a discussion document on wholesale call termination
1 February 2007
The Independent Communications Authority of South Africa (Icasa) has
gazetted a discussion document on wholesale call termination, published in
Government Gazette No 29568 of 29 January 2007. In terms of the new Electronic
Communications Act (EC Act), Icasa is required to define relevant markets for
regulation purposes and among other things, evaluate the competitiveness of the
markets. This will ensure that any regulation if required is based on a sound
methodological approach and aimed appropriately at markets that lack sufficient
competition. The discussion document on wholesale call termination is the first
in a series of discussion documents defining wholesale and retail markets that
will be published by Icasa this year.
The public is required to make submissions on the document and submit them
to Icasa by 31 March 2007 as stated in the gazette. Call termination refers to
the handing off or routing of calls from one network operator to another. It is
part of the cost of interconnection between network operators. The wholesale
call termination discussion document provides that:
* call termination markets for Telkom, Vodacom, MTN and Cell C are defined and
are found to be separate markets
* market competitiveness is evaluated and all licensees are declared to have
significant market power (SMP) in their call termination markets and
* remedies in line with the EC Act are proposed, including, amongst others,
cost-based call termination.
Icasa is faced with the task of ensuring that prices for communication
services are reduced in South Africa. Icasa has looked into international best
practice on cost-based call termination as one way of addressing high
interconnection costs which are passed onto consumers. Regulator in other
countries, for example Office of Communications (OFCOM) in the United Kingdom
have recommended cost based call termination in their sectors. As each operator
has SMP on its own call termination on each network, cost based pricing is a
market remedy that will begin to reduce the costs of calls, while still
ensuring profitability for operators. It is Icasa's view that if call
termination is cost-based, there will be effective competition in the retail
market and this will ensure lower prices for consumers.
Icasa also analysed call termination in Tanzania, Nigeria and Uganda where
Vodacom and MTN operate and found that call termination in those countries is
cheaper than in South Africa even if traffic volumes and subscriber numbers are
higher in South Africa than in those countries. In 2005, Icasa launched a
discussion document examining mobile pricing in South Africa. The enquiry was
suspended when the EC Act came into force as it required that certain steps be
taken before regulation of a market can be embarked upon. In line with this,
the findings and conclusion document on mobile pricing, published on 15 January
2007 in Government Gazette No 29457 proposed that the process will be continued
according to the requirements of the EC Act as part of an enquiry into
wholesale call termination.
For enquiries:
Sekgoela Sekgoela
Tel: (011) 321 8434
E-mail: ssekgoela@icasa.org.za
Issued by: Independent Communications Authority of South Africa
1 February 2007
Source: Independent Communications Authority of South Africa (http://www.icasa.org.za)
