While\u00a0Vodacom has instituted legal action against the Independent Communications Authority of South Africa (Icasa) over mobile termination rates, the group says\u00a0it has reduced its average effective price per minute by 22% over the past year.<\/p>\n
Vodacom is taking Icasa to court for not following a fair and objective process to determine the final termination rates in its call termination regulations 2014.<\/p>\n
Mobile termination rates refer to the fee that one network charges another for receiving and terminating calls on its network. These rates have\u00a0declined from R1.25, in 2009, to a current price of 40 cents.<\/p>\n
According to the new regulations, the rate will drop to R0.20, with a further drop to\u00a0R0.15 in 2015, and R0.10 the following year.<\/p>\n
In an opinion piece\u00a0featured on BusinessDay,\u00a0Vodacom Group CEO,\u00a0Shameel Joosub, stressed that the operator\u00a0supports lower connection fees between the mobile networks.<\/p>\n
“The only caveat is that the correct process must be followed. Indeed, I\u2019d like to reiterate our previous proposal to the industry regulator that interim cuts are implemented immediately.”<\/p>\n
“If they agree, we then have some breathing space to calmly and thoroughly deal with the process issues holding things up,”\u00a0Joosub said.<\/p>\n
He said that Vodacom also supports the Minister of Communications, Yunus Carrim, in his drive to reduce the cost to communicate.<\/p>\n
“That\u2019s easy to say, but the evidence is that we\u2019ve reduced our average effective price per minute by 22% over the past year. Prepaid, which is typically used more by the lower income segment, has come down even further: 25% in the last year, and 50% over the past three years,” the mobile operator lead said.<\/p>\n
He continued that the significant reductions in price have been enabled by a large investment programme in SA including\u00a0R30 billion into infrastructure over the past six years,\u00a0with more than R7 billion spent per year over the last two years and a projected spend of R9 billion in the coming year.<\/p>\n
“By investing in capacity, we\u2019re able to offset lower prices with higher volumes. Crucially, we can do this without impacting network quality,” Joosub said.<\/p>\n
“We\u2019ve also achieved these price reductions against a rising inflationary tide of electricity and fuel price hikes which are key input costs for us, and also the weaker currency which drives up the cost of imported equipment. In short, we\u2019ve put a huge amount of effort into delivering sustainable reductions in communications costs.”<\/p>\n
Joosub pointed to an ‘inaccurate narrative’ created by the media showing how big operators are against cuts, “and therefore, anti-consumer, while the small networks are pro-cuts. The truth, as is often the case, is far more complicated,” Joosub said.<\/p>\n
He said that the international norm is that a connection fee should be based on how much it costs the receiving network to carry this call. These costs naturally come down over time with advances in technology and with the benefit of increasing economies of scale.<\/p>\n
“To determine the current number, regulatory best practice is to conduct a detailed cost study. This is also something that is required in terms of South African law. We believe we\u2019re being entirely reasonable in expecting that the regulator respects this process,” Joosub said.<\/p>\n
He said that this process has not happened, because Vodacom has not been asked to provide the detailed information necessary to complete this type of study.<\/p>\n
“On top of this, we were not given sight of whatever model may have been constructed, nor given the chance to comment on it. That we ought to have been consulted is a fundamental requirement under the law. It is also a standard step taken by regulators across the world to ensure the accuracy, credibility and validity of their models,” Joosub said.<\/p>\n
He noted that Icasa has also imposed an unprecedented level of asymmetry. “This means that by 2016, Vodacom will have to pay four times more to connect a call to the smaller networks than they will pay to connect to Vodacom.”<\/p>\n
“Legal action should always be a last resort and we\u2019re not happy that we\u2019ve reached this situation. The fact that we\u2019ve proposed that an interim cut is enacted immediately shows clearly that for us, the issue isn\u2019t about fighting lower rates.”<\/p>\n
“It\u2019s about making sure that the right process is followed and that the rates ultimately imposed are objectively and fairly determined,” Joosub said.<\/p>\n
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