Legal battle looms between Icasa and mobile operators

Bekezela Phakathi

A LEGAL showdown looms between the Independent Communications Authority of South Africa (Icasa) and mobile telecommunications providers MTN and Vodacom in a continued clash over mobile call termination regulations.

The regulator confirmed in Parliament on Tuesday (11/02/2014) that it had received a letter from lawyers acting for MTN stating that “offending provisions” contained in the regulations must be removed as a matter of “urgency”.

Nomvuyiso Batyi‚ an Icasa councillor who deals with markets and competition‚ said the regulator had instructed its lawyers to write back to MTN’s legal team to make it clear that these provisions would not be removed.

Ms Batyi said Icasa expected Vodacom to follow MTN’s decision to challenge the regulations.

Icasa last month halved the fees that the companies can charge rivals to use their networks‚ as part of a broader plan to reduce the cost to communicate in South Africa — long regarded as among the highest in Africa. The decision followed “months of consultations” between Icasa and the telecoms industry‚ the regulator said.

Starting in March this year‚ mobile termination rates — the fees that mobile operators pay each other to carry calls — will fall to 20c/minute from 40c/minute‚ and gradually decline over the next three years to 10c/minute. MTN and Vodacom will‚ however‚ pay their smaller rivals more than double the normal rate‚ according to the asymmetric termination rate system.

Vodacom has called the asymmetric rate more aggressive and unjustified‚ describing it as a subsidy for smaller operators. Last month‚ it indicated that it planned to launch a legal challenge against the regulatory cut in fees. It has said the planned cuts could cost it R1bn in the 2015 financial year.

Both Vodacom and MTN have also warned that “aggressive” cuts could lead to job losses and a reduction in capital expenditure.

On Tuesday‚ Icasa and the Department of Communications appeared before Parliament’s communications portfolio committee to report on the cost to communicate.

Ms Batyi told MPs that Icasa’s regulations on the termination rates would stand‚ unless a court referred them back.

On the sidelines of the meeting‚ Ms Batyi said a legal battle was expected and Icasa had already hired senior counsel. She said the challenge was likely to be around the procedures followed leading up to the implementation of the regulations.

“No one can tell us (anything) on the pricing structure because of how the legislation in South Africa is drafted‚” she said. “No court can say‚ ‘Icasa‚ the price is wrong.’ They can say‚ ‘You have missed this step‚ redo this portion and you were unfair in coming to this conclusion‚’ but no one will say the actual price is wrong‚” Ms Batyi said.

Portfolio committee chairman Sikhumbuzo Kholwane said earlier that “surely they (MTN and Vodacom) will fight tooth and nail to maintain their profits”.

“We are in a battle here ... but we are catching up with the operators who are making profits unfairly‚” he said. “We do respect their right to approach the courts ... but I think the regulator must find a way to talk to South Africans so they know that they (mobile operators) have been sucking (their) blood.

“This needs to be revealed ... probably South Africans will vote with their feet.”

Communications Minister Yunus Carrim told MPs earlier that the department supported Icasa’s decision on the call termination regulations‚ “as it serves the country’s interests”. He said it was expected that the reduction in rates would lead to cheaper communication and economic growth.

“The high cost to communicate has deterred investment ... the mobile operators will also benefit because cheaper communication will lead to economic growth‚ and as the economy grows‚ more people will be able to use their services‚” Mr Carrim said.

He said the big mobile operators might lose in the short term but would gain in the long term. © BDlive 2014