MTN calls for termination rate cuts to be scrapped

 ·11 Feb 2014
MTN Vodacom Icasa pressure

Mobile operator MTN has demanded that Icasa do away with reduced call termination rates, Parliament’s communications portfolio committee heard on Tuesday.

“We did receive a letter from one of the big operators, a legal letter, to which we should have responded to by 12 o’clock,” Icasa councillor in charge of markets and competition Nomvuyiso Batyi told MPs.

MTN wants Icasa to remove recently published regulations which include a 50 percent cut in call termination rates.

Termination rates are the fees operators charge each other to carry calls between their networks.

Asked by MPs what the implications of a possible lawsuit is, Batyi replied: “At this point we do not want to pre-empt the implications because it will depend on the process that they follow.”

MTN could decide on one of two options.

“There might be an application if they just want to review the regulations, then our regulations stand up until the court has set them aside or referred them back to us,” Batyi said.

“Unfortunately that will have an impact on the smaller operators, especially Telkom and Cell C, and it will have an impact on end users that are specifically on those networks.”

Last month, Icasa announced mobile termination rates would be cut from the current 40 cents to 20 cents.

For fixed lines, call rates will drop to 12c for short-distance calls and 16c for long-distance calls.

Icasa also introduced an asymmetric system, over and above the termination rates, where bigger operators would pay 44c a minute to carry calls to smaller operators, with smaller operators paying a 20c a minute rate to their bigger rivals.

Icasa chose this model to help smaller operators grow.

The move led to Vodacom stating last week that it was considering legal action.

“Vodacom has not served us with anything, it’s actually MTN. We are defending that action,” Batyi told reporters following the committee meeting.

More on termination rates

MTN, Vodacom sink on rate cuts

Telkom to pass on CTR cuts to consumers

Vodacom: Consumers won’t benefit from MTR cuts

Drastic call termination cuts announced

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