Icasa fines MTN millions over price hike - TechCentral

Icasa fines MTN millions over price hike

A hoarding outside MTN’s head office in Johannesburg

Communications regulator Icasa’s complaints and compliance committee (CCC) has fined MTN South Africa R5-million — R2-million of which is suspended for three years — for contravening regulations when it hiked the tariffs on one of its data plans without following the requirements.

MTN appeared before the CCC earlier this year over a charge that it failed to comply with a notification rule regarding tariff adjustments.

The CCC found that MTN contravened regulation 9 of the standard terms and conditions by failing to comply with the part of the regulation that requires notifying Icasa at least seven days prior to the provision of a charged service. The matter was initiated by the compliance and consumer affairs division of Icasa. The regulator’s decision-making council ratified the findings last week.

The regulator was unhappy that MTN amended its 1GB WhatsApp monthly bundle to R30. “MTN implemented the price adjustment before the end of seven days’ period without prior approval by Icasa,” the regulator said in February.

MTN South Africa spokeswoman Jacqui O’Sullivan told TechCentral on Monday the company is aware of the ruling and intends to appeal it at the high court, arguing that it has a strong case given that the low-cost WhatsApp plan in question was degrading the quality of its 3G network and that the price adjustment was therefore urgent.

Icasa said in February that MTN had argued that the early implementation of the amendment was done out of necessity as the company was faced with a choice between breaking the letter of the regulations and suffering more serious harm.

Could have been worse

MTN could have faced a fine of between R100 000 and R5-million, and the CCC chose the maximum sum. However, the regulations also allowed the committee to impose a fine of fined 10% of MTN South Africa’s annual turnover for every day (or part thereof) during which the offence took place, which it chose not to do.

At the time, Icasa said it felt that MTN’s “actions and contraventions … effectively undermined the authority’s efforts of reducing the cost of communications in South Africa and the implementation of consumer protection regulations aimed at promoting transparency and prohibiting unfair business rules in the provision of communication services”.

MTN responds in detail

In a statement issued later on Monday, after TechCentral first reported the news about the ruling, O’Sullivan explained more of the background to the CCC investigation and MTN’s view on the outcome.

“In April 2018, MTN launched its social bundles and introduced a monthly WhatsApp bundle of 1GB for just R10. This unprecedented pricing aimed to further drive down the cost to communicate for South Africans,” she said.

“The public’s response was exceptional. WhatsApp usage on the MTN network increased by 300% in just eight weeks. An unintended consequence of the low-priced WhatsApp data was an extraordinary increase in demand on MTN’s 3G network.

MTN’s Jacqui O’Sullivan

“MTN’s dual data strategy has seen consistent and sustained investment in both its 3G and 4G networks over the past few years to deliver a world class network experience. At the time, MTN urgently invested a further R200-million in the 3G network to accommodate the huge spike in traffic that was being driven by the demand for WhatsApp.

“On 18 June 2018, MTN advised Icasa that it intended to change the pricing from R10 to R20. This price increase was delayed in the hope that additional network interventions may have provided some relief. Unfortunately, the situation did not improve and the stability of the 3G network remained significantly at risk.

“On 12 July 2018, MTN notified ICASA that a more significant price increase of the WhatsApp bundle, to R30, would be necessary to provide the immediate relief that the 3G network required. MTN followed this notification to Icasa on 13 July 2018, with a letter to the CEO of Icasa requesting leniency on the requirement that all pricing changes may only be affected seven days after the notification of the regulator.

“The letter, sent by MTN South Africa’s CEO, Godfrey Motsa, highlighted the significant risk MTN’s 3G network was facing, because of the extraordinary spike in traffic and requested leniency to affect the pricing changes before the seven-day notice period had passed.

“MTN did not receive a response to the letter and, on 16 July, MTN introduced the pricing change. MTN respects the role of the Regulator and that of its Compliance and Consumer Affairs division. MTN is committed to compliance and to maintaining good relationships with all stakeholders and the decision to proceed, without some sort of Icasa-issued condonation, was not made lightly. At the time, we believed this was the only action to ensure the continued functionality of MTN South Africa’s 3G network and considering the risk posed to millions of customers had that network failed, the difficult decision was made.

“We were very aware of the required Icasa timing, which is why we applied for leniency, but this was a tough situation, and, at the time, we did what we felt necessary to protect the connectivity of millions of South Africans,” O’Sullivan said.

“MTN has considered the content of the decision. MTN holds that the penalty applied should be proportionate to the transgression and that it should be rational and reasonable considering the circumstances. For this reason, among others, MTN will be taking the decision on review to the high court.”  — (c) 2019 NewsCentral Media

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