Silence Greets ICASA’s Call Termination Rates

4 October 2018

The Independent Communications Authority of SA (ICASA) announced last week that it has concluded its three-year investigation into call termination rates.

These are the fees telephony service providers, including Telkom and the mobile network operators, pay each other to terminate voice calls made by a subscriber of one service provider to a subscriber of another service provider.

“ICASA’s review of the 2014 Call Termination Regulations has been greeted with silence by the incumbent mobile networks, which is telling as this is an anti-competitive rate regime that favours large operators,” says Dominic Cull, ISPA regulatory advisor.

ISPA’s core objection to the new rates is that they will remove any advantage given to smaller fixed line service providers to compete with dominant incumbent Telkom while the differential between the fixed and mobile termination rates means that these smaller operators are effectively required to subsidise the mobile networks.

The incumbent operators were extremely vocal when it came to the previous termination rate cuts, predicting catastrophic consequences as a result of revenue declines. Now, however, their public silence on the latest set of termination rates indicates that they are at ease with ICASA intervening in the telecoms market in a manner which benefits established players.

“Where in the world do we find a regulator that takes more than 36 months to complete a notionally pro-competitive intervention and come up with a regime which has obvious anti-competitive consequences?”, asks Cull.

ICASA’s decision to eliminate asymmetric rates which favour smaller operators directly contradicts its own position that its interventions to date in this market had failed to facilitate greater competition.

ISPA argued in its submission to ICASA that this failure, in fact, justified more aggressive asymmetry.

“We will examine with interest the reasons set out by the regulator for taking a different approach (although we note that no reasons document has been published). ICASA claims that this intervention will lower the cost to communicate, but we see its recent actions and inactions as having the opposite effect,” said Cull.

This is only one example of the ineffectiveness of ICASA in promoting competition in the voice market. Other examples include:

• ICASA’s decision to exempt calls originating outside of South Africa from regulated call termination rates, which has seen these rates increase to as high as R3.30 ex VAT per minute.
• ICASA’s failure to intervene in the call origination market, which has meant the failure of carrier pre-selection and additional costs for consumers calling toll-free numbers such as Life Line or Child Line.
• ICASA’s failure to finalise a framework for porting non-geographic numbers such as 0800 and 0860 numbers, strengthening the dominance of Telkom.