Cell C surprise rate move blocked
The Independent Communications Authority of South Africa (ICASA) has declined an application by Cell C to stop voice termination rates from being cut on 1 March 2013, according to ICASA spokesperson Paseka Maleka.
Maleka said that ICASA can’t simply suspend a regulatory process without proper consultation. He explained that when the glide path was first introduced it followed a public consultation period where stakeholders offered their inputs for consideration by the regulator.
Such a process can’t be completed within a short space of time, Maleka said, and for this reason the three year glide path continues as planned.
The “glide path” refers to a steady decrease in termination rates over the last three years, with the last cut under the current regulations set to be implemented on 1 March 2013.
By the end of the glide path period, peak and off-peak mobile termination will be reduced to R0.40, local fixed calls will drop to R0.12 during peak times and off-peak times, and the rate for national calls on fixed lines will be R0.19.
Maleka said that ICASA will do a market review in the next financial year to determine what should happen to termination rates in the years ahead.
During this market review stakeholders (such as Cell C) will be able comment on what should follow this last round of cuts, Maleka said.
Update: Cell C has provided comment on ICASA’s decision:
Cell C respects the decision by ICASA to continue with the implementation of the MTR glide path as planned.
The company also welcomes the acknowledgement by ICASA that there is a lack of effective competition in the market and that they will bring forward an urgent market review to determine amongst others the effectiveness of the current MTR regulations and whether they have had the desired effect on reducing the cost to communicate in South Africa.
We trust that the Regulator will also use the opportunity of the market review to make a determination on whether on-net vs off-net tariff differentiation and high national roaming charges contribute to the lack of effective competition.
Cell C believes that lower call termination rates will benefit the country, but only if there is a greater asymmetry for smaller players and new entrants, which will enable them as sustainable competitors, as was the case with Vodacom and MTN during their first ten years of operations against thethen-incumbent, Telkom. In fact the asymmetry between the dominant mobile operators and Telkom remains at approximately 400% to this day.
Cell C has been in discussions with ICASA for some time on the matter and the company believes the outcome of the market review will assist the Regulator in encouraging a more competitive landscape and ultimately benefit consumers with more competitive pricing.
Cell C thanks the Regulator for taking the company’s position into account with its decision.
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