Small players, cellphone users to benefit from new rates

2014-01-29 11:27

South Africa’s telecommunications regulator, Icasa, has announced aggressive asymmetrical call termination rates, which will benefit smaller mobile players like Cell C and Telkom Mobile, who have less than 20% of the retail market.

Despite opposition from dominant mobile players like MTN and Vodacom in October, when the draft regulations were published, Icasa pushed ahead with its plans for asymmetrical call termination rates.

It even increased the asymmetrical advantage to the smaller players proposed in the draft regulations by increasing the rates they can charge.

The move should lead to increased competition in the mobile market, which should lead to price reductions.

Icasa is hoping that it also leads to South Africa’s smaller players investing more in their network infrastructure.

Industry players believe Vodacom and MTN will be unhappy with the new regulations and may attempt to challenge them in court, while Cell C has welcomed the decision by Icasa.

Call termination rates, also know as interconnect rates, are the rate that one mobile player charges another player to terminate a call on its network.

So if a Vodacom customer calls a Cell C customer, Vodacom must pay Cell C for the fact that the call ends on the Cell C network.

At a press conference today, Icasa’s acting chair Vuyo Batyi announced that call termination rates would be slashed from 40c to 20c on March 1 2014 and then to 15c and 10c on March 1 2015 and March 1 2016 respectively.

However, Cell C and Telkom Mobile will have asymmetrical termination rates of 44c on March 1 2014, which will reduce to 42c, 40c and 20c in 2015, 2016 and 2017 respectively.

The asymmetrical call termination rate of 20c in 2017 will only apply to mobile players who have less than 10% of the retail market share.

What this means is that when a Cell C customers terminates a call on the Vodacom network, Cell C will pay Vodacom 20c per minute from the beginning of March, while if a Vodacom customers calls a Cell C customers, Vodacom will pay Cell C a rate of 44c per minute.

Termination rates for calls to fixed lines will drop to 12c per minute for short-distance calls and 16c per minute for long-distance calls.

This will be reduced to 13c in 2015 and will remain there till 2017.

The asymmetrical rates in fixed line have been set at 13c per minute for short-distance calls and 21c per minute for long-distance calls.

The call termination rates are yet to be gazetted by Icasa.

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