Icasa has no leg to stand on - Vodacom

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Johannesburg - The court battle over call termination rates and regulations involving Vodacom, MTN and the Independent Communications Authority of SA (Icasa) was ultimately a “one-horse race”, Fanie Cilliers for Vodacom told the South Gauteng High Court yesterday.

“There’s no precedent we know of for a statutory body to come to court and say I’ve made a mess, my conclusions are indefensible,” Cilliers argued in Vodacom’s reply to Icasa’s submissions on Wednesday. Even so, Icasa had still justified a contrived basis for its calculations and ignored the rights of the operators, he added.

Vodacom and MTN are challenging the validity of the amended call termination regulations for this year, which Icasa has gazetted for implementation from Tuesday.

Icasa has dropped its previous version of the regulations, which followed a steep glide path for termination rates over three years to 2016.

The regulator previously argued that it aimed to get the rates to cost price to level the playing field between the four operators and to identify market failures caused by the structure of the market.

The rates are what wireless network operators charge each other to receive calls on each other’s networks. The industry regulator intended the sharp drop in wholesale rates between the operators to indirectly result in lower call rates for end consumers.

Call termination regulations were introduced in 2010. The first glide path that culminated in a termination rate of 40c a minute was scheduled to end last month, but Icasa was forced to extend this rate by another month to accommodate the court case.

Vodacom and MTN’s urgent application seeks to block the rates from halving to 20c next Tuesday, 15c next year and 10c in 2016. The two operators have also objected to the 44c asymmetric rate, which they said was too high. They would have to pay Cell C and Telkom Mobile this higher rate, while the two smaller operators will pay 20c to terminate calls from Vodacom and MTN’s networks.

Vodacom and MTN have argued that they would effectively subsidise the smaller operators and lose millions in termination revenue.

Icasa told the court on Wednesday that it had promulgated an amendment to the regulations and scrapped the 2015 and 2016 rates because a review by economics firm Genesis had shown that Icasa might have erred in its determination of those rates, which could not be defended as cost based.

Vodacom and MTN told the court on Tuesday that their rights, including constitutional rights, had been violated because Icasa refused to disclose the methodology that it had followed to arrive at the rates.

Icasa disputed this on Wednesday, saying it had provided ample opportunity, and claimed the operators had selectively provided information and not shown their true costs.

Icasa was forced to rely on earlier data it had in its possession to supplement its determination.

Now that Icasa is seeking to implement only the 20c rate, MTN and Vodacom still want the court to order the review of the regulation at a later date or suspend the implementation in the interim.

They argued harm would be irreparable if the market structure changed after implementation of the rates next week.

Cilliers said “Vodacom wants a proper process in which it is entitled to participate – that’s what the act says: put your methodology on the table”.

Cell C argued that consumers would be harmed if the rate was not dropped next week.

Wim Trengove for MTN argued that Icasa had made an attempt to introduce a new regime that could be found unlawful later. Judgment is reserved to Monday. - Business Report


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