Johannesburg - Vodacom and MTN, the country’s largest cellular network operators, have decided not to appeal a high-court ruling that authorised the industry regulator to implement new call termination regulations despite the court finding that the rules were illegal and invalid.
The decision by the operators enables the regulator to pursue a cost study on the regulations without the previous hostility from the industry.
The call termination regulations govern the rates the operators pay to connect calls to each other’s networks.
Last month, Vodacom and MTN challenged the process which the regulator followed to determine these regulations including the sudden drop in the rates to 20c from 40c previously, which they argued would hurt their profits. The regulations also require them to pay a higher rate, 44c, to smaller rivals Cell C and Telkom Mobile in a practice known as asymmetry, because the latter have a smaller market share.
The operators have implemented the new rates pending the outcome of the cost study, which the regulator has to pursue over six months, according to the court order.
In the meantime, the Independent Communications Authority of SA (Icasa), which regulates the telecoms, technology and broadcasting sector and operates in the public interest, has been gagged from further communication on the matter. Paseka Maleka, the spokesman for Icasa, said on Friday: “As per the advice of our legal counsel, please note that we cannot engage the media any further on the judgment, regulations or the way forward on this matter until further notice.”
There are concerns over Icasa’s ability to complete the study in time. The operators had not yet been approached for cost information since the ruling on March 31, according to an industry insider.
Zunaid Bulbulia, MTN South Africa’s chief executive, said on Friday: “MTN will not appeal the ruling,” adding: “MTN shall work with the regulator in a constructive manner and consultative manner.”
Vodacom also confirmed that it would not appeal.
A cost study process usually runs over three to six months and can cost between $400 000 (R4.2 billion) and $600 000. The regulator would typically appoint a third party to conduct the survey, according to Christoph Stork, a senior researcher at Cape Town-based Research ICT Africa.
He said Icasa would need to undertake a cost study on each operator. The cost of interconnection could include the cost of electricity consumed by the base stations where calls are switched, traffic flow and labour, according to Stork.
International termination rates range between 15c and 20c, he added.
Lowering the rates is expected to enable smaller players to operate more efficiently and introduce market competition which could lower the cost to communicate for the public.
Last week Mark Habib, a director of telecoms and technology at Standard & Poor’s ratings agency, said South Africa was regarded as a country with higher communication rates in the Europe, Middle East and Africa region.
Jose Dos Santos, the acting chief executive for Cell C, said recently he did not believe Icasa erred when it determined that the rate would further decline from 20c to 10c by 2016. - Business Report