The Independent Communications Authority of South Africa’s (ICASA) public hearings for the Draft Call Termination Regulations kicked off today and will continue until 30 June.
The hearings are likely to see the various telecoms players pushing their own agendas which vary from requesting the lowest possible interconnect rates to asking for high and even asymmetrical mobile termination rates.
In 2009 mobile interconnect rates made headlines with consumers, the media and parliament pushing the issue. Many providers welcomed the idea of lower interconnect rates, and Telkom and Neotel even committed to passing on the full mobile termination rate cuts to their subscribers.
This was an easy decision with a single peak mobile termination rate cut of 36c, but fast forward a few months and many telecoms players are starting to change their tune.
ICASA showed some teeth in April by proposing the following interconnect pricing interventions:
- Mobile termination rates are proposed to be reduced to R 0.65 from July 2010 and further reduced to R 0.40 from July 2012.
- Fixed termination rates are proposed to be reduced to R 0.15 from July 2010 and further reduced to R 0.10 from July 2010.
These suggested interconnect price cuts – both for mobile and fixed line calls – may have taken some of the larger operators by surprise, and the initial feedback from the larger telecoms operators shows a distinct flavor of discontent.
During the next three days of hearings there are likely to be heated debates about the impact of drastic termination rate price reductions, and to shed light on some of the likely topics the following table highlights some of the feedback from the major players in the interconnect debate:
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What companies tell ICASA
|
| Company |
What they say |
| Telkom |
- Telkom is of the view that the regulations in their current form are flawed
- Telkom’s fixed termination rates certainly cannot decrease and should in fact increase
- Telkom finds there to be no basis upon which the Authority can impose symmetric termination
|
| Vodacom |
- Vodacom agrees that the wholesale network cost-based rate is around the R0.40 level
- Vodacom notes that the proposed glide path from the current MTR to R0.40 is far too aggressive. ICASA must reconsider the proposed further reduction of mobile termination rates for 2010 and Vodacom recommends that the implementation date for the first reduction in terms of the glide path be moved to 1 March 2011 at the earliest.
- Vodacom welcomes the pro-competitive decision of the Authority to recommend symmetric MTRs (not giving Cell C or other players an advantage)
- Vodacom expresses a preference for the retention of the blended rate concept – maintaining the peak and off-peak rates differentiation – as opposed to the proposed move to a single rate
|
| MTN |
- The regulations should be substantially modified to comply with the EC Act, else they risk being challenged.
- The concept of “Established SMP” player must be refined. MTN cannot be considered to be an established player in the fixed call termination market.
- MTN supports ICASA?s symmetrical treatment of the mobile operators (not giving Cell C any advantage)
- MTN submits the proposed glide path is unjustified and unreasonable.
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| Cell C |
- The proposed symmetric reductions in MTRs are unlikely to increase consumer welfare and introduce stronger competition for incumbent MNOs. It is therefore necessary that ICASA reconsiders its position regarding the symmetric MTR reductions (to benefit Cell C)
- Cell C does not have ESMP and faces CBP, it cannot be subject to the same pro-competitive remedies as the larger MNOs
- Should ICASA proceed with the implementation of the proposed regulations on 1 July 2010 it will have acted procedurally unfairly
- The present date for the implementation of the proposed regulations does not give Cell C sufficient opportunity to re-organise its business
- Should Cell C’s call termination revenues decrease any further in 2010 then this will cause it significant prejudice.
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| Neotel |
- Neotel supports ICASA’s proposed intervention in respect of the regulation of mobile call termination charges
- ICASA needs to define separate complementary wholesale markets that are necessary to terminate a call on a fixed network
- Wholesale charges for the various complementary segments of a fixed call should reflect the costs relating to the distance between each of the relevant segments of a call that ultimately terminates on a fixed voice network.
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