Antoinette Slabbert
2 minute read
2 Apr 2014
6:00 am

Egg-on-face cellphone war fizzles out

Antoinette Slabbert

All sides claimed victory in the battle over cellphone interconnection rates that raged hotly in the South Gauteng High Court and came to an inconclusive end on Monday.

Picture: AFP

Judge Haseena Mayat ruled the determination of the Independent Communication Authority of South Africa (Icasa), about new interconnection rates, was unlawful and invalid.

This would have seen the rates cellphone operators charge to carry each other’s clients’ calls, drop by 50% to 20c per minute for Vodacom and MTN, from April 1 this year, and to 15c next year, and then 10c the year thereafter. Cell C and Telkom Mobile would be allowed to charge 44c per minute to give smaller operators “a leg up” and stimulate competition.

Mayat ruled that there was no rational basis for the tariff of 20c and granted a final order of invalidity, but she suspended the invalidity for six months, meaning the rates regime will go ahead anyway. It clearly “messed up” its determination and “did not do the work” it was supposed to put into the process, Adv Fanie Cilliers, acting for Vodacom, argued.

The whole idea was to break the dominance of the two cellphone giants and stimulate effective competition in order to drive down cost.

MTN and Vodacom were less successful when they pleaded poverty in court. Their arguments that they would suffer irreparable harm, clearly did not convince judge Mayat. She asked them how the harm “of two very rich companies” weighed up against the public interest in ultimately lower cellphone rates.

Vodacom argued it could lose R1 billion in annual revenue. Its spokesperson, Richard Boorman, said after the judgement that one cannot necessarily conclude that that equates to a R500 million loss in the six months suspension period. MTN argued before court that it could lose R450 million in revenue in six months.

The two companies won the argument about validity on points of procedure, but there wasn’t much sympathy since they’ve benefitted very generously for years from th high determination rates it charged its smaller competitors.

During the six months period, new calculations will be made to determine the cost of interconnection. The ultimate goal is that these rates should be at cost. ICASA and the two big providers threw accusations at each. MTN and Vodacom said ICASA sucked its thumb and came up with 10c as a cost, while Icasa said MTN and Vodacom were in the best position to supply reliable data about the cost of interconnection, but were not forthcoming.