20c per minute drop too steep: Vodacom

Vodacom Group CEO Shameel Joosub said in a statement today (7 October 2013) that the initial 20c price drop in mobile termination rates proposed by the Independent Communications Authority of South Africa (Icasa) is too steep.

“We support Icasa’s goal of reducing mobile termination rates, provided that such a reduction is cost-based,” Joosub said. “Cuts in mobile termination rates can have a profound impact on both our business and those of our suppliers, franchisees and other stakeholders.”

For this reason, Joosub said Vodacom supports a managed “glide path” of reductions over several years.

“We will be responding to ICASA to make the case that the proposed reduction and glide path, which has an initial drop of 50% in March 2014, are too steep and could have serious negative impacts,” Joosub said.

Asymmetry too much

Vodacom also took issue with Icasa’s proposed asymmetry in mobile termination rates between large and small cellular operators.

“Asymmetry means that Vodacom pays more to connect a voice call to someone on Cell C or Telkom Mobile than these networks pay to connect to someone using Vodacom,” Joosub explained.

Joosub said that Icasa’s proposal will take the current rate of asymmetry from a 10% differential to rates ranging between 95% and 160% over three years.

“The accepted practice worldwide is declining asymmetry for a limited period for new entrants at a fraction of the levels proposed,” Joosub said, adding that they intend to engage with Icasa for “a more reasonable” outcome.

“We see this proposed asymmetry as placing Vodacom (and by extension, our customers) in the position of effectively subsidising our competitors,” Joosub said.

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