Telkom does not feel the Independent Communications Authority of SA's (ICASA's) latest inter-operator fee regulations have struck the right balance when it comes to fixed-line communication.
The telco expressed its views on the latest call termination rate (CTR) regulations at the authority's public hearings into the state of competition in ICT today, where the company appealed to ICASA to address various issues - including over-the-top (OTT) players, spectrum allocation, universal service obligations and market consolidation.
This comes after ICASA on Monday announced the new termination rate structure that will govern the fees operators pay each other to terminate calls on their networks, for the next three years and according to an annual gliding scale. The regulations include asymmetry for smaller players - in the case of fixed-line, Neotel.
Until the end of September next year, fixed termination rates have been set at 12c within area codes and 15c between area codes, with an asymmetry advantage of 6c (all area codes). The asymmetry advantage will drop by 4c next October and 2c in October 2016.
Mobile termination rates (which Telkom would pay to mobile operators for a fixed-line call terminating on a mobile network) have been set at 20c for the next year, with a 31c asymmetrical rate for smaller players Cell C and Telkom Mobile. Next year, this will go down to 16c (24c asymmetrical rate) and, in 2016, to 13c (19c asymmetry).
Equitable model
Siyabonga Mahlangu, Telkom Group executive of regulatory affairs and government relations, says Telkom is concerned the latest CTR regulation does not adequately achieve the necessary balance for fixed-line communications, in terms of a number of aspects.
"Termination rates have a major financial impact on operators through interconnection in-payments and out-payments. They also drive change in the retail market. Both effects should be considered in setting optimal termination rates."
Mahlangu says the rates should also ensure the interests of infrastructure investors and over-the-top players are balanced in a way that does not undermine investment.
"Termination rates should be set in a way that treats operators equally and promotes competition. Where costs are used to set termination rates, they should include the full cost of providing the service, including the access network."
The costing model ICASA utilised in reaching its latest termination rates is the long-run incremental cost plus (LRIC+) model, which includes joint and common costs - unlike pure LRIC.
Mahlangu says Telkom will "continue to subsidise the dominant mobile incumbents with a mobile termination rate that is still significantly higher than the fixed termination rate (FTR)".
The low FTR determination, he says, will also favour OTT players over the needs of a sustained network modernisation programme.
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