MTN makes good on legal threats against Icasa

 ·13 Feb 2014
MTN Vodacom Icasa pressure

MTN has made good on its promise to take legal action against Icasa’s decision to significantly cut call termination rates in South Africa.

According to a report by Techcentral, MTN has filed an application at the High Court, seeking to get the new rates set aside – while also seeking an urgent interdict to stop Icasa from implementing the rate cuts come 1 March 2014.

The Independent Communications Authority of South Africa (Icasa) released its “Call Termination Regulations, 2014” on 29 January 2014, which will see mobile termination rates (MTR) reduced from the current 40c per minute to 10c 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.

These regulations will benefit Telkom and Cell C, but will cost Vodacom and MTN hundreds of millions of rands in lost revenue.

Not unexpectedly, the two largest mobile operators in the country – MTN and Vodacom – have decided to take legal action.

A matter of process

The report confirmed that the legal standpoint against Icasa would be over the process followed by the regulator in determining the rate cuts.

MyBroadband independently established that the model used by Icasa was not shared with the operators, and they weren’t given a chance to comment.

International best practice is that complicated cost models, like the LRIC-based financial model, should be shared with the operators, and they are then given a chance to comment on it.

The LRIC model further requires very specific information, such as detailed network traffic profiles and other detailed cost information, to produce accurate results.

MyBroadband received feedback from industry sources that the regulator did not request all the required information, at least not current numbers, needed for the LRIC model.

According to these sources no cost information was requested from the network operators to put this model together.

Some high level information requests were made, but this information wouldn’t have been enough to populate a LRIC model.

If this is the case it means that the regulator may have used incomplete or outdated information in its calculations. This may include making incorrect assumptions where information was not available.

Icasa’s next move

Icasa previously confirmed that MTN has served it with court papers, seeking relief on the regulations; and that makes the matter sub judice.

However, the 2014 Call Termination Regulations remain until such time that the Court decides otherwise in terms of the review process.

According to the report, Icasa has until 16h00 on Friday (14 February) to lay out plans to oppose the application or interim order.

More on termination rates

MTN calls for termination rate cuts to be scrapped

MTN, Vodacom sink on rate cuts

Telkom to pass on CTR cuts to consumers

Vodacom: Consumers won’t benefit from MTR cuts

Drastic call termination cuts announced

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