Plans to slash call termination rates in South Africa

The Independent Communications Authority of South Africa (Icasa) has again proposed substantial reductions in call termination rates and the abolition of asymmetric rates favouring Telkom and Cell C.

Call termination rates are the fees network operators charge one another to connect calls from a competitor to one of their subscribers.

For example, if a Vodacom subscriber calls someone on MTN, MTN charges Vodacom a fee.

“These draft amendments mark the penultimate step in a process that began with the Authority’s 2021 decision to review the existing call termination rates,” Icasa said in a statement on Friday.

“These draft rates emanate from an intensive cost-modelling process involving the development of an iterative, multi-input, bottom-up cost model, accompanied by extensive engagement with the main voice operators.”

Icasa said the central feature of this cost model has been the adoption of a long-run incremental cost (LRIC) approach — in line with global international good practice.

“The outcome of this consultative process has allowed the Authority to deduce the appropriate cost levels of wholesale voice call termination services, and therefore to specify what operators should be able to charge,” it continued.

“Another central feature of the above rates is the phasing out of asymmetry between what large and small mobile operators can charge, in accordance with the decision set out in the Authority’s 2022 Findings Document.”

New entrants into the voice services market will continue to qualify for asymmetry for three years.

The table below summarises the mobile and fixed call termination rates Icasa is proposing.

Asymmetric call termination rates refer to allowing different players to charge different fees for connecting calls into their networks.

In South Africa, asymmetry was implemented to favour smaller operators like Cell C and Telkom.

This allowed Telkom and Cell C to charge Vodacom and MTN more for call termination than the larger operators were allowed to charge them.

Cell C and Telkom previously slammed Icasa’s attempts to do away with asymmetry, with Telkom even taking the regulator to court.

“In creating a more competitive and consumer-friendly telecommunications landscape, Icasa takes a significant stride with the publication of draft amendments to the Call Termination Regulations,” said council committee chairperson Nompucuko Nontombana.

“By phasing out asymmetry and providing a transitionary period for new entrants, we aim to empower operators to adapt gradually, all while maximizing benefits for consumers.”

Nontombana said Icasa was confident these wholesale voice call termination rates would meet the objectives of the Electronic Communications Act and pave the way for a more dynamic and consumer-centric telecommunications market.

Stakeholders have until 10 May 2024 to submit their feedback to Icasa about the regulations.