The South Gauteng High Court on Monday (31 March) ruled that new call termination regulations issued by the\u00a0Independent Communications Authority of South Africa (Icasa) are \u201cunlawful and invalid\u201d.<\/p>\n
However, the declaration of invalidity has been suspended for 6 months, which means that that the new call termination rates will kick in on Tuesday, 1 April 2014, as planned, but Icasa has been given six months within which to review them.<\/p>\n
Among other things, the current regulations cut mobile termination rates (MTRs) to 20c per minute, while allowing asymmetry of up to 44c per minute.<\/p>\n
Under the ruling, for the next 6 months Cell C and Telkom Mobile will be allowed to charge Vodacom and MTN significantly more to place to calls to their networks than Vodacom and MTN can charge them.<\/p>\n
Both MTN and Vodacom opposed the new regulations, arguing that Cell C should not gain the benefits of asymmetry as it is not a new entrant, and that Icasa did not follow the correct process to determine the rates.<\/p>\n
Initially, the new call termination rates were supposed to kick in on 1 March 2014 after being announced on 29 January 2014.<\/p>\n
MTN applied for an urgent interdict against the new regulations, resulting in Icasa announcing that it would move the implementation date to 1 May 2014. Later Icasa revised its position and set the commencement date for 1 April 2014 instead.<\/p>\n
In a last ditch effort to prevent the interdict from being granted, Icasa also announced that it would relook the rate cuts set out in the regulations for 2015, 2016, and 2017.<\/p>\n
Icasa went on to publish urgent amendments to the regulations in the Government Gazette which repealed all the rate cuts but the 20c\/44c adjustment for 2014.
\nEffect of the ruling<\/p>\n
In its filing affidavit, MTN said that the new MTRs would cost it almost R143-million in lost aggregated interconnect revenue per month, or R858-million over 6 months.<\/p>\n
However, during the course of the court proceedings, an MTN lawyer was quoted as saying that the company could lose R450-million in revenue if the new rates were implemented before a review of the regulations. Such a review could last around 6 months, the lawyer said.<\/p>\n
MTN South Africa CEO Zunaid Bulbulia also warned that the rate cuts could lead to \u201cEskom-type\u201d rolling network blackouts \u201cbecause we just don\u2019t have the free cash in our business\u201d.<\/p>\n
Questioned about this statement from Bulbulia, an MTN media spokesperson told MyBroadband that subscribers need not be concerned about Bulbulia\u2019s warning.<\/p>\n
Vodacom also warned that the MTR cuts would impact its revenue, which it said \u201cmeans less money for Vodacom to invest in network upgrades and bringing overall call costs down\u201d.<\/p>\n
Cell C said in its court papers that if the interdict was successful it would have a devastating effect on the company, which includes:<\/p>\n
Without the benefit of increased asymmetry in MTRs, Cell C said that its only real alternative would be to increase its retail rates in line with Vodacom and MTN\u2019s prices.<\/p>\n
This ruling therefore means that Cell C has received a temporary reprieve, but depending on what form the revised regulations take this could change in the next 6 months.<\/p>\n
This article first appeared on MyBroadband<\/a><\/p>\n Icasa makes fresh changes to MTR regulations<\/strong><\/a><\/p>\n Icasa caves to Vodacom, MTN pressure: report<\/strong><\/a><\/p>\nMore on call termination rates<\/h3>\n