New call rates between cellphone networks aimed at stimulating competition resulted from a “half-baked experiment”, the high court in Johannesburg heard on Tuesday.
Frank Snyckers SC, for Vodacom, argued that communications regulator Icasa’s 2014 regulations for call rates, set to be introduced next month, should have taken into account the structural effects this would have on the market.
“If we mess with this market on the basis of a half-baked experiment, we can never undo [the harm],” Snyckers said.
Cellphone network operators MTN and Vodacom are challenging the introduction of new asymmetric call termination rates.
Icasa had conceded there were problems with its proposed model for mobile rates that operators have to pay one another for calls to other networks. The authority wants to implement a set of regulations that would see these rates dropped to 10 cents per minute in 2016.
For 2014, MTN and Vodacom would have to pay 44c/minute to smaller operators, while the smaller companies would have to pay only 20c, in an asymmetric structure.
MTN and Vodacom want the 2014 regulations scrapped. Alternatively, they want interim relief to prevent the introduction of the new rates until they have been reviewed.
Snyckers said the costs contained in the asymmetrical 2014 regulations could only benefit consumers if they had been correctly worked out.
Earlier, Wim Trengove SC, for MTN, argued that it was unfair to make the rates asymmetric beyond newcomers to the mobile market.
If the proposed regulations were implemented from April 1, the smaller operators would effectively be receiving a subsidy. “MTN and Vodacom customers will have to pay a higher rate to subsidise CellC, Telkom Mobile and their customers,” Trengove argued.
There were also questions about how Icasa arrived at the proposed rates, which it claims will stimulate competition in the mobile market.
Trengove said MTN could lose R450m in revenue if the new rates were implemented before a review of the rates regulations, which could last around six months.
Alfred Cocknell SC, also for MTN, argued that there were issues of procedural fairness in Icasa’s dealing with the regulations.
He said that MTN had sought to make submissions on the draft regulations, but were not given the relevant information to make meaningful submissions.
MTN asked for the costing study and regional or global benchmarking studies that informed the regulations. “Icasa refused to give these.”
Icasa refused to reveal the method it used to arrive at the new rates, which Cocknell referred to as a “black box”.
“My client could not make a meaningful submission without that black box,” he said.
Cocknell said there could be significant changes to the structure of the market if the court did not grant the application. — Sapa
