1. Independent Communications Authority of South Africa
Presentation to the Parliamentary Portfolio Committee on Wholesale Call Termination
08 March 2011

2. Background
Government Policy is to ensure fair retail prices through promotion of competition
Competition Act of 1998
Electronic Communications Act of 2005
Implementation of policy:
Evaluate bottlenecks to competition
Such bottlenecks are prevalent in supply chains, e.g telecommunications etc

3. On-net calls and termination
End-user A
End-user B
Network A
Origination
Termination
Step 1: End-user A starts a call to End-user B
Step 2: Network A routes the call through its
network to End-User B
Outcome: Network A completely controls retail price

4. Off–net calls and termination
End-user A
End-user B
Network A
Network B
Origination
Termination
Step 1: End-user A starts a call to End-user B
Step 2: Network A routes the call to Network B
Step 3: Network B routes the call to End-user B
Outcome:
Network B has an impact on the retail price

5. Promotion of fair prices under the ECA
Authority may regulate prices :
Where there is a lack of effective competition in a particular market
What must the Authority do?
Evaluate the value chain over which retail services are provided
Regulate “away” bottlenecks to fair competition

6. Call Termination and Retail Prices
Retail prepaid prices have not increased since
2007
Retail prepaid prices have actually declined
Per second packages
MTN Zone/ Loaded/ Vodacom Yebo 4 Less/ Cell C Winc/ Telkom Mobile or 8ta
What is the impact of a reduction in Call Termination?

7. Retail Price Trends
CPI comparison of Inflation, Food prices and Telecoms prices, 2008 to Jan 2011
Source: StatsSA

8. Have prices actually come down?
Year on year price movements, 2008 to Jan 2011
Retail prices ARE declining

9. What has the Authority found
Call termination rates were set at excessive levels
Ability to compete was hampered by existing commercial terms in interconnection agreements
High bank guarantees
High minimum monthly traffic requirements

10. Regulation Reduce termination rates Reduce cost of access Outcome:
Networks now have more control and ability to charge lower retail prices
Do not face high barriers to entry/operations
Networks may now effectively compete on price

11. Expected Impact Enhanced competition in provision of retail services
Are we seeing this yet?
Yes, licensees are expressing interest in entering retail mobile market
Fixed to mobile retail rates have been reduced
Consumers have more transparent mobile to mobile retail tariffs