South Africa: Cell C Wants Bigger Rivals to Pay Higher Interconnect Rates

Telecoms

Cell C has asked the Independent Communications Authority of SA (Icasa) to compel rivals MTN and Vodacom to pay a higher interconnection rate to small operators like itself to help them grow their businesses. Cell C has proposed that smaller companies pay 65c to operators that the regulator has declared to have significant market power, while companies such as MTN and Vodacom pay smaller operators 75c. These are referred to as asymmetric mobile termination rates.

Asymmetry is when companies pay mobile termination rates in proportion to their market size. The mobile termination or interconnection rate is the fee that operators pay each other to carry calls onto their networks.

Icasa has proposed a flat rate of 65c from 89c. The rate is expected to be reduced to 50c next year, and to 40c in 2012.

Lars Reichelt, the CEO of Cell C, said last week during the hearings on the proposed interconnection rates, "asymmetry is an effective mechanism to increase the level of competition".

Cell C, which was also declared to have significant market power by Icasa, has for years been asking for regulatory remedies that would boost its ability to compete with MTN and Vodacom. Reichelt said Icasa must take into account that Cell C cannot exercise market power since it was a small player in the market. Cell C said in its written submission that asymmetric mobile termination rates, implemented for an interim period, would promote long-term competition in the mobile market as this would enable the company to grow its market share and become a more effective competitor.