The Independent Communications Authority of South Africa’s (Icasa) recently released its new draft call termination regulations, which propose a three year plan to reduce mobile termination rates between network providers to 10c per minute.
The purpose of the proposal is to reduce the asymmetry of termination rates across networks and would mean a dramatic decrease for MTN and Vodacom, from 40c per minute to 10c per minute.
MTN and Vodacom have argued against the proposal saying it will negatively influence their ability to invest in network infrastructure in rural areas, which they currently subsidise with termination revenue. They further said that there is no evidence that lower termination rates will lead to lower retail prices.
But most worrisome to them is the fact that Cell C will benefit from asymmetry, with Vodacom and MTN paying higher fees to terminate calls on Cell C’s network than the other way around. They argue that Cell C has no right to demand this.
MTN South Africa CEO Zunaid Bulbulia argues that asymmetry means that Vodacom and MTN will basically fund Cell C, and this money will simply flow out of the country to pay Cell C’s international shareholders.
According to Bulbulia Cell C has simply not invested enough in building a strong network, and the problems which the company now faces are a consequence of this.
Cell C acting CEO, Jose Dos Santos has hit back at MTN rejecting MTN’s argument. “MTRs act as a floor for retail prices, so if we still had to pay a wholesale price of R1.25 to terminate calls, Cell C would not have been able to drop its retail rates to 99c,” he said.
Bulbulia conversely argues that Cell C could have launched a 99c per minute flat rate, even if MTRs were still R1.25 if Cell C had invested enough in their network. A larger network would give them more on-net traffic which would have made these lower rates possible.