Cell C CEO, Alan Knott-Craig has welcomed the announcement by the Independent Communications Authority of South Africa (Icasa) on draft call termination regulations, which he says is first regulatory step in normalising the South Africa telecommunications space.
Icasa gave notice of the publication of its new draft call termination regulations on Friday, 4 October 2013, outlining a glide path for the next three years to reduce the cost to telecommunications operators of terminating a call on another network.
Icasa has proposed the following tariffs for calls that terminate on a mobile network:
- Current: R0.40
- 1 March 2014: R0.20
- 1 March 2015: R0.15
- 1 March 2016: R0.10
Fixed line termination over the whole period will be R0.19 between ON and R0.12 within ON, with no distinction between peak and off-peak times.
“It is really encouraging to see Icasa work quickly and efficiently, favouring neither friend nor foe. Whilst in actual terms (cents) the asymmetry is lower than what was hoped for, Icasa has been smart in providing asymmetry over a longer period with a relatively gentle glide path,” Knott-Craig said in a statement on Monday (7 October).
“On the other hand it has blasted the way open by drastically reducing the single largest cost factor in prices, namely MTR,” the CEO said which both Vodacom and MTN enjoy, and controlling more than 90% of the mobile market revenue.
“They (Icasa) have got that spot on. Of all the players Telkom (fixed line) wins hands down. And I do not begrudge them that,” Knott-Craig said, highlighting the major role the telco has played in establishing the current mobile industry.
“Whilst my first instinct is to challenge Icasa, they have had to tread a fine line between under-reacting and over-reacting, and they have cleverly done what they needed to do to make it possible for the telecommunications market in South Africa to gain a semblance of normality,” Knott-Craig said.
He said that while he would have wished for a better outcome for Cell C, for individual interests, Knott-Craig believes that the market will be a more competitive and balanced one with Icasa’s proposed draft regulations on termination rates as they have currently proposed them.
“It is important to note that this is but the first regulatory step in normalising the South Africa telecommunications space. There is much more to come, and the competition is going to be fierce,” Cell C’s lead said.
Knott-Craig said that Cell C needs more market share, “and we will only gain that through aggressive pricing and good network quality”.
The group said on Friday that it has captured 2 million new customers over the last year, taking its subscriber base to around 12 million.
“Price is the easy bit, and we are still on track for adding masses of capacity and drastically improving network quality by November this year to cater for the dramatic increase in traffic. We are fighting for an even playing field to compete on. And we are winning, because we absolutely believe in our cause,” he said.
Icasa has also laid out a 6-year glide path for asymmetric termination rates for “qualifying licensees”.
“Licensees may qualify for this asymmetric rate if they have a market share of less than 20% of total minutes terminated to a mobile location,” Icasa said on Friday. “In effect, Cell C and Telkom Mobile qualify to charge these asymmetric rates.”
The proposed termination rates for these qualifying licensees are as follows:
- Current: R0.44
- 1 March 2014: R0.39
- 1 March 2015: R0.33
- 1 March 2016: R0.26
- 1 March 2017: R0.20
- 1 March 2018: R0.14
- 1 March 2019: R0.10
“The Authority finds no need to change the current asymmetric termination rates for fixed termination, meaning that asymmetric termination to a fixed location remains at 10%,” Icasa said.
Stakeholders will have 14 working days following the publication of the Government Gazette to submit written comments on the draft regulations, Icasa said.