Photo by: Duane Daws
The Independent Communications Authority of South Africa (Icasa) on Monday said it had adopted a new cost standard to determine the cost of mobile and fixed termination rates going forward.
The authority would use long-run incremental cost plus (LRIC+) as the cost standard for the bottom-up and top-down modelling to determine mobile and fixed wholesale voice call termination rates.
This came as Icasa continued a review, which started in May, of the contested call termination rates after its latest glide path was declared “invalid and unlawful” by the South Gauteng High Court in March.
The Court had allowed Icasa six months to complete a costing exercise and “correct” the “irrational and arbitrary” determination of the regulations.
At the time, Icasa indicated that an LRIC cost standard would apply, but that the “appropriate form” of LRIC – either “pure” LRIC or LRIC+ – would be determined at a later stage based on its suitability for the South African market.
LRIC+ included joint and common costs, which were excluded from pure LRIC, in addition to direct-fixed and direct-variable costs.
Icasa said in a statement on Monday that LRIC+ would allow operators to recover a portion of joint and common costs incurred in the provision of wholesale voice call termination service through termination rates.
This was a move aimed at correcting the “imbalances” created after the 2010 call termination regulations applied different cost standards to different markets. The mobile termination rate was set on a fully allocated cost basis, while the fixed-line termination rate was set on a LRIC basis.