While the new draft call termination regulations from the Independent Communications Authority of South Africa (Icasa) were positively received by Cell C, other operators are reserving comment.<\/p>\n
However, O-Tel Telecoms CEO, Wapa deputy chair, and head of Ispa\u2019s operators workgroup, Mohammad Patel said he expects opposition from MTN and Vodacom.<\/p>\n
Icasa announced on Friday, 4 October 2013, that it wants to cut the costs of terminating a call on a mobile network to R0.10 over the next 3 years.<\/p>\n
Under the proposed regulations, smaller operators such as Cell C and Telkom Mobile will be afforded preferential termination rates for 6 years, after which their rates will also be R0.10.<\/p>\n
Regulatory expert Dominic Cull said that \u201cbold\u201d is probably a good way to describe Icasa\u2019s proposed changes.<\/p>\n
Feedback from Telkom on the draft regulations was mostly positive, though a spokesperson for the company said they must still analyse Icasa\u2019s proposal.<\/p>\n
\u201cTelkom is of the view that the current termination rates are prejudicial to Telkom and welcomes the review of the termination rate regulations,\u201d the spokesperson said.<\/p>\n
\u201cThe company will therefore analyse the draft regulations that were published and pronounce on the proposed regulation at an appropriate time,\u201d Telkom said. \u201cTelkom will also participate in the process through submitting its comments to Icasa.\u201d<\/p>\n
MTN South Africa\u2019s acting chief corporate service officer, Fusi Mokoena, said that they too were reviewing the document and will file a response on the due date once they have worked through it.<\/p>\n
\u201cMTN will closely examine the contents of the proposed Regulations and analyse its potential regulatory and economic impact,\u201d Mokoena.<\/p>\n
A Vodacom spokesperson said that they are also studying the proposed changes and will comment in due course.<\/p>\n
Asked for his take on the proposed termination rate cuts, Mohammad Patel said that it is a promising initiative from Icasa to lower telecommunication costs for the South African Public.<\/p>\n
He added that he expects Vodacom and MTN to challenge the rate cuts because it will have a significant impact on their bottom-line.<\/p>\n
This in turn will affect their staff complement, sponsorships, and other financial obligations, Patel said.<\/p>\n
\u201cWhat Icasa has to do is to ensure that these cost savings are passed on to the public,\u201d Patel said.<\/p>\n
He said that only Cell C and Telkom Mobile have cut their profit margins by launching products with call rates at 99c, while larger players did not reduce their rates when the latest rate cut (to R0.40) kicked in.<\/p>\n
Patel said this means the profitability of the large players have increased. For example, MTN now has to pay less to Vodacom whilst keeping their call rates as high as R2.70\/minute, Patel said.<\/p>\n
\u201cOn the other side of the coin, the lower termination rate is not an all rosy affair for entrants,\u201d Patel said.<\/p>\n
He said that the lower call cost does mean that new players pay the incumbents less, but it also means that their call rates margin will reap lower profits.<\/p>\n
\u201cThis will affect their cash flow and turnover which is important in its [capital expenditure] for growing the network,\u201d Patel said. \u201cThey will need to look at getting the income from other avenues which may result in higher rental fees or other methods to gain profitability,\u201d he added.<\/p>\n
Patel said that Icasa has a challenge on its hands, and should lobby government for some sort of subsidy to entrants that meet Icasa and government\u2019s requirements and are able to provide workable business plans.<\/p>\n
Speaking in his capacity as the leader in the operators working group at the Internet Service Providers\u2019 Association of South Africa (Ispa), Patel said he will be working with other ISPs to submit their opinion to Icasa on behalf of Ispa.<\/p>\n
He said that he expects to submit supportive documents to Icasa after they have had their discussion.<\/p>\n
Icasa announces new draft call regulations<\/strong><\/a><\/p>\n New call termination rates coming<\/strong><\/a><\/p>\n New Icasa Cost to Communicate timelines<\/strong><\/a><\/p>\n Icasa tied up in settlement negotiations: report<\/strong><\/a><\/p>\n