South African non-profit company, and recognised Internet industry representative body- ISPA, questions recently announced aggressive reductions in fixed call termination rates.
ISPA also advocates for the implementation of the proposed convergence of mobile and fixed call termination rates towards eventual parity.
Call termination rates refer to the fees levied by telecom networks to facilitate the transmission of calls initiated by a subscriber on one network to reach, or “terminate” at, a subscriber on another network. These expenses warrant scrutiny as they are typically transferred to the final telecom consumer.
The Independent Communications Authority of South Africa- ICASA has chosen not to synchronize South Africa’s fixed termination rate with the mobile termination rate, despite its own findings recognizing the increasing convergence between fixed and mobile services, primarily influenced by the Covid-19 pandemic.
The regulatory authority recently announced its plan to decrease mobile termination rates. These rates will drop from 9 cents per minute (13 cents for smaller operators) to 7 cents (9 cents) starting July 1, 2024, and then to 4 cents (4 cents) from July 1, 2025. Additionally, fixed-line termination rates will undergo more significant reductions. Currently at 6 cents per minute, they will decrease to 4 cents on July 1, 2024, and further down to just 1 cent from July 1, 2025.
ISPA member, Switch Telecom, asserts that R0.01 represents an extraordinarily low Fixed Termination Rate- FTR by global standards. Not only does South Africa’s FTR stand as a mere fraction of those in highly developed markets, but the country’s vast geographical expanse coupled with relatively low population density further exacerbates the challenges. The real-world expense of deploying fixed lines in South Africa significantly exceeds that of Europe, where the FTR exceeds ICASA’s proposed rate by 40%. Moreover, South Africa faces distinctive hurdles, including unreliable power infrastructure, which amplifies the cost of ensuring dependable services.
Telkom not happy
Telkom
Telkom, South Africa’s landline operator, has voiced disappointment over ICASA’s decision to reduce fixed call termination rates and mobile termination rates with asymmetry. Many members of ISPA, who offer voice services, have observed a growing trend of fixed-mobile substitution in the voice market, echoing a global phenomenon.
According to ISPA chair, Sasha Booth-Beharilal: “The argument for parity has little to do with interconnection revenue, but rests on the fact that the distinction between fixed and mobile calls is blurring. The result is that the average cost of terminating a fixed call is now the same, if not more expensive, than terminating a mobile call.”
The initial call termination review occurred circa 2010, leading to ICASA implementing glide paths to reduce termination rates. Since 2014, ICASA regulations have significantly lowered call termination rates. Presently, concerns revolve around parity issues, with the prevailing sentiment being that discrepancies in fixed and mobile termination rates lack justification.
ISPA welcomes proposals to cap rates for terminating international calls, as excessive rates lack relation to regulated or actual costs. ISPA will collaborate with ICASA to ensure practical implementation. Established in 1996 as the Internet Service Providers’ Association of South Africa, ISPA is the country’s sole Internet Industry Representative Body (IRB), recognized by the Department of Communications and Digital Technologies (DCDT). Advocating for an open, free, and competitive internet, ISPA represents around 235 diverse internet organizations.
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*https://www.ellipsis.co.za/wp-content/uploads/2022/01/call-termination-findings-document.pdf see paragraph 4.3.3.8
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