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Vodacom not pleased with Termination rates cut

Eugene morokolo Jan 30,2014 0 Comments

  Vodacom not pleased with Termination rates cutVodacom-red-rebranding-225×300.jpg” width=”225″ height=”300″ />While the department of Communication has welcomed the Independent Communication of Authority of South Africa (ICASA) call termination rate cut, mobile operator Vodacom was not all too amused.

Termination rates are the charges which one telecommunications operator charges to another for terminating calls on its network. The termination rate is currently 40c/minute and will be reduced to 20c/minute from March. Small operators stand to gain from the new tariffs and big operators as expected are not happy.

Vodacom says though it favours low call rates it had preferred the authority to consider the impact of the low call rates.  “Our key request to ICASA has been to consider the adverse impact of lower termination rates on our customers, our partners and our suppliers. To this end, we had proposed a reasonable reduction glidepath.” Vodacom said.

The company further says that their recommendation has not been accepted and they will be reviewing the potential impact both internally and externally.  “We will be in a better position to comment on the steps we will need to take to adjust our business model once that review has been completed”. It said.

Vodacom says it had also made representations to ICASA about the proposed asymmetry structure, which it says is now more aggressive to the detriment of Vodacom’s customers and business. “We feel that the level of asymmetry is unjustified and that there is no clear basis for the differential. This asymmetry is clearly a subsidy for the smaller operators.” Vodacom Argued.

The operator says it believes that the outcome has been reached without following due process. “ A cost-based study, which is a prerequisite before reaching this type of decision, has not been conducted and shared with us. We will be considering our options in relation to this.” The company adds.

Commenting on the announced termination cuts Vodacom CEO   Shameel Joosub said other operators will gain from Vodacom’s infrastructure that it had invested in the past.  “I wish I could say this is a victory for the consumer, but it is far from it. This is a subsidy which in effect means that Vodacom will be charged more to call Cell C and Telkom Mobile than the latter will be charged to call Vodacom. This prejudices Vodacom’s customers, and rewards those who have not invested in their networks at the expense of those who have.”

“We will consider our options in order to do our best to protect our customers and ensure that South Africa continues to get the network investment that it needs and deserves.” Joosub concluded.

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