Voice over IP provider says cutting call costs to 1 cent is a mistake

The Internet Service Providers’ Association (ISPA) has questioned ICASA’s plan to slash call termination rates for fixed lines to 1 cent per minute.

ISPA called for the Independent Communications Authority of South Africa (ICASA) to implement converged pricing for fixed and mobile call termination.

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

“These costs are worthy of interrogation as they are almost always passed on to the end telecoms consumer,” ISPA stated.

Last month, ICASA issued draft amendments to its call termination rate regulations.

In it, ICASA proposes aggressive rate cuts over the next two years.

These are summarised in the table below.

ISPA said ICASA has decided not to align South Africa’s fixed and mobile termination rates — a move that goes against its own findings.

ICASA issued a findings document in 2022 that acknowledged the convergence between fixed and mobile, driven largely by the Covid-19 pandemic.

ISPA member and voice over IP provider Switch Telecoms also said R0.01 is an extraordinarily low fixed termination rate (FTR) by global standards.

“In addition to SA’s FTR being just a fraction of the FTR in highly developed markets, South Africa is a geographically large country with relatively low population density,” it stated.

“The real-world cost of deploying fixed lines is far higher than in Europe, for instance, where the FTR is 40% higher than ICASA is proposing.”

Complicating matters further is load-shedding, which adds to the cost of providing reliable services.

“Telkom, South Africa’s fixed line operator, has already expressed dismay at ICASA’s decision to cut fixed call termination rates and mobile termination rates asymmetrically,” ISPA said.

“For their part, many of ISPA’s members provide voice services and their experience is that fixed-mobile substitution in the voice market is increasing. This is a worldwide trend.”

ISPA chair Sasha Booth-Beharilal said the argument for parity between fixed and mobile termination rates has little to do with interconnection revenue.

“[It] rests on the fact that the distinction between fixed and mobile calls is blurring,” said Booth-Beharilal.

“The result is that the average cost of terminating a fixed call is now the same, if not more expensive, than terminating a mobile call.”

While ISPA disagreed with ICASA’s plan to continue differentiating between fixed and mobile calls, it welcomed the proposal to curb excessive international termination rates.

ISPA said these bear no relation to regulated rates or actual costs.

“ISPA will engage with ICASA to ensure it understands how this will be practically implemented,” the organisation said.