Johannesburg - An amendment that will bring the new cellphone call termination regulations into effect from Tuesday was promulgated into law yesterday even as legal counsel for the communications industry regulator and cellular network operators MTN and Vodacom were fighting each other over the regulations in court.
Gilbert Marcus, senior counsel for the Independent Communications Authority of SA (Icasa), jumped up to interrupt network operator Cell C’s arguments in the late afternoon to apprise the court of the latest development.
The regulations, which Vodacom and MTN are challenging, will bring into law the drop of wholesale call termination rates, or interconnection rates as they are popularly known, to 20c a minute from 40c previously. The rates do not directly affect retail rates that consumers are charged.
Icasa’s move ignored pleas by applicants Vodacom and MTN, who had asked the South Gauteng High Court to set aside the regulations, which spell out rates for the next three years, pending a review at a later stage. But if that was impossible, they asked the court to suspend the 2014 regulations, which are scheduled to be implemented on April 1.
Marcus told Business Report that Icasa was able to promulgate the regulations via the Government Gazette because the authority had stated in its answering affidavit earlier this month that it intended to do so. The amended regulations keep the rate cut for this year but repeal the rate cuts that Icasa had aimed to implement next year and in 2016.
Last night, Paseka Maleka, the spokesman for Icasa, could not confirm the publication of the notice in the gazette.
The outcome will be clear when Judge Haseena Mayat delivers judgment on Monday.
In addition to the overall rate cut, Vodacom and MTN are concerned about the degree of asymmetry, which they say will give their smaller operators an unfair advantage.
According to the regulations, smaller operators such as Cell C and Telkom Mobile will be entitled to charge MTN and Vodacom 44c a minute for every call their customers make to a Cell C or Telkom Mobile client.
In turn, Cell C and Telkom Mobile will only pay 20c
for calls to the telecoms giants.
When MTN and Vodacom presented their arguments at the onset of the court case on Tuesday, they argued that the sudden drop in rates from the previous 40c a minute would be a “shock” to the system.
Icasa, Cell C and Telkom, which are opposing the litigation, said Vodacom and MTN were presenting a weak case.
Yesterday David Unterhalter, senior counsel for Icasa, argued that the applicants had not proved grounds for a review based on a clear right.
MTN and Vodacom had noted that Icasa conceded in court papers that the 10c rate planned for 2016 was not cost-based and, therefore, if that was Icasa’s destination for the rate path, then the 20c cut was merely a stepping stone from the previous 2010 regulations, which expired at the end of last month.
The operators also claimed that Icasa had engaged in procedural unfairness because it had not given them access to the methodology it had applied to arrive at the rates.
But Icasa argued that it had given the operators numerous opportunities but they had refused to reveal their true costs when requested to do so.
This meant Icasa had to source data independently and from the operators’ responses to previous questionnaires to determine the cost base. An economist’s report by MTN was also not clear on the operator’s costs.
Unterhalter argued that history showed that when the market was insufficiently regulated, just before Cell C’s entrance in 2001, South Africa had the highest telecoms rates among African countries. MTN charged the highest prices.
Counsel for Cell C argued that if the 2010 regulations were maintained it would be unlawful because the rates had expired and no high court in South Africa had suspended regulations an interim basis.
Cell C argued that Vodacom and MTN were arguing only in their commercial interest and were not considering the public interest.
Icasa demonstrated this earlier in the day when it argued that when the regulations were first implemented in 2012, Cell C was the first company to introduced price competition to the market, two years late. The third-biggest player reduced retail rates from more than R2 a minute to 99c a minute. MTN later followed suit and dropped to the same rate only after losing some customers to Cell C.
Vincent Maleka, senior counsel for Telkom, argued that the new rates were in line with international benchmarks.
Termination rates were 12c in Kenya, 18c in Ghana and 20c in Tanzania. “We will submit even on that regional benchmark, the rate determined by Icasa is not at odds with the international benchmark.” - Business Report