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ICASA, operators under pressure

Despite differences, SA's mobile operators understand ICASA's need to regulate the industry.

Despite differences, SA's mobile operators understand ICASA's need to regulate the industry.

The relationship between SA's mobile operators and the country's telecoms regulator, the Independent Communications Authority of SA (ICASA), has taken strain in recent months.

This situation may have unintended consequences for both parties and, ultimately, consumers.

This comes on the back of, most recently, a "spat" between ICASA and MTN over international termination rates, Cell C blaming ICASA, to a degree, for its recent price hikes, operators' differences of opinion on ICASA's mobile network reports and – one of the biggest battles the industry has witnessed – the mobile termination rate (MTR) saga, which culminated last year, but still rages on.

After ICASA last month issued an order for MTN – SA's second largest mobile operator by market share and Africa's biggest – to "immediately" stop collecting 25 US cents in interconnect fees for terminating international calls, the operator defended the move, saying it would engage the regulator on the matter "in due course".

Chief corporate service officer at MTN SA, Graham de Vries, notes foreign operators charge MTN for delivering international calls from the MTN network to their networks, and many of MTN's international carrier partners charge rates "significantly more" than the rate charged by MTN prior to the decision taken by ICASA.

He says MTN's international termination rate of 25 US cents was the company's attempt at balancing the outflow of money from SA. "ICASA's decision effectively now does not permit us to do this."

Unintended costs

The latest disagreement is only one of many between the operators and the body that – as the Wireless Application Service Providers' Association puts it – essentially regulates the mobile operators and their relationship with mobile consumers.

But World Wide Worx MD Arthur Goldstuck says the harder stance by ICASA comes after many years of the relationship being too cosy for consumer comfort. "The tide turned when government finally understood the impact that lower termination rates would have on call costs − one of the major financial burdens on lower-income members of the population.

"The operators resisted every step of the way, coming up with absurd arguments and threats, such as the ludicrous suggestion that higher termination rates funded the free Please Call Me SMS service − which in fact was designed to increase calling volumes. There was also an argument that operators didn't benefit from the high fees because it was a ‘zero-sum game' − ignoring the fact that, if this were the case, such fees would not be necessary in the first place."

Aside from the various court challenges that ensued, Goldstuck says it was such "disingenuous arguments" that positioned the operators as both dishonest and anti-consumer, and made the task of the regulator that much easier.

"[It] also positioned the two parties as warring sides against and for the consumer. The fact there was zero sympathy from consumers for the operators' arguments also made the task of ICASA much easier and politically popular."

The unintended consequence of this, he notes, is that ICASA has failed to see the urgency of the operators' need for high-speed spectrum. As a result, the regulator failed the nation in not allowing connectivity technology that is mainstream across the world to be licensed in SA.

Owner of Ellipsis Regulatory Solutions Dominic Cull recently said, from the viewpoints of SA's mobile operators, "they are under a lot of pressure".

He notes the companies have to show growth and returns for their shareholders, and at the same time have the blow from lower termination rates and dwindling voice revenue to deal with, plus they are sitting in a constrained environment due to a lack of spectrum.

"It is like a pressure cooker and the industry is saying, ‘ICASA is blocking us at every turn and something has to give'."

Constructive connection

Despite the sometimes rocky relationship, however, SA's operators say they understand ICASA's role and strive to cooperate around the country's telecoms challenges.

De Vries says MTN "continues to engage