Interconnect price battle
The Independent Communications Authority of South Africa (ICASA) today announced that the public hearings in respect to the Draft Call Termination Regulations will take place from 28 to 30 June at the Bytes Technology Centre in Midrand.
“The level of call termination charges has been a cause for concern in South Africa for some time. During 2009, the Independent Communications Authority of South Africa (ICASA) conducted a market review of the provision of wholesale call termination services,” ICASA said in a press statement.
ICASA released its proposals on the outcome of this review in the draft “Call Termination Regulations” on the 16th of April 2010 in Government Gazette No. 33121, where the regulator proposed, amongst others, the need for a cost-oriented price cap on both mobile and fixed call termination rates.
The closing date for written submissions on these draft regulations was the 18th of June 2010, by which time ICASA had received 20 written submissions.
Operators ready to do battle
All the major operators including Telkom, Neotel, Cell C, Vodacom and MTN submitted feedback – mainly criticizing the draft regulations.
Telkom argues that the regulations in their current form are flawed, and that fixed termination rates “certainly cannot decrease and should in fact increase”.
MTN said in their submission that the draft regulations should be substantially modified to comply with the EC Act. MTN further said that proposed glide path is unjustified and unreasonable.
Cell C also slated the MTR regulations in its current format, arguing that symmetric reductions in MTRs are unlikely to increase consumer welfare. Cell C calls for asymmetric interconnect rate to benefit themselves and other new operators, and further said that if its “call termination revenues decrease any further in 2010 then this will cause it significant prejudice.”
Neotel supported ICASA’s proposed intervention in respect of the regulation of mobile call termination charges, but asked the regulator to define separate complementary wholesale markets that are necessary to terminate a call on a fixed network.
The most surprising submission came from Vodacom which said that they agree that the wholesale network cost-based rate is around the R0.40 level. Vodacom stands to lose billions on Rands with ICASA’s proposed mobile termination rates, making it quite magnanimous of the mobile provider to support the proposed rates.
Vodacom did however ask for a later implementation date of the proposed interconnect price cut glide path, asking for the first reduction in terms of the glide path be moved to 1 March 2011 rather than mid-2010.
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