Icasa may cut mobile termination rates further

The Independent Communications Authority of SA (Icasa) said this week that it would review the effect of the mobile termination rate cuts in a bid to stimulate competition in the market. The regulator could also introduce further cuts as it says there is "no reason" rates should not fall to 15c-25c from 40c at present.

By Thabiso Mochiko

1 Mar 2013

The mobile termination rate is the fee operators charge to terminate each other's calls on their networks. From today‚ the rate will fall to 40c from a high of R1.25 three years ago when Icasa introduced gradual cuts.

Icasa's decision to review the market comes after Cell C proposed that it suspend mobile termination rate cuts until a market review had been completed. The regulator nonetheless decided to implement the final rate cut.

While Icasa acknowledged that some reductions in the retail price had taken place‚ it was concerned that there had been an "insufficient increase" in competition over the past few years.

Icasa said high termination rates were a barrier to effective competition and to reduced prices for calls to different networks.

"To this end‚ the authority sees no reason why mobile termination rates should not be in the region of R0.15 to R0.25‚ based on benchmarks set by SA's peers in Africa and the rest of the world‚" the regulator said.

"It is also conceivable that termination rates should tend towards zero over time‚" Icasa said. It was also concerned that the pricing of an on-net voice call - calls within the same network - may be below the termination rate‚ an indication that operators were pricing on-net calls at "below the true cost of a call‚ or that the current termination rates are still considerably too high".