ICASA ready to butt heads with MTN on price cuts

By: Gugu Lourie (Tech Financials)

South Africa’s communications regulator is prepared to butt heads with MTN, the country’s second biggest mobile phone operator, to ensure cellular phone prices are lowered to the benefit of subscribers.

The Independent Communications Authority of SA (ICASA) said on Tuesday in Parliament it had received an official request from MTN Group asking for planned price cuts to be scrapped. MTN sent a legal letter saying ICASA must withdraw the regulations to lower cost of communications.

In the final regulation, the Independent Communications Authority of SA announced last month that the incumbent mobile cellular operators are expected to reduce their Mobile Termination Rate (MTR) from 40c today to 20c as of 1 March 2014. The MTR’s for small mobile operators like Cell C and Telkom Mobile will remain at 44c. The fixed termination rate for Telkom remains at 12c in respect of local interconnection for the coming year, while the rate for the national interconnections will fall from 19c to 16c. By March 2017, the call termination rates for the major operators will be unified at 10c, with continued, albeit falling, asymmetry for small mobile and fixed operators.

MTN on Wednesday served ICASA with an urgent application to the High Court for an interim order suspending the bulk of the provisions of the above mentioned regulations.

“ICASA has decided that it is in the public interest for the urgent application to be heard and decided on a less urgent basis,” Paseka Maleka, ICASA spokesperson says. “The High Court’s decision will have wide-ranging effects on the parties and the public at large, including subscribers for telecommunications services.”

In the meantime, Icasa has decided to delay the commencement of the 2014 Regulations from 1 March 2014 and extend the operation of the Call Termination Regulations – the fees charged by mobile and fixed phone companies to handle calls from other providers – to 1 May 2014.

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Maleka adds that the MTN application is complex, comprising some 399 pages and affected parties are afforded very little time to respond, in that answering affidavits are required to be filed by 18 February 2014.

The urgent application was enrolled for hearing on 25 February 2014.

“It is important that the High Court is fully informed of all the relevant issues before making its decision and it is therefore necessary that the affected parties have sufficient time to properly prepare their answering papers, particularly given the complexity of the matter,” says Maleka.

South Africa’s biggest mobile operators – Vodacom and MTN – will have to start charging each other to carry calls between their networks 20c/minute by 1 March 2014. Vodacom has disclosed that it stands to lose R1bn due to the implementation of this regulations and intends to challenge the legal validity of the process followed by the country’s telecoms regulator to aggressively cut mobile and fixed termination rates.

“We have concerns about the process used to determine these published rates. We intend to challenge the legal validity of the process,” said Shameel Joosub, Vodacom Group CEO.

ICASA said it was cutting mobile and fixed termination rates to reduce the cost to communicate.

According to the Communications Minister Yunus Carrim the high costs to communicate have deterred global and domestic investment in this country and we understand that ICASA consulted extensively with all the parties and we feel that they should accept the outcomes.

“These rates provide for greater competition which we expect to lead to reductions in the cost to communicate,” Carrim said in January.

The declining cost to communicate complements the goals of “SA Connect”, the country’s broadband policy, of bridging the digital divide by making broadband accessible and affordable.

This piece was lifted with permission from Tech Financials 

news@ujuh.co.za

  • Thank you Icasa finally you are becoming a regulator with balls to challenge these companies which have been ripping us for years. We as consumers are fully behind you as your fight is ours as well. I just wish that Telkom Mobile and Cell C should support your cause as they stand to benefit from your cause. MTN wants to milk us and they shouldn’t be allowed. Ujuh keep us posted on the developments around this case.

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