Drop termination rates to 10c next year: Knott-Craig

Cell C CEO Alan Knott-Craig said that the regulator (Icasa) should drop mobile termination rates to 10c per minute next year (2014) to increase competition and lower retail rates.

Speaking at the 2013 MyBroadband conference, Knott-Craig highlighted that it currently costs R0.40 to terminate a call on Vodacom and MTN’s networks, and R0.44 to terminate a call on a smaller operator’s network.

This is significantly higher than the termination rates in countries such as France (R0.11), Italy (R0.13), and Turkey (R0.16).

To illustrate the impact of high termination rates in South Africa, Knott-Craig explained that they pay 10c to terminate a call in the US or UK.

“We make more profit taking a call and sending it to the UK or US, than sending it across a room in South Africa,” said Knott-Craig.

The need for lower termination rates, larger asymmetry

“Why are we jumping up and down when the regulator says that they are going to drop termination rates to 10 cents over 3 years?” asked Knott-Craig.

“They should have dropped it down to 10c next year – just one shot. Let’s get it over with and relax,” he said.

Knott-Craig added that significant asymmetry is needed to increase competition in South Africa and drive down prices.

He showed that Cell C – a smaller player which needs assistance to drive prices down – actually started to pay MTN and Vodacom net termination revenue.

“The guys which are trying to bring the price down are starting to pay the big networks extra profit,” said Knott-Craig.

“That is wrong. There is something wrong with the regulatory framework, which is now being fixed [with lower MTRs and asymmetry],” said Knott-Craig.

More on mobile termination rates

Telkom, Cell C win in planned MTR price cuts

Icasa draft call termination regulations published

New draft call regulations from Icasa