1 How does ICASA facilitate communications in South Africa? The - - PowerPoint PPT Presentation

▶
1 how does icasa facilitate communications in
SMART_READER_LITE
LIVE PREVIEW

1 How does ICASA facilitate communications in South Africa? The - - PowerPoint PPT Presentation

Oct 06, 2023 193 likes •523 views

1 How does ICASA facilitate communications in South Africa? The Policy framework Trends in retail prices Call Termination Universal Service The Fixed Line Challenge How can ICASA address the concern of high prices?

slide-1
SLIDE 1

1

slide-2
SLIDE 2
  • How does ICASA facilitate communications in

South Africa?

  • The Policy framework
  • Trends in retail prices
  • Call Termination
  • Universal Service
  • The Fixed Line Challenge
  • How can ICASA address the concern of high

prices?

  • What would ICASA like to do?
  • What can ICASA do?

2

slide-3
SLIDE 3
  • Services cannot be offered without:

– Telephone Numbers – Spectrum – Type Approval – Review of Interconnection Agreements to ensure fairness

  • ICASA is the only body that does this in South

Africa

3

slide-4
SLIDE 4
  • Government policy is to address high prices

through introduction of competition

– Competition Act of 1998 – Electronic Communications Act of 2005

  • ECA:

– ICASA can regulate prices where a licensee has dominance and the market is not competitive – Governed by Chapter 10 of the Act

4

slide-5
SLIDE 5

5

slide-6
SLIDE 6

MTN 8ta Cell C Vodacom

500 1000 1500 2000 2500 3000 3500 4000 4500 2009 2010 2011 2012 30 outgoing calls/mnth 300 outgoing calls/mnth 900 outgoing calls/mnth 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 2009 2010 2011 2012 30 outgoing calls/mnth 300 outgoing calls/mnth 900 outgoing calls/mnth 500 1000 1500 2000 2500 3000 3500 4000 4500 2009 2010 2011 2012 30 outgoing calls/mnth 300 outgoing calls/mnth 900 outgoing calls/mnth 500 1000 1500 2000 2500 3000 3500 4000 4500 2009 2010 2011 2012 30 outgoing calls/mnth 300 outgoing calls/mnth 900 outgoing calls/mnth

6

slide-7
SLIDE 7

Vodacom MTN Cell C

1000 2000 3000 4000 5000 6000 7000 2009 2010 2011 2012 30 outgoing calls/mnth 300 outgoing calls/mnth 900 outgoing calls/mnth 1000 2000 3000 4000 5000 6000 7000 2009 2010 2011 2012 30 outgoing calls/mnth 300 outgoing calls/mnth 900 outgoing calls/mnth 1000 2000 3000 4000 5000 6000 7000 2009 2010 2011 2012 30 outgoing calls/mnth 300 outgoing calls/mnth 900 outgoing calls/mnth 1000 2000 3000 4000 5000 6000 7000 2009 2010 2011 2012 30 outgoing calls/mnth 300 outgoing calls/mnth 900 outgoing calls/mnth

8ta

7

slide-8
SLIDE 8

Name of Operator No of tariff plans Name of tariff plan Vodacom 6 4U prepaid (Per second) Vodacom 4 Less (Per second) AllDay per minute AllDay per second Day Saver (per second) Big Bonus Voucher (per second) MTN 4 Muziq (per second) MTN Zone (per second) One Rate Call Per Second Cell C 5 Easychat Standard (per second) EasyChat All day (per second) EasyChat per second EasyChat 99c 99c For Real 8ta 3 Per Second Per Minute Per Second

8

slide-9
SLIDE 9

Both consumers and mobile operators have benefited from the reduction in MTRs due to:

  • Operators: Increase in both termination minutes and revenue
  • Consumers: Reduction in effective tariff per minute

1 1.05 1.1 1.15 1.2 1.25 1.3 1.35 1.4 10000 11000 12000 13000 14000 15000 16000 17000 18000 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12

Effective Tariff

Total Prepaid Revenue (LHS) Total Prepaid Minutes (LHS) Effective tariff (RHS)

9

slide-10
SLIDE 10
  • Level of on- and off-net tariff differential by Vodacom & MTN
  • On-net promotions by Vodacom & MTN could further increase

in on- and off-net differential

  • International voice tariff less than national tariff (Cell C R0.85
  • int. tariff, Vodacom R0.89 int. tariff) vs R1.04 industry effective

tariff)

Operator International tariff Industry Effective tariff Vodacom R0.89 to 52 countries R 1.04 MTN Discounts up to 100% to selected countries R 1.04 Cell C R0.85 to 50 destinations R 1.04 8ta Varies from R2.50 to R176 R 1.04

10

slide-11
SLIDE 11

11

slide-12
SLIDE 12
  • High termination rates:

– Represent a price floor for the retail price of a new entrant – Retard efficiency within a firm

  • Solution:

– Establish cost base for call termination – Introduce regulated glide-path towards the cost base

  • BUT Billing systems are the most expensive part of a call

End- user A End- user B Network A Network B Origination Termination

12

slide-13
SLIDE 13

2010 2011 2012 2013 2014

Promulgation call termination regulations, GG 33698, 29 Oct. 2010 Mar 2011 - First cut:

  • R0.89 – R0.73

Mar 2012 – second cut:

  • R0.73 – R0.56

Mar 2013 - last cut:

