Vodacom slams ICASA’s move to lower termination rates

30 Jan 2014

South African telecoms watchdog ICASA’s decision to introduce aggressive asymmetry in wholesale call termination rates has provoked a backlash from market leader Vodacom, which quickly voiced its dissatisfaction with the move, local news agency TechCentral reports. Vodacom said in a statement: ‘We feel that the level of asymmetry is unjustified and that there is no clear basis for the differential. This asymmetry is clearly a subsidy for the smaller operators.’ The network operator added: ‘We believe that the outcome today has been reached without following due process. A cost-based study, which is a prerequisite before reaching this type of decision, has not been conducted and shared with us.’ Although Vodacom stated that it is ‘supportive’ of lower termination rates, the cellco urged ICASA to take into account the adverse effect on customers, partners and suppliers. Vodacom CEO Shameel Joosub said: ‘I wish I could say this is a victory for the consumer, but it is far from it. This is a subsidy which in effect means that Vodacom will be charged more to call Cell C and Telkom Mobile than the latter will be charged to call Vodacom. This prejudices Vodacom’s customers, and rewards those who have not invested in their networks at the expense of those who have.’ Further, the executive revealed that the company is currently in the process of ‘considering its options’ in order to protect its customers and ensure that ‘South Africa gets the network investment that it needs’.

As previously reported by TeleGeography’s CommsUpdate, earlier this week ICASA announced its decision to introduce aggressive asymmetry in wholesale call termination rates, effective 1 March 2014. The new rules favour smaller network operators Cell C and Telkom Mobile, with Robert Pasley, Cell C’s chief financial officer, saying: ‘As far as I am concerned, the draft regulations gave us a reasonable shot at becoming a sustainable competitor. This only increases our chances of being successful’. Pasley also stated that market leaders Vodacom and MTN South Africa would not succeed in challenging the final decision in court, ‘because the underlying costs of termination are broadly in line with where ICASA is going. There are many pro-competitive and pro-public interest reasons that ICASA has come out with this regulation.’