Cell C and Telkom fight to keep call rate advantage
Cell C and Telkom have criticised industry regulator Icasa’s decision to eliminate asymmetric mobile termination rates (AMTR), reports the Sunday Times.
AMTR refers to how large mobile network providers like MTN and Vodacom pay a higher fee to providers like Cell C and Telkom for carrying their calls, than these smaller networks pay MTN and Vodacom.
Icasa recently confirmed it will phase this out over the next 12 months — although new entrants into the mobile network space will still benefit from AMTR throughout the next three years.
Telkom believes that Icasa’s plan to handle termination rates moving forward is insufficient.
“While the findings document has indicated that AMTRs should be phased out within the next 12 months, Icasa has indicated that cost-based pricing should be applied (including asymmetry),” Telkom said.
“The relative costs incurred by smaller and larger operators are likely to indicate that removing AMTR is unjustified.”
Cell C chief legal officer Zahir Williams added that AMTR had been essential for driving competition within the industry.
Zahir Williams, Cell C Chief Legal Officer
“Cell C has noted Icasa’s findings on its review of AMTRs and is assessing the business effect thereof, taking into account the challenges of smaller MNOs to effectively compete against large MNOs,” said Williams.
Icasa contends that its decision is justified, as it has already given small entrants this advantage for 12 years – whereas international best practice suggests three or four years is sufficient.
A controversial history
Both MTN and Vodacom have been criticised for how they handled call termination rates, particularly once government had called for additional mobile operators in 1998.
Soon after the government’s announcement, Vodacom and MTN began hiking call rates.
By the time Cell C launched in 2001, call termination rates had increased by over 500% for off-peak calls and over 1,100% for on-peak.
Call termination rates in SA (Source: Lewis – Pricing and tariffs: principles)
Cell C said these termination rates hurt its development upon entering the market, as it had to pay a large portion of its revenue from voice calls to Vodacom and MTN.
However, Vodacom contended that the increases had nothing to do with Cell C’s entry into the market.
Icasa stepped in and regulated call termination rates in 2010.
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