“ICASA has made this determination because of ineffective pricing and competition in the market. We all know that South Africa has always been said that the cost of communication is still high. Recently, there was a global IT report that said that South Africa is ranked 117th out of 140 countries in terms of the high cost of communication,” ICASA spokesperson Paseka Maleka told CNBC Africa on Monday.
“This is one of the interventions that ICASA’s coming up with and right now, what we’re proposing to be on the draft regulations is that the termination rates must reduce from 40 cents to 10 cents in the next three years.”
The termination rates review will allow the Independent Communications Authority of South Africa (ICASA) to create a balanced framework for fixed line and cell phone rates, and encourage consumer choice in the industry.
“South Africa comes from a history whereby we didn’t have a lot of mobile companies who are providing this service. Even now, you only have about two fixed line companies, so there isn’t a lot of competition,” Maleka explained.
“We’re trying to intervene to make sure that the cost of communication is reduced and at the end of the day people pay nothing at all.”
This review of termination rates could greatly benefit smaller telecommunications companies, and throttle unfair competition within the space.
Maleka added that the proposed regulation will first be on a wholesale level before filtering down to a retail level.
Revised termination rates will directly make changes in larger mobile network operators Vodacom and MTN, where they will be required to charge the 40 cents termination rate.
Smaller mobile network operators such as Telkom Mobile and Cell C will however be able to charge rates slightly higher than 40 cents, but still asymmetrical, as they have less than 20 per cent of the telecommunications market share.
The asymmetrical charge will favour smaller companies in order to increase their competitive abilities over the next five years if the regulations are finalised.
“We’re trying to make sure that they get the market share as well, because currently their market share is less than 20 per cent. What we’re going to propose in the regulations is that whoever has got a less than 20 per cent market share, is supposed to charge an extra fee in terms of the asymmetrical charge,” said Maleka.