Icasa must stop guessing

The Independent Communications Authority of South Africa (Icasa) must conduct a proper market study to determine South Africa’s call termination rates (CTRs) and the level of asymmetry enjoyed by smaller networks.

That was the prevailing view at a recent debate about call termination regulations organised by the Centre for Competition, Regulation and Economic Development (CCRED).

On the debate panel were: Ryan Hawthorne (CCRED), Charley Lewis (Link Centre), Dominic Cull (Ellipsis Regulatory Solutions), and Angus Hay (Neotel).

The debate centred around Icasa’s most recent call termination rate regulations that were struck down in the South Gauteng High Court earlier this year as unlawful and invalid.

Icasa was found not to have followed proper processes to determine the CTRs and was given six months within which to review the regulations.

On 21 May 2014, just over 7 weeks after the court had delivered its judgement, Icasa announced that it had begun the review and called on operators to provide the information it needed.

Responses from network operators had to be in on Friday, 13 June 2014.

While many industry commentators are happy with Icasa conducting a study to determine what CTRs should be based on what it costs networks to connect a call, there is still much controversy around the issue of so-called “asymmetry”.

Asymmetry in call termination rates means that some operators (usually smaller ones) get to charge other operators more to connect calls to their networks.

In other words, Neotel charges Telkom more to connect calls to its network than Telkom charges Neotel; and Cell C and Telkom Mobile charge Vodacom and MTN more.

However, Icasa proposed that the level of asymmetry enjoyed by Cell C and Telkom Mobile increase from where it ended at 10% in 2013, to over 100% in 2014.

The level of asymmetry enjoyed by smaller mobile operators would then increase over the next 3 years. Under Icasa’s previous CTR regulations for 2011–2013, the level of asymmetry decreased over time.

Vodacom and MTN balked at this and took the matter to court.

The panellists at the CCRED debate all shared concerns over the high levels of asymmetry and largely agreed that Vodacom and MTN were justified in taking the matter to court.

“They have a point to object to Icasa’s process,” Dominic Cull from Ellipsis Regulatory Solutions said, “they have a right to demand that it’s done properly.”

Asked what the level of asymmetry then should be, Cull responded: “If I give you an answer on what the level of asymmetry should be I would illustrate the problem. I’d be guessing.”

Cull said that a comprehensive regulatory framework needs to be developed which includes a detailed market study.

“We need to stop with the guessing,” Cull said, to the approval of the rest of the panel.

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