ICASA defends decision to reduce asymmetry in MTRs

8 Apr 2015

The Independent Communications Authority of South Africa (ICASA) has defended its decision to reduce the level of asymmetry for smaller operators in the country’s mobile termination rates (MTRs) for the period 1 October 2014 to 28 February 2018, saying that it ‘disagrees with the Cell C view that the asymmetry levels are inadequate and will perpetuate market failure’, TechCentral reports, citing a document published in the Government Gazette.

As previously reported by CommsUpdate, 2014 Cell C expressed its disappointment with the regulator’s proposed termination rates shortly after their publication and accused ICASA of making ‘a dramatic U-turn’ by stating that ‘the massive proposed reduction in asymmetry completely eliminates any pro-competitive remedy.’ In January 2015 Cell C lodged an application in the High Court in Johannesburg requesting a review of ICASA’s wholesale MTR regulations and seeking to obtain access to the information that led to the regulator’s decision to further reduce the MTR tariffs.

For its part, the regulator claims that ‘international best practice is to provide asymmetry to new entrants for a very limited period only. The rationale for this is to achieve a balance between recognising cost differences and perpetuating cost inefficiencies among later entrants.’ Further, ICASA argues that its decision to determine the rates based on the operators’ long-run incremental costs (LRIC), rather than at some rate above LRIC as was the case in the past, ‘removes the market failure associated with above-cost pricing and itself provides considerable market assistance to the smaller operators’.