Call termination probe progresses

Johannesburg, 23 Jul 2007

The investigation by the Independent Communications Authority of SA (ICASA) into wholesale call termination is progressing well, with a finding document expected to be made available to the public next month.

This is according to ICASA councillor Dr Tracy Cohen, who is heading up the team deliberating call termination and its associated tariffs - the amount network operators charge each other for receiving calls on their networks.

"We're in the process of defining markets, as per chapter 10 of the Electronic Communications (EC) Act," says Cohen.

"Call termination is the first market we chose to deal with. We held hearings in May and now we're deliberating on our findings. We hope to have a finding document published by the end of August."

Knock-on effect

Many critics argue that regulating and controlling the prices operators charge to transfer calls across networks will be an effective way to bring down the costs of telephone calls for the consumer.

Virgin Mobile CEO Peter Boyd is vocal on the issue of wholesale call termination. He feels it stifles the ability of the smaller operators, Virgin and Cell C, to grow their market shares, because nearly all the calls from these two are delivered to different networks.

In the case of MTN and Vodacom - with about 10 million and 20 million South African subscribers, respectively - a significant proportion of their calls are within their own networks, meaning call termination rates do not push up the cost of these calls.

The larger mobile operators argue that a heavy-handed regulatory approach to these tariffs may make certain cellular areas not financially viable - affecting the operators' ability to connect some of SA's poorest communities.

MTN's revenue for the past financial year was R52 billion. Vodacom's was R41 billion.

Intervention?

Cohen says she cannot accurately predict when ICASA will make a decision on the issue. "There are many aspects to this market definition process, and it is not first and foremost a pricing inquiry.

"It's a market definition exercise and if, when all the requirements have been complied with, we have grounds to intervene in the market, we will do so. This may or may not have an effect on pricing."

Cohen notes the sector's legal framework changed when the EC Act came in. She says ICASA is "in the process of establishing a solid, holistic, ex ante framework for regulation - which aims to bring certainty and stability into the market".

"This is not an overnight exercise. It needs to be done carefully to ensure that ineffective competition - as well as anti-competitive conduct - are remedied."