Vodacom criticises call for asymmetric termination rates

Mobile termination rates are fees that mobile operators pay each other to carry each others calls.

An asymmetric mobile termination rate requires major operators to pay a higher than normal rate to their smaller counterparts. In return‚ small operators will pay their competitors the normal rate.

The current mobile termination rate is 40c.

Cell C has called on the regulator to introduce this form of intervention as part of the overall reduction in mobile termination rates to assist small operators. Cell C believes lower call termination rates will benefit the country‚ but only if there is greater asymmetry for smaller players and new entrants. Mobile termination rates have come down to 40c from a high of R1.25 three years ago.

SA's cellphone prices are among the most expensive on the continent‚ with the country ranked 30th out of 34 African countries.

Vodacom's chairman Peter Moyo said in the company's latest annual report that Vodacom had been supportive of the reduction in mobile termination rates over the past three years and continued to work with the Independent Communications Authority of SA (Icasa)‚ on extending the downward glide path - the reduction of mobile termination rates over a period of time.

"The question is whether asymmetry‚ if granted‚ would be counterproductive and reduce the propensity to invest in networks‚" he said.

What asymmetry means is...

He said that asymmetry was typically applied to give new players a temporary boost‚ allowing them to become established. Once up and running‚ normal competitive rules resumed‚ he said.

"Asymmetry effectively means that the incumbent operators subsidise the new operator‚ which only makes sense in that early phase. We have a situation in SA where networks have been in operation for over ten years and we believe that these companies' shareholders‚ rather than our customers‚ should pay for their network investment‚" he said.

Shameel Joosub‚ the CEO of Vodacom‚ said the group did not "feel that asymmetry for players that have been in the market for a long time is warranted. Getting the glide path right achieves the right balance between investment and pricing‚ and will help to avoid the inadvertent consequence of undermining the network quality we're able to deliver to our customers".

Cell C is lobbying the regulator to urgently intervene to assist small operators. The company is under pressure to grow its business and become profitable. It argues that the slow pace of regulatory intervention is also contributing to its problems.

Icasa has hinted that the rate could be reduced further and it has embarked on a cost to communication programme that seeks to review the prices paid by consumers for communications and also wholesale prices. It would review related regulations that influence the cost of communications in the country‚ such as the call termination regulations and the local loop unbundling framework.

The portfolio committee on communications will next week hold public hearings on "the general cost to communicate in SA"‚ in Gauteng. The committee said it "has recognised that‚ despite reduced mobile termination rates‚ the cost of communication in SA is still high and competition remains fragmented."