SA's telecommunications regulator is standing firm in its plans for a final price drop in interconnect rates, as originally set forth in the Call Termination Regulations.
The Independent Communications Authority of SA (ICASA) yesterday issued a statement informing stakeholders that its glide path for interconnect - or mobile termination rates (MTR) - will continue, despite a call from Cell C to halt the final price cut, which comes into effect on Friday.
As of 1 March, MTRs will drop to 40c (peak and off-peak), down from a high of R1.25 three years ago, when ICASA instituted the sliding scale that saw MTRs dropping by 16c annually.
The MTR is what operators pay each other to terminate traffic on their networks.
Lower prices
ICASA says its expectation, when it published the Wholesale Voice Call Termination Regulations in 2010, was that the three-year glide path would, over time, see the development of a more dynamic pricing environment, including lower retail rates.
ICASA spokesperson Paseka Maleka says because the three-year glide path is contained in state regulations, any changes to such a matter would require a public process that will afford all relevant stakeholders an opportunity to make their comments. "Further, any changes would need to be informed by a comprehensive study or market review."
The authority acknowledges that some reductions in the retail price have taken place, but the body says it is concerned that competition has not increased sufficiently over the last few years.
"The authority's goal is to promote effective competition and [ICASA] is of the view that the cause or barrier to a lack of effective competition is the high termination rate. High termination rates are a barrier to reduced off-net call prices and therefore prevent effective retail price competition."
To this end, ICASA says MTRs in the region of 15c to 25c are fair, based on benchmarks set by SA's peers in Africa and the rest of the world. "It is also conceivable that termination rates should tend towards zero over time."
Drive for competition
Cell C says it respects ICASA's decision to continue with the implementation of the MTR glide path as planned.
The company also welcomes the acknowledgement by ICASA that there is a lack of effective competition in the market and the resolve to look into telecoms pricing as a matter of urgency.
"We trust that the regulator will also use the opportunity of the market review to make a determination on whether on-net versus off-net tariff differentiation and high national roaming charges contribute to the lack of effective competition."
Cell C believes lower call termination rates will only benefit the country if there is a greater asymmetry for smaller players and new entrants. "This will enable [smaller operators] as sustainable competitors, as was the case with Vodacom and MTN during their first 10 years of operations against Telkom."
Cell C has been in discussions with ICASA for some time on the matter. The company believes the outcome of the market review will assist the regulator in encouraging a more competitive landscape and ultimately benefit consumers with more competitive pricing.
ICASA says it has noted concerns raised and will initiate a review of the call termination market and look into the matter of price transparency on an urgent basis.
The authority intends to urgently review the structure of pricing, including transparency in the market, and will examine the necessity for intervention.
ICASA says it will unveil its plan of action "soon".
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