ICASA, South Africa’s telecoms regulator, said it will review its January order to cut mobile termination rates (MTRs) after Vodacom and MTN – the country’s two biggest mobile operators – complained about what they saw as unfair treatment.
Bigger operators always suffer more than smaller players when MTRs are cut – they terminate more calls – but Vodacom and MTN were particularly aggrieved over ICASA’s proposals on so-called “asymmetric rates”.
Under the original January order, ICASA wanted MTRs to fall from ZAR0.40 ($0.04) to ZAR0.20 per minute from 1 March 2014, then down to ZAR0.15 from March 2015 followed by a reduction to ZAR0.10 from March 2016.
However, the regulator also called for some significant asymmetry.
While smaller operators, such as Cell C and Telkom Mobile, would pay ZAR0.20 minute to MTN and Vodacom to terminate calls from 1 March 2014, South Africa’s big two would pay MTRs to smaller operators at ZAR0.44 per minute under ICASA’s proposals – an asymmetry of 120 per cent and a marked jump up from the previous 10 per cent level.
ICASA saw MTR asymmetry widening further, going up to 150 per cent from March 2015, and then shooting up to 300 per cent from 2016.
Vodacom and MTN applied legal pressure on ICASA in February, forcing the regulator to postpone its proposed MTR cuts to 1 April.
And now, according to a document seen by Bloomberg, ICASA “has decided to engage in a reconsideration of the termination rates applicable for the years beginning 1 April 2015 and 1 April 2016″.
In response to the original January order from ICASA, Vodacom CEO, Shameel Joosub, said “I wish I could say this is a victory for the consumer, but it is far from it”.
He called ICASA’s MTR scheme a subsidy in which Vodacom would be charged more to call Cell C and Telkom Mobile than the latter would be charged to call Vodacom.
“This prejudices Vodacom’s customers, and rewards those who have not invested in their networks at the expense of those who have,” he said
Zunaid Bulbulia, CEO of MTN South Africa, wrote in an opinion piece for IT News Africa that “the new termination rates are not reflective of the costs of terminating calls in South Africa and some well-established licensees will now be allowed by ICASA to charge termination rates that are four times as high as the price charged by MTN for terminating calls on its network”.
He added that neither ICASA nor the country’s smaller operators had explained how “overcharging” the larger networks’ subscribers to call smaller networks would deliver cheaper prices for all of South Africa.
“The proposal,” he said, “is nothing more than a tax on MTN’s subscribers to fund the smaller players’ marketing promotions for the next three years. This is a proposition that is not only commercially unsound, but unsustainable as well.”