  • R0.56 – R0.40

Rate % reduction Pre 2011 R 1.25 Voluntary reduction R 0.89

  • 29%

March 2011 R 0.73

  • 18%

March 2012 R 0.56

  • 23%

March 2013 R 0.40

  • 29%

13

slide-14
SLIDE 14

14

Pre-2010 March 2011 March 2012 March 2013 Nominal Retail Rate per minute R 2.50 R 2.50 R 2.50 R 2.50 Termination Rate R 1.25 R 0.73 R 0.56 R 0.40 Margin R 1.25 R 1.77 R 1.94 R 2.10 Less Origination (estimation) R 0.60 R 0.60 R 0.60 R 0.60 Profit R 0.65 R 1.17 R 1.34 R 1.50 % change in profit 80% 15% 12%

This benefit ONLY ACCRUES to the smaller player Only the smaller player has “regulated” pricing power The increased profit margin makes room for price competition

slide-15
SLIDE 15

15

816 866 1027 1271 826 637 5425 5694 5683 5120 4108 3524

  • 4609
  • 4828
  • 4656
  • 3849
  • 3282
  • 2887
  • 6000
  • 4000
  • 2000

2000 4000 6000 8000 2007 2008 2009 2010 2011 2012 R'million Interconnection revenue Interconnection payments Net interconnection revenue (payment)

Telkom’s net position has improved by 37 per cent based on the termination rate reduction

slide-16
SLIDE 16

R 0.0 R 0.2 R 0.4 R 0.6 R 0.8 R 1.0 R 1.2 R 1.4 Peak Off-peak

The potential future?

  • 1. Will further reductions

harm all stakeholders?

  • 2. Slide 9 showed that a small

reduction in retail prices led to an INCREASE in revenue

  • 3. Any future change in rates

will be evidence-based

The future?

16

slide-17
SLIDE 17
  • No. of households with

fixed line access to communications continues to decrease

  • Access to the Internet is

growing because of mobile telephony

  • Fixed lines are not as

relevant as they should be

  • The private sector

mobile operators have made significant progress in achieving universal service

  • bjectives

5% 10% 15% 20% 25% 30% 35% 2009 2010 2011 No access to communications Fixed lines Household member with Access to the Internet

17

slide-18
SLIDE 18

18

Data Bundle Price Download Speed R331.37 1Mbps R149 21.6Mbps Fixed Line Mobile

  • Fixed lines are not relevant because they cost too

much for lower speeds

  • This is out of line with the rest of the world
slide-19
SLIDE 19

19

slide-20
SLIDE 20
  • Fixed lines to the home must be the objective
  • High capital cost but very low fixed operating cost

for ̴unlimited capacity

  • BUT:

– Up to 80% of new fixed line network cost is civil construction – Delays in getting wayleave approval and water use licences artificially increase this cost

  • We have to ensure efficient:

– New network deployment – Existing infrastructure, e.g. LLU

20

slide-21
SLIDE 21

21

slide-22
SLIDE 22

High cost to communications? High costs to Industry:

  • Infrastructure monopoly?
  • Barriers to network

deployment?

  • Lack of spectrum?
  • No spectrum sharing?
  • Import duties?
  • Volatile exchange rate?

High costs to end-users

  • High costs to industry
  • Possible monopoly in retail

markets?

22

slide-23
SLIDE 23

Cape Town Bloemfontein JHB/PTA Durban

International connectivity National backhaul Metro-ethernet Local access

1 2

PTA JHB Sandton East Rand

3

JHB Local switch

)))))) 4

23

slide-24
SLIDE 24

Discussion Document Initiate Enquiry Data Collection & Analysis Public Consultation Findings Document & Draft regulations Public Consultation Implementation Final Regulations

6-9 months > 4 months > 4 months On-going

Resource Needs

  • Economists
  • Cost Accounting
  • Statisticians
  • Engineers
  • Lawyers

Resource Needs

  • Economists
  • Cost Accounting
  • Statisticians
  • Engineers
  • Lawyers

Resource Needs

  • Economists
  • Cost Accounting
  • Statisticians
  • Engineers
  • Lawyers

Resource Needs

  • Cost Accounting
  • Compliance: Legal
  • Impact Analysts

Timeline: > 14 months

24

slide-25
SLIDE 25

25

slide-26
SLIDE 26
  • Cost model for voice value chain
  • Cost model for data value chain
  • Identify need for intervention
  • Regulate prices where necessary
  • Other obligations to be considered

26

slide-27
SLIDE 27
  • Make High Demand Spectrum available ASAP

– To new entrants – To an open access network, and – To the incumbents

  • All this assignment of spectrum to have

universal service obligations

  • Expected impact:

– Increase access for all – Increase competition leading to lower prices and better choice – GDP growth as per World Bank forecasts

27

slide-28
SLIDE 28
  • Broadcasting Value Chain Analysis

– Improve competition

  • Support development of Local Content
  • It will be technically possible to have 140 SD

TV channels in the UHF band.

  • We want to make this happen!

28

slide-29
SLIDE 29

29

slide-30
SLIDE 30
  • The Challenge

– ICASA only has approximately R 20 million to do all its discretionary work – One market review costs approximately R 5 million

  • What is ICASA doing about this?

– We are re-prioritising our activities BUT – We do not have sufficient funds to support parliament in all of its objectives

30

slide-31
SLIDE 31

31