Great news, but such a pity that ICASA seem to have tripped over their own incompetence again. They certainly get an A for effort, but I'm afraid it's a G for basic understanding of interconnection. For that matter, where are the smart analysts and journalists who should have picked up the fatal flaw instantly?
The mobile termination rate is a single, flat rate (or two, if there's peak and off-peak) that applies to all calls made to a mobile network, regardless of where the call is handed over e.g. a call handed from a fixed network in Jo'burg can terminate on a handset in Cape Town, or Durban, or just Jo'burg. It's a single rate because the calling network has no way of knowing where the handset is. The cost needs to be calculated based on the AVERAGE cost to deliver the call, taking all sources and all destinations into account statistically. It includes both the termination cost of the call on the radio network, and the cost of carrying the call across the backbone network to where the handset is currently.
In contrast, there is no way to express the fixed line termination rate as a single number (or even two, if there's peak and off-peak). Fixed line numbers are geographically-bound, and the cost of delivering a call depends on both the SOURCE and the destination. A call originating in Cape Town, destined for an 021 number is charged at the LOCAL fixed line termination rate, calculated from the cost of only the LOCAL infrastructure. A similar call destined for an 011 number includes a substantial additional cost for carrying the call across the country, based on the NATIONAL infrastructure.
So, you may ask, why not just blend the fixed line rate into a single number, like the mobile rate? Basically, because you would put most fixed line competitors who offer decent national prices out of business. If Telkom charged a single blended rate for all fixed line calls, regardless of where handed over, there would be no reason for any other long distance carrier to exist, and no way for them to make any money out of such calls. They could hand over all calls at source, and would not be in a position to compete with Telkom on the higher margin part of the business, which is carrying national calls.
In South Africa, there are therefore TWO fixed line termination rates (and in other countries, there are more). One applies to local termination, and the other to local termination plus carrying the call long distance. This principal is so fundamental to telephony that it is exasperating that ICASA could be unaware of it. In the US, for example, it was the basis of the entire market structure for a century.
Even if one assumes that not proposing both rates is an honest mistake (!), why on earth does ICASA think that termination on a fixed network costs one quarter of the price of termination on a mobile network? This has never been the case, and certainly isn't the case now. In fact, mobile networks are typically much cheaper to deploy than fixed networks, so, if anything, these numbers should be swapped. The only reason for the original asymmetry was to support the poor, starving mobile networks when they first launched, cross-subsidising them from Telkom.
So, for anyone who understands fixed line interconnection, and the economics of building networks, ICASA's announcement makes no sense. Regardless of the actual size of the numbers, and whether there is peak and off-peak, we need to see at least three numbers - one for local fixed line termination < one for mobile termination < one for national fixed line termination.
All that said, the mobile termination rate looks great. ICASA: Please just publish something a little less nonsensical for fixed line termination. You really have no excuse, since you have everyone's interconnection agreements, and just have to bother to look at them.
