Johannesburg - Arguments over the fees operators pay to accept calls on each other’s networks will begin tomorrow between the communications industry regulator and wireless network operators MTN and Vodacom in the South Gauteng High Court.
The Independent Communications Authority of SA (Icasa) is expected to review part of its proposed cuts to the call termination fees – a proposal which led Vodacom and MTN, the country’s two largest operators, to seek the legal action against the authority and a review of the rules last month.
The review may be Icasa’s admission of what the operators have argued previously, that it had failed to apply the global industry practice of conducting an economic impact study before stringently lowering the rates.
Icasa’s decision to review the rates came after it had consulted an external economist, spokesman Paseka Maleka said on Thursday.
“We did our own work after this matter was taken to court. We engaged our lawyers and decided to get an external economist… We are fine for the first year but in year two and three we will have to reconsider the fees.”
Vodacom said it could not comment on the legal process.
Graham de Vries, the regulatory and legal general manager at MTN South Africa, said the review implied that there would be no reduction of the rates between 2015 and 2016.
“It also means that Icasa concedes that there simply was no basis to determine that 10c was the cost of terminating a call. As a result, MTN believes that Icasa has changed the entire rationale of the 2014 regulations.”
The tariffs, which affect wireless voice providers, decline according to a sliding scale over the next three years. Icasa first introduced rate cuts in 2010. It reviews the rates every three years.
In January, it proposed that rates drop by 50 percent to 20c a minute from April 1, with a further cut to 15c from the beginning of April next year. Icasa also proposed that smaller operators could charge the larger rivals 44c.
On April 1, 2016 the rates were to slide to 10c. The cuts are intended to foster competition and reduce costs for smaller operators Cell C and Telkom Mobile, whose parent, Telkom, is 40 percent controlled by the state. Operators are expected to pass on savings to consumers.
Meanwhile, uncertainty hangs over the implementation of the rate cut on April 1. “It still is [April 1] as far as we communicated,” Maleka said, adding that further clarity would depend on the outcome in court.
Vodacom and MTN are likely to revive their arguments that lower rates would mean lower revenue from call termination, which would force them to cut jobs and reduce investment in their network infrastructure.
In the six months to September last year, Vodacom’s turnover from call termination fell 24 percent to R1.9 billion. MTN SA reported a 25 percent drop in such revenue in the year to December.