Mobile operator MTN has torn into Cell C, warning its smaller rival that it must “abide by the law and start competing on the merits of its products rather than obscure regulatory favours”.
The attack follows Cell C’s decision to lobby the industry regulator, the Independent Communications Authority of South Africa (Icasa), to postpone this Friday’s reduction in mobile termination rates — these are wholesale internetwork call charges that play a role in retail prices — pending an urgent review to determine the effectiveness of the regulations governing them.
MTN South Africa chief corporate service officer Robert Madzonga describes Cell C’s call as “extraordinary” and says it suggests a “serious lack of planning”.
Cell C is arguing strongly for the continuation of an “asymmetric” tariff regime whereby smaller players, including itself, pay less to bigger operators MTN and Vodacom to carry calls onto their networks that the other way around.
When Icasa began cutting termination rates three years ago, it introduced asymmetry at a level of 20%. This was reduced to 15% in 2012 and is due to fall to 10% this Friday when the rates are cut again.
Cell C has called for “sustained asymmetry for smaller operators until they achieve a competitive degree of scale”.
But Madzonga says MTN is dead against asymmetry in termination rates, saying it’s not justified by underlying technology differences and distorts competition.
“Rather than encouraging small operators to become more efficient, it just increases larger operators’ costs,” he says. “International best practice confirms that any mobile termination rate asymmetry must be grounded in objective cost differences and should not be granted for more than four years. This encourages operators to become more efficient and not rely on continuous regulatory subsidies to compete.”
Madzonga says MTN will cut termination rates to the prescribed 40c/minute on 1 March, saying the regulations that govern the price cuts were the result of a “rigorous market review process and a year-long consultation in which Cell C participated fully”.
“By law, any change to these regulations needs to follow the same rigorous process,” he adds. “The new cuts, and the reduced levels of asymmetry, have been on the table for several years. MTN has adjusted its business model to take these changes into account.
“It is deeply disturbing that Cell C, the self-proclaimed South African consumer champion, is now asking Icasa to change the law at the last minute so they can keep their mobile termination rates up when the industry was told they would fall years ago.” — (c) 2013 NewsCentral Media