arm for Cell C, Telkom Mobile

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 29 Jan 2014
SA's telecoms regulator has used its muscle to help the country's smaller mobile players win market share.
SA's telecoms regulator has used its muscle to help the country's smaller mobile players win market share.

The Independent Communications Authority of SA (ICASA) has introduced new mobile termination rates (MTRs) that strongly favour SA's smaller players, Cell C and Telkom Mobile.

Termination rates are the fees operators pay to carry calls on each other's networks. By bringing asymmetrical rates into play, ICASA is essentially trying to level the mobile playing field, currently largely dominated by Vodacom and MTN.

As of 1 March, ICASA announced this morning, MTRs for Vodacom and MTN will drop to 20c - half the current MTR rate - while Cell C and Telkom Mobile will be able to charge the two larger players more than double that (44c) to terminate calls on their network.

The termination rates are set on a gliding scale, which will come to an end in 2016 with an MTR of 10c for Vodacom and MTN, and 40c for Cell C and Telkom Mobile. This means the two smaller players can charge the dominating networks four times the amount the two have to pay.

Levelling fields

ICASA chairperson Steven Mncube says the regulator is using its muscle to ensure all telecoms companies "take their rightful place in the country's economy. As an authority we also regulate to ensure that the majority of our people have access to affordable electronic and ICT services wherever they are."

Over the next three years, Cell C and Telkom have a massive competitive advantage over SA's mobile duopoly. The drop in termination rates - and more specifically the asymmetrical rates - is seen by industry observers as a major windfall for smaller players and one of the main catalysts for a mobile price war in SA.

In October, when ICASA released its draft termination rates, which were less favourable to Cell C and Telkom Mobile than those announced today, it said its determination was based on a review of industry conditions. The authority says MTRs need to promote competition.

The rates announced today, says Mncube, have been introduced specifically to reduce the cost to communicate.

ICASA believes the new regulations will ensure a free flow to the retail process. "Although the asymmetry is high for a limited period, it is intended to provide a conducive environment for smaller operators to invest in infrastructure. The authority takes a dim view of any price discrimination."

Last year June, ICASA introduced the industry to its "Cost to Communicate" programme, which it hoped would ultimately address long-standing concerns around SA's high communications costs.

The new inter-network rates, introduced today by ICASA:

Period

Vodacom and MTN

Cell C and Telkom Mobile

1 March 2014

20c

44c

1 March 2015

15c

42c

1 March 2016

10c

40c

1 March 2017

20c (providing the operator/s has a market share of 10% or less)

Share