Telkom big winner in new Icasa call rates

The new draft call termination regulations recently published by the Independent Communications Authority of South Africa (Icasa) have raised some eyebrows in South Africa’s telecommunications industry.

Icasa’s proposed changes to the rates fixed-line operators may charge other carriers to connect calls to their networks, and the low mobile termination rates that will apply from 2017 are of particular interest.

Regarding fixed-line rates, it is somewhat curious that Icasa has proposed that fixed-line and mobile call termination should be equal from 1 March 2015.

Fixed-line call termination changes

Sources in the industry indicate that there is a sense that Telkom would benefit the most should the draft call termination regulations be implemented as-is at the end of September (2014).

The table below summarises how the previous fixed-line call termination rates Icasa instituted compare to the new proposed regulations.

It shows that fixed-line operators such as Telkom and Neotel will be able to charge other carriers more to connect calls to their networks than they were previously.

Year Old fixed termination rates New fixed termination rates
W0N B0N
Regluated rate Asymmetry Regluated rate Asymmetry Regluated rate Asymmetry
2014 R0.12 R0.13 (8%) R0.16 R0.21 (31%) W0N: R0.12 / B0N: R0.18 W0N: R0.19 / B0N: R0.29
2015 R0.12 R0.13 (8%) R0.12 R0.13 (8%) R0.16 R0.22 (38%)
2016 R0.10 R0.13 (30%) R0.10 R0.13 (30%) R0.12 R0.16 (33%)
2017 R0.10 R0.13 (30%) R0.10 R0.13 (30%) R0.08 R0.10 (25%)
W0N: Within area code
B0N: Between area codes

Operators are not saying anything about this publicly yet, however, as they have reserved comment until they’ve had more time with the draft regulations.

“Telkom supports Icasa’s efforts to lower the cost to communicate and has taken note of the proposed call termination rates announced by the regulator,” a spokesperson for Telkom told MyBroadband.

“The company will study the rates, review the implications thereof, and thereafter communicate on the regulation,” Telkom said.

MTN offered similar feedback, saying that it would first review the published regulation and the accompanying explanatory note before providing comment.

Vodacom was willing to venture that it had taken note of the termination rates proposed to kick in from 1 March 2017:

“We’re studying the announcement and will be providing feedback in due course. Among other points of discussion, we’d like to engage with Icasa to better understand the basis of the rates in the later years, particularly year four.”

Cell C did not respond to questions about the new call termination regulations by the time of publication.

Mobile call termination

Telkom, as a smaller mobile player in South Africa, will also benefit from asymmetric rates in mobile termination.

This means the company (along with Cell C) will be able to charge other operators a higher tariff for placing calls to their networks than Vodacom and MTN are allowed to charge them.

To qualify for asymmetry, Icasa proposed that an operator must have less than 20% of the total terminated voice minutes in the fixed or mobile market.

The table below summarises how the mobile termination rates Icasa had previously instituted compare to the new draft.

New termination rates usually kick in on 1 March every year. The commencement date of the new 2014 rates will be the exception, as they are set to launch from 1 October.

Year Old mobile termination rates New mobile termination rates
Regulated rate Asymmetry Regulated rate Asymmetry
2013 R0.40 R0.44 (10%)
2014 R0.20 R0.44 (120%) R0.20 R0.30 (50%)
2015 R0.15 R0.42 (180%) R0.16 R0.22 (38%)
2016 R0.10 R0.40 (300%) R0.12 R0.16 (33%)
2017 R0.10 R0.20 (100%) R0.08 R0.10 (25%)

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Telkom big winner in new Icasa call rates