Final MTR cut to go ahead as Icasa reviews transparency
The Independent Communications Authority of South Africa (Icasa) on Wednesday said it would review the call termination market on the back of emerging transparency concerns, but the final mobile termination rate (MTR) cut would move ahead as planned.
Icasa said in a statement that it would unveil its action plan “soon” following the urgent examination of the pricing structure and transparency within the termination market.
The current MTR was on track to be reduced to 40c a minute on March 1, as stipulated by Icasa’s 2010 Wholesale Voice Call Termination Regulations.
The initial termination rate of R1.25 a minute in 2009 had been systemically reduced over the years, dropping to 89c and 73c in 2010 and 2011 respectively, and finally reaching 56c last year.
The communications regulator pointed out that any changes to the glide path would require public consultation and a comprehensive study or market review.
However, the rate cuts had not produced the intended increase in competition and Icasa believed that the MTRs should be further reduced to between 15c and 25c, and eventually eliminated altogether.
The market review would examine the viability of this.
High termination rates created a barrier to effective industry and retail price competition and prevented new and small entrants from competing effectively, the authority stated.
It also disabled the reduction of off-net call prices, allowing larger players to offer on-net voice prices that are lower than the off-net voice prices a smaller player charged its customers, which Icasa said could represent margin squeeze and predatory pricing.
“Other jurisdictions have addressed such behaviour through regulations imposing flat rates across networks, a price floor for a product and/or anticompetitive penalties on operators found to be pricing in this manner,” the authority commented.
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