SA prepaid call rates fall, ICASA credits termination rate drop

Prepaid call rates have dropped 24 per cent over the past two years, the Independent Communications Authority of South Africa (ICASA) has revealed, as a direct positive result of the drop in termination rates.

The cost of prepaid mobile voice calls has seen a decline from R1.37 (US$0.159) to R1.04 (US$0.120) over the period from June 2010 to June 2012, the regulator announced in a press release on Tuesday.

The regulator claims that the drop can be directly attributed to the Call Termination Rate Regulations which were introduced in March 2010, and finalised in October of the same year.

Termination rates refer to the fees paid by operators in order to enable users to make cross-network calls – high termination rates pushing call costs up.

Amidst much uproar from the major industry players, ICASA in 2010 announced a lowering of termination rates for all operators holding a 25 per cent market share or more as of mid-2009. The regulator set a target termination rate of R0.40 (US$0.046), and agreed upon a three year phasing-down of rates on consultation with industry members.

According to the regulations, as of March 1 2011 until February 28 2012, termination rates for mobile calls were set at R0.73 (US$0.084) at peak times and R0.65 (US$0.075) at off-peak times. From March 1 2012, mobile termination rates were reduced to R0.56 (US$0.065) at peak times, and to R0.52 ($0.060) for off-peak calls – this is in fact the rate currently in use. As of March 1 2013, the rates will be lowered further to R0.40 (US$0.046) irrespective of the time of the mobile call.

The regulator explained that lower call prices and the country’s increasingly competitive mobile telecoms market had been achieved through a combination of successful initiatives, beginning with the Call Termination Rate Regulations, but also including the introduction of flat-rate packages in 2010 and a number of new tariffs made available to consumers across 2012. ICASA concluded that consumers are now faced with a much increased offering of benefits achieved through promotional packages on the market.

Call rate costs are calculated on the combined basis of free, promotional and paid-for minutes. In order to decipher the effective call tariff used by operators, the regulator compared total revenue to total number of minutes.

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