Cell C urges MTR cuts postponement

Cell C is calling upon the Independent Communications Authority of South Africa (ICASA) to postpone proposed cuts to mobile termination rates (MTRs), arguing they are insufficient and will hinder market competitiveness.

The mobile operator is asking ICASA to conduct an “urgent market review” into whether existing and proposed regulations are conducive to reducing communications costs in South Africa.

“Cell C has called for an urgent market review to determine the effectiveness of the call termination regulations and whether they have had the desired effect on reducing the cost to communicate in South Africa,” the operator told HumanIPO.

According to Cell C, MTRs need to be substantially lower than the current levels of R0.56 (US$0.065) during peak times and R0.52 (US$0.060) at off-peak times, and the proposed R0.40 (US$0.046) flat rate. The operator also argues smaller operators should be subject to different MTRs until achieving a stable market position, in a bid to facilitate competitiveness in the country’s mobile telecoms sector.

“In order to increase competition and to bring down the cost to communicate, which will ultimately benefit consumers, Cell C’s view is that there needs to be significant further MTR reductions for the dominant mobile operators as well as a significant and  sustained MTR asymmetry for smaller operators until they achieve a competitive degree of scale,” explained Cell C.

“We have asked ICASA to retain the current MTR levels pending the outcome of this urgent market review, because we are concerned that if the MTR drops to the proposed 44c rate for mobile operators without significant market power on 1 March 2013, then the ratio of asymmetry that smaller operators require to compete effectively with the dominant incumbents will not thereafter be realised,” the operator added.

The proposed cuts to MTRs come as part of a glide-scale setting out a three-year plan for the reduction of rates contained in the Call Termination Rate Regulations finalised in October of 2011.  

According to the regulations, between March 1 2011 and February 28 2012 MTRs were set at R0.73 (US$0.084) at peak times and R0.65 (US$0.075) at off-peak times; decreased to R0.56 (US$0.065) at peak times, and to R0.52 (US$0.060) for off-peak calls for the March 1 2012 to February 28 2013 period.

Pursuant to the same glide path, MTRs were to drop to R0.40 (US$0.046) irrespective of the time of the mobile call as of March 1 this year. It is this cut Cell C is now opposing, claiming MTRs should be even lower.

Larger rival network operators in the country have already voiced intentions to oppose the MTR asymmetry that Cell C is pushing for.

Posted in: Mobile

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