The Competition Commission on Wednesday said that it agreed that mobile call termination rates are too high.

In a presentation to Parliament's portfolio committee on communication, the commission said: "The Commission supports expeditious processes to reduce mobile call termination rates, but this should not be arbitrarily done – it must be defensible."

The commission said that due to their market power and a lack of effective competition, "operators are likely to recover profits lost from lower call termination rates through increases in the price of retail services, which is not desirable.

"Ideally one should not look to regulate those prices directly," the commission said.

It also called for the reduction of regulatory barriers to entry, to entice more competition.

"We support an interim process to reduce termination rates, however any figure arrived at arbitrarily may be subject to challenge.

"There is enough information to come up with a defensible figure. If it is too low it would affect profitability. You could come up with a figure that is too high."

The commission said that COA/CAM information (the set of accounts which sets out costs) should allow Independent Communications Authority of SA (Icasa) to determine a defensible interim figure.

"This would allow for a once-off reduction on the basis of the costing methodology. We shouldn't be guessing these figures," a spokesperson for the commission said.

"We support further reductions over the next three years but also on a defensible basis." The committee has proposed to reduce the interconnection rate, or the termination rate, from 1.25 rand to 60 cents with effect from November 1 and by a further 15 cents every November until 2012.

The commission called on Icasa to continue with the regulatory process envisaged in the Electronic Communications Act with a view to reducing termination rates to an appropriate level.

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