New call termination rates finalised

The Independent Communications Authority of South Africa (Icasa) announced its new call termination regulations on Monday, 29 September 2014.

This comes after Icasa announced a draft version of the regulations on 4 September (which was published on 9 September) and gave stakeholders until 19 September to comment before finalising them.

The reason for the urgency is due to a 31 March 2014 High Court ruling which declared Icasa’s previous regulations unlawful and invalid.

A suspending of the declaration of invalidity for 6 months gave Icasa until the end of September to produce new regulations.

Call termination rates in South Africa are split into two broad categories: termination to a mobile location (when placing calls to a cellular network) and termination to a fixed location.

Icasa’s new mobile termination rates are summarised in the table below, and compared against what they would have been had they not been struck down by the High Court.

Year Old mobile termination rates New mobile termination rates
Regulated rate Asymmetry Regulated rate Asymmetry
1 Oct 2014 – 30 Sep 2015 R0.20 R0.44 (120%) R0.20 R0.31 (55%)
1 Oct 2015 – 30 Sep 2016 R0.15 R0.42 (180%) R0.16 R0.24 (50%)
1 Oct 2016 – 30 Sep 2017 R0.10 R0.40 (300%) R0.13 R0.19 (46%)

The criteria for determining which operators qualify for the asymmetric rates remains the same as in the draft regulations, Icasa said.

Instead of using market share (which had to be under 25% to qualify previously), the new regulations look at total terminated minutes. For an operator to qualify for asymmetry it must have less than 20% of the share of total terminated minutes in either the fixed or mobile market.

Cell C previously expressed its displeasure at Icasa’s draft mobile termination rates, saying that the regulator had proposed “a complete U-turn” on its previous regulations.

The mobile network also said that Icasa was effectively acknowledging that “the duopoly that exists in the South African market today is an acceptable state of affairs and will be allowed to continue.”

Mobile termination rates only form part of the regulations, and Icasa also finalised a number of changes to fixed-line rates, as shown in the table below.

Year Old fixed termination rates New fixed termination rates
Regulated rate Asymmetry Regulated rate Asymmetry
2014 R0.12 R0.16 R0.13 (8%) R0.21 (31%) R0.12 R0.15 R0.18 (50%) R0.21 (40%)
2015 R0.12 R0.12 R0.13 (8%) R0.13 (8%) R0.11 R0.12 R0.15 (36%) R0.16 (33%)
2016 R0.10 R0.10 R0.13 (30%) R0.13 (30%) R0.10 R0.10 R0.12 (20%) R0.12 (20%)
W0N: Within area code; B0N: Between area codes

Commenting on the final regulations, Icasa said their publication was “a culmination of a protracted consultative process with the interested parties in order to inform licensees of the Authority’s approach in determining wholesale voice termination rates”.

Icasa warned that a reduction in wholesale rates such as call termination does not necessarily mean that consumers will see an immediate reduction in retail prices.

However, the regulator also noted that rates came down almost immediately when the previous call termination rate cuts were announced.

“The extent to which retail rates drop is operator-dependent,” Icasa added.

Vodacom also provided a quick statement shortly after the conclusion of the press conference.

“This process has been constructive and is a good example of how the industry can work with the regulator to get to a scientifically based result,” said Vodacom. “We appreciate Icasa’s willingness to consult with industry players.”

The operator said it is going to review the new rates and will be in a better position to provide comment once that has been completed.

“We have some concerns about the asymmetry granted to certain companies and the potential impact that this could have on our business,” Vodacom said.

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New call termination rates finalised