Mobile termination rates: How does SA compare?

How does SA’s mobile termination rates compare against the OECD nations?

By - April 1, 2012
Cellphone money

The Organisation for Economic Co-operation and Development (OECD) released its latest report on mobile call termination rates just ahead of South Africa’s most recent rate cuts.

In October 2010, the Independent Communications Authority of South Africa (ICASA) announced new call termination regulations that aim to significantly drop termination rates between 2011 and 2013.

Called a “glide path,” ICASA prescribed that interconnect rates had to be cut annually over the three year period, with the final price cut set to take effect on 1 March 2013.

The next reduction in termination rates is to result in equal peak and off-peak rates for mobile and fixed-line calls. From 1 March 2013, the termination rate of mobile calls will be set to R0.40, local fixed-line calls R0.12, and national fixed-line calls R0.19.

For the moment, however, the termination rates are as follows:

Glide path for termination to a…
Location Peak Off-peak
Mobile location R 0.56 R 0.52
Fixed location with ON area code R 0.15 R 0.12
Fixed location between ON area code R 0.25 R 0.19

Compared to the mobile termination rates of the OECD nations (using a Rand/Dollar exchange rate of R7.625/$), both South Africa’s peak and off-peak termination costs are above the average.

The graph below shows the ranking of South Africa’s interconnect rates for mobile calls among the 34 countries of the OECD.

OECD mobile termination - February 2011

OECD mobile termination - February 2011

The OECD reported that while rates have decreased across its member nations by 53% between 2006 and 2011 – from USD 0.1406 per minute in 2006 to USD 0.0650 per minute in 2011 – there is still much divergence between countries.

According to the OECD report, the complexity and difference in the way that operators charge fees makes it difficult to draw a link between rates charged and prices paid by users for voice calls in different countries.

However, cutting rates to zero would strengthen competition in voice and other services, the report said.

“It could also speed up the introduction of innovative new VoIP services and encourage providers to offer a range of tariff models to meet the needs of their users, free from prices reflecting monopoly power on the networks of others.”

Related articles

Voice rates: who cut prices and who didn’t?

Voice call price cuts in SA

Mobile price cuts? Not likely!

Interconnect rates, voice prices: what can you expect?

ICASA suggests aggressive interconnect cuts

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