ISPA says Inflated Call Termination Rates for International Calls do Prejudice South African Consumers

8 April 2015

South Africa’s Internet Service Providers’ Association (ISPA) says it is misleading for MTN to take a unilateral decision to increase its rates in order to protect its revenue while claiming that this will not prejudice local consumers.

The industry body that serves the interests of ISPs and voice providers is referring to the matter in which MTN South Africa is defending its unilateral implementation from November 2014 of a US$0,25/minute termination fee on international inbound calls (an increase of around 1 480% on its fee for local inbound calls).

ISPA welcomed the decisive action taken by the Independent Communications Authority of South Africa (ICASA) in the interests of local consumers while noting that MTN has warned the ICASA that it will take the matter to court unless the communications regulator backs down on a decision to block the operator from imposing the fee.

Dominic Cull, ISPA Regulatory Advisor, says the implementation of inflated call termination rates for international calls prejudices South African consumers who, by nature of the fact that their friends, family members and business associates overseas bear the cost of originating calls from overseas towards them.

This will be particularly keenly felt in the Southern African Development Community (SADC) region where a large number of migrant workers are employed in South Africa while supporting dependents in the region.

Says Cull: “There is a cause-and-effect relationship whereby if you increase the cost for a foreign calling party to call to a South African, you will create a situation where more South Africans have to call the foreign party back, thereby passing the cost to the South African public.”

The success of facilities like the “Please Call Me” SMS offer demonstrate the principle that, where it is not affordable for a party to originate the call, they will make use of an alternate mechanism to require the other party to initiate the call.

MTN has claimed in the media that the adjustment to the rate was necessary to redress imbalances with the rates charged by international operators, but ISPA points to revenue constraints imposed through the various sets of call termination regulations since 2010 as the likelier reason for MTN seeking to inflate the rate at this time.

ISPA notes that these regulations are intended as pro-competitive remedies allowing new entrants to compete.

“Reintroducing massively inflated call termination rates – even in respect of just internationally-originated calls – will have an anti-competitive effect on new entrants trying to provide voice services to international clients“, Cull concludes.