MTN criticised over international call rates

2015-04-08 14:45 - Gareth van Zyl
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MTN logo. (Duncan Alfreds, Fin24)

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Johannesburg - Increased termination fees for inbound international calls on MTN South Africa’s network hurt local consumers, says the Internet Service Providers’ Association (Ispa).

Termination rates are what mobile operators charge each other to connect calls between networks.

In November 2014, MTN moved to raise its termination fee on international inbound calls to $0.25 per minute, a move that landed it in hot water with the Independent Communications Authority of South Africa (Icasa).

This means that MTN charges almost R3 per minute for call traffic from international destinations to its network users in South Africa. Icasa last year published updated mobile termination rates of R0.20.

Icasa wants MTN to reverse its international inbound tariff hike, but the mobile network has said it introduced the price increase to redress imbalances in rates charged by international operators.

In turn, Ispa on Wednesday said MTN’s price hike “prejudices South African consumers by nature of the fact that their friends, family members and business associates overseas bear the cost of originating calls from overseas towards them”.

Ispa added that phone users in the Southern African Development Community (SADC) will also feel this price increase owing to a large number of migrant workers being employed in South Africa.

Ispa initially brought forward a complaint about MTN’s price hike to Icasa.

“There is a cause-and-effect relationship whereby if you increase the cost for a foreign calling party to call a South African, you will create a situation where more South Africans have to call the foreign party back, thereby passing the cost to the South African public,” said Dominic Cull, Ispa regulatory adviser, in a statement.

Ispa further said the regulations are intended as pro-competitive remedies allowing new entrants to compete.

“Reintroducing massively inflated call termination rates – even in respect of just internationally-originated calls – will have an anti-competitive effect on new entrants trying to provide voice services to international clients,“ said Cull.

MTN, in the meantime, has responded to the criticism it has received by explaining how it is redressing an imbalance it allegedly experiences.

"Operators in foreign countries charge MTN for delivering international calls from the MTN network to their networks. A large number of MTN’s international carrier partners charge ITRs significantly more than the rate of $0.25 as charged by MTN prior to the decision taken by Icasa,” Graham de Vries, chief corporate service officer at MTN South Africa, told Fin24.
 
”The ITR (international termination rate) charged by MTN was an attempt to bring into equilibrium the significant outflows of money from South Africa and Icasa’s decision effectively now does not permit us to do this. This means the ITRs that international carriers are charging severely tilt pricing in favour of international carriers.
 
“Any perception that this inter-operator cost affects the SA consumer is inaccurate. It should be understood a higher ITR charged to our international interconnect partners is an international inter-operator cost and does not impact or affect the retail rates charged to our MTN subscriber phoning international destinations,” De Vries told Fin24.
 
MTN is also studying the decision taken by Icasa and will be engaging with the regulator, De Vries added.

Read more about: mtn  |  icasa  |  call rates  |  mobile operators

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