Cell operators’ battle to connect
Termination fees are the fees telecommunications operators pay one another to carry their calls on each other’s networks. The operators levy an interconnection charge of 6c/minute on calls from CSTs.
That compares with a regular interconnect rate of as much as R1,25/minute in peak hours. Because Cell C is SA’s smallest cellphone operator and most calls are made to Vodacom and MTN numbers, it is able to profit from the cheap interconnect rate by charging 90c/minute (a prescribed rate) for calls from CSTs.
Cell C had permission from the industry regulator, the Independent Communications Authority of SA (Icasa), to locate the CSTs in the places it did, which allegedly included well-to-do urban areas. But MTN took exception and withheld CST interconnect revenues it owed Cell C. The latter retaliated by stopping all interconnect payments to MTN.
MTN took Icasa to court, where the regulator admitted it hadn’t properly applied its mind. Icasa is revisiting the CST issue, but Cell C says it will continue operating the centres until such time that Icasa orders it to stop.
Cell C and MTN are now in discussions in an effort to reach a settlement regarding outstanding interconnection fees. Cell C CEO Jeffrey Hedberg claims MTN owes the company about R200m.
Cell C wants a thorough review of the interconnection regime. Hedberg says the regulatory environment is skewed in favour of MTN and Vodacom, especially in interconnect rates.
"I was responsible for international activities at Deutsche Telekom [and]… this is one of the most biased regulatory environments I have seen or experienced," he says.
Cell C, he says, would like asymmetric regulation of termination rates, where it will pay less to other operators to terminate calls than other companies pay it. He says this is necessary because its subscribers have to terminate more calls on the MTN and Vodacom networks.
The two bigger operators profit from the fact that their subscribers make more calls to people on their own networks.
Icasa is scheduled to hold public hearings into mobile termination fees next month.
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