The Internet Service Providers’ Association (Ispa), an industry body that represents most of South Africa’s ISPs, has lashed out at MTN’s decision to hike international inbound calls unilaterally, arguing that it is “misleading” for the operator to claim the decision will not prejudice local consumers.

Last week, MTN South Africa CEO Ahmad Farroukh defended MTN’s decision in November 2014 to introduce a US$0,25/minute interconnection fee on international inbound calls. This was after communications regulator Icasa informed the company that it is required to charge an interconnect fee of R0,20/minute, no matter where the call originates.

In an exclusive interview with TechCentral, Farroukh warned that MTN could take Icasa to court if it didn’t reverse its decision. The Icasa ruling followed a complaint lodged by Ispa.

“Ispa welcomed the decisive action taken by Icasa in the interests of local consumers while noting that MTN has warned Icasa that it will take the matter to court unless the communications regulator backs down on a decision to block the operator from imposing the fee,” the ISP body says in a statement issued on Wednesday.

In the statement, Ispa regulatory adviser Dominic Cull says the implementation of “inflated” call termination rates for international calls prejudices South African consumers who, by nature of the fact that their friends, family members and business associates overseas, bear the cost of originating calls from overseas towards them.

Cull warns that MTN’s move, if allowed, will be “particularly keenly felt in the Southern African Development Community region, where a large number of migrant workers are employed in South Africa while supporting dependants in the region”.

“There is a cause-and-effect relationship whereby if you increase the cost for a foreign calling party to call to a South African, you will create a situation where more South Africans have to call the foreign party back, thereby passing the cost to the South African public,” says Cull.

“The success of facilities like the ‘please call me’ SMS offer demonstrate the principle that, where it is not affordable for a party to originate the call, they will make use of an alternate mechanism to require the other party to initiate the call.”

In the statement, Ispa says MTN has claimed that the adjustment to the rate was necessary to redress imbalances with the rates charged by international operators, but says revenue constraints imposed through the various sets of call termination regulations since 2010 is the likelier reason for MTN seeking to inflate the rate at this time.

Call termination rates — the fees operators may charge each other to carry calls between their networks — have been reduced sharply over the past five years in an effort to promote competition and force down retail prices.

“Reintroducing massively inflated call termination rates — even in respect of just internationally originated calls — will have an anticompetitive effect on new entrants trying to provide voice services to international clients,” Cull says.

In his interview with TechCentral, Farroukh said Icasa is wrong when it states that the termination rate regulations refer to all calls, whether local or international.

By setting the termination rate for inbound international calls at $0,25/minute, MTN would make $5m/month in revenue compared to $320 000/month now. This would raise additional tax revenues for the government and would not have a negative impact on South African consumers, he said.

“What is the impact on the consumer? Nil. It’s just a lost opportunity for us to pay more taxes and have more foreign currency in the country … without sweating.”

He said MTN paid foreign operators R1bn in 2014, while it collected only R65m in return. “All we’re trying to do is balance that.”