Cell C 'disappointed' in draft MTRs

Cell C is no longer the winner in the new MTR regime.

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Cell C has expressed disappointment at the "dramatic U-turn" taken by the Independent Communications Authority of SA (ICASA), which recently announced draft mobile termination rate (MTR) regulations that favour consumers, but take the wind out of the sails of the country's third biggest operator.

As of 1 April, MTRs for Vodacom and MTN dropped to 20c - half the previous rate - while Cell C and Telkom Mobile were able to charge the two larger players more than double that (44c) to terminate calls on their network. Now, rates will drop 4c a year from next March, until reaching an all-time low of 8c in 2017. While the new rates only differ from the previously proposed ones by a maximum of 2c, the new asymmetry is considerably lower - with Cell C and Telkom Mobile losing up to 24c of the asymmetry advantage.

In a reaction statement released today, Cell C cried foul at the newly-proposed asymmetry. "Without such pro-competitive remedy, the South African market will remain a duopoly," says the operator.

Cell C adds ICASA's initial MTRs in April were a "positive adjustment", while "no serious argument" was presented in court papers by MTN and Vodacom that the figure is unreasonable. "Consequently, it is unsurprising that this rate has remained unchanged in the latest draft regulations from ICASA. As can be seen in the table below, the change between the current proposed regulations and the previous published regulations is inconsequential."

According to Cell C, ICASA has also made a U-turn in its implementation of government policy around of pro-competitive regulations and reducing the cost to communicate. "The massive proposed reduction in asymmetry completely eliminates any pro-competitive remedy.

"ICASA is now only proposing a marginal cost recovery, which is not, in terms of many international benchmarks and literature, the basis on which asymmetry is determined, and which will have the effect of entrenching the duopoly in the South African market today.

"This is a different proposition to the pro-competitive remedy that was gazetted in the original regulations and is particularly puzzling when the number of mobile network operators has reduced from four to a de-facto three in the intervening period."

"Cell C seeks a remedy of the current market failure and the establishment of a pro-competitive environment that allows all players to offer logical pricing, improved quality of service and attract further investment."