The independent Communications Authority of South Africa (Icasa) has announced the rollout of new call termination rates in South Africa which will be effective as of March 1 2014.
The termination rates are the fees which operators charge each other to carry calls between their networks.
The new system which Icasa has implemented allows for asymmetric termination rates between different suppliers. Mobile termination rates, which are currently 40 cents, will now be 44 cents for bigger companies when carrying calls to smaller companies while smaller operators will pay only 20 cents to their bigger rivals. Fixed-line call rates will drop to 12c for short-distance calls and 16c for long-distance calls.
Icasa says that the aim of this model is to help smaller mobile operators to grow and increase competition in the market.
The announcement has been welcomed by Communications Minister, Yanus Carrim, who says that the new rates will bring down communications costs in South Africa and encourage global and domestic investment.
Vodacom, South Africa’s biggest mobile operator is not happy with the new asymmetrical system.
CEO Shameel Joosub said in a statement “We believe that the outcome has been reached without following due process. A cost-based study, which is a prerequisite before reaching this type of decision, has not been conducted and shared with us.”
He believes that the new rates are prejudiced against Vodacom customers and “rewards those who have not invested in their networks at the expense of those who have.”
MTN is also not happy and have said that the asymmetry would disincentivise them from investing in networks in rural areas, a division of their business which they currently subsidise. They also claim it may impact their sponsorship deals and staff complement.
Cell C, who will benefit the most from the asymmetry, have welcomed the announcement, saying that the new rates will give them a good chance of becoming a successful, sustainable competitor in the market.
Telkom has also greeted the news with enthusiasm, as they see it as an advancement in bringing cellphone costs more in line with fixed-line costs.
Icasa is planning to drop the termination rates even further over the next three years, going down to 15 cents next year, and 10 cents in 2016, with the asymmetric rate being set at 42 cents next year, followed by 40 cents in 2016 and 2017.