The Independent Communications Authority of South Africa (Icasa) has officially unveiled its final amendments to the call termination rate regulations, marking a pivotal step in the ongoing evolution of the telecoms landscape. Published in the Government Gazette, these regulations reflect a carefully considered approach to fostering competition, reducing costs, and addressing market imbalances. Here’s a closer look at what these changes entail and their implications for consumers and operators alike.
Understanding Call Termination Rates
Call termination rates are the fees that telecom operators charge one another for carrying calls between their networks. For decades, these rates have been progressively reduced, driven by Icasa’s commitment to lowering the cost of communication for South Africans. However, the latest amendments introduce a slightly delayed (but still substantial) glide path for rate reductions, ensuring a balance between consumer affordability and industry sustainability.
Key Changes in the Termination Rate Structure
One of the standout revisions in the new regulations is the phased reduction in rates over the next few years. For large mobile operators, the current termination rate of 9c per minute will drop to 7c per minute on 1 July 2025, with further reductions to 5c in 2026 and 4c in 2027. Similarly, smaller operators, which currently charge 13c per minute, will follow a comparable trajectory, eventually reaching 4c per minute by 2027.
Fixed-line operators will also experience gradual reductions, with rates dropping to just 1c per minute by 2027 for both large and small operators. New market entrants will retain slightly higher rates during their first three years of operation, reflecting Icasa’s effort to support emerging players in a competitive environment.
Balancing Competition with Consumer Benefits
One of the most debated aspects of the revised regulations is Icasa’s decision to phase out asymmetry in termination rates between large and small operators. Asymmetry has historically provided smaller players like Telkom and Cell C with a pricing advantage to compete against dominant market leaders. However, Icasa now aims to restrict this privilege solely to new entrants with less than three years in the market.
While this move is intended to level the playing field and enhance market fairness, smaller operators have voiced concerns. Telkom and Cell C argue that removing asymmetry could weaken their ability to challenge dominant players, potentially resulting in revenue losses without delivering direct benefits to end consumers.
Weighing the Broader Implications
Icasa’s amendments were informed by a range of factors, including cost modelling, international benchmarks, technological advancements, and the competitive landscape. The regulator emphasized its commitment to aligning with the objectives of South Africa’s Electronic Communications Act, which seeks to promote competition, reduce communication costs, and ensure equitable access to telecom services.
However, the implementation of these changes is not without its challenges. Critics, including Cell C CEO Jorge Mendes, have cautioned that the aggressive reduction in termination rates may disproportionately benefit larger operators while placing undue pressure on smaller players. The potential for market consolidation remains a concern, as smaller operators may struggle to sustain their market share under the revised framework.
Consumer Impact: Lower Costs on the Horizon
For consumers, the long-term goal of these amendments is clear: to make voice calls more affordable. By reducing termination rates, Icasa aims to drive down wholesale costs, which could eventually translate into lower retail prices for end-users. However, the timeline for these benefits reaching consumers remains uncertain, as operators navigate the financial and operational implications of the new regulations.
Looking Ahead: A Balancing Act
Icasa’s revised termination rate regulations represent a significant milestone in South Africa’s telecoms journey. By adopting a more measured approach to rate reductions and addressing market imbalances, the regulator seeks to strike a delicate balance between fostering competition, supporting new entrants, and delivering value to consumers.
As the industry adjusts to these changes, the coming years will reveal whether the intended benefits are realized. For now, all eyes are on South Africa’s telecom operators as they adapt to a new era of regulation and competition.
The telecoms industry stands at a crossroads, with Icasa’s latest amendments setting the stage for transformative change. While the road ahead may be challenging, the opportunity to create a more competitive, affordable, and inclusive telecoms landscape is one that cannot be overlooked. For operators, policymakers, and consumers alike, collaboration and innovation will be key to navigating this evolving landscape and unlocking the full potential of South Africa’s communication infrastructure.
