Likely outcomes in mobile court battle
The call termination rate legal battle is set to begin at the Johannesburg High Court on Tuesday morning (25 March 2014), with Vodacom and MTN in the one corner, and Icasa, Cell C and Telkom in the opposite corner.
Icasa released its “Call Termination Regulations, 2014” on 29 January 2014, which will see mobile termination rates (MTR) reduced from the current 40 cents per minute to 10 cents per minute over the next three years.
The regulations further call for significant asymmetry, up from the current 10% to 120% from March 2014, 180% from March 2015, and 300% from March 2016.
Vodacom and MTN have challenged the regulations, arguing that a fair and objective process was not used to determine the final termination rates.
The legal challenge from Vodacom and MTN is two-fold:
- An urgent application to stop the implementation of the 2014 Call Termination Regulations on 1 April 2014;
- An application to set aside the 2014 Call Termination Regulations (hence, ask Icasa to go back to the drawing board and follow the correct process).
Last week, Bloomberg reported that The Independent Communications Authority of South Africa (Icasa) will review its original decision to cut mobile termination rates following legal pressure from Vodacom and MTN Group.
According to a document seen by Bloomberg, Icasa “has decided to engage in a reconsideration of the termination rates applicable for the years beginning 1 April 2015 and 1 April 2016″.
The media company said that the watchdog confirmed the affidavit and its content, and said that the review is being conducted with the aid of an external economist.
Court battle
This week’s court battle surrounding the 2014 Call Termination Regulations will focus on whether the regulations should be implemented immediately or not (hence, whether the urgent application is granted or not).
Vodacom and MTN will argue for the implementation to be stopped until a review process is completed. Icasa, Cell C and Telkom will argue for the immediate implementation of the new call termination rates.
There are three likely outcomes from this week’s legal proceedings:
- The urgent application is granted, and the implementation of the new termination rates is halted pending the outcome of the review application, which looks at the legality and merits of the process followed to arrive at the rates;
- The urgent application is dismissed, in which case the new rates would be implemented on 1 April, but the review application would still be heard – the likely time frame is 8-12 months;
- There’s an outside chance that the judge could rule straight away that Icasa has to restart the process and run a proper cost model.
It should be noted that the ruling, which is expected before the end of the week, will most likely only address the urgent applications against the immediate implementation of the new call termination rates.
Even if the urgent application is dismissed, the battle regarding the legality of the 2014 Call Termination Regulations will still take place.
More on mobile termination rates
Make or break moment for mobile: Knott-Craig
Icasa caves to Vodacom, MTN pressure: report
Carrim questions MTR impact on MTN, Vodacom
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