Icasa sets new termination rate cost model

The Independent Communications Authority of South Africa has adopted the long-run incremental cost plus (LRIC) model as a cost standard to determine the cost of mobile and fixed wholesale voice call termination, it said on Monday.

Icasa said reasons for the decision was 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.

The LRIC model looks at the changing costs that a company can foresee or estimate.

Icasa said the model would ensure continued investment in electronic communications networks in South Africa and correct the imbalances created in 2010 where the call termination regulations applied different cost standards to different markets.

It would also ensure a smooth transition from a fully allocated cost standard used in 2010 to an eventual cost standard of pure LRIC.

Termination rates are the rates operators pay one another for calls to other networks.

Cellphone networks MTN and Vodacom took Icasa to court earlier this year to stop it from implementing the regulations on mobile termination rates.

In March the High Court in Johannesburg declared new call termination rates proposed by Icasa invalid and unlawful.

The court gave Icasa six months to amend its regulations.

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Icasa sets new termination rate cost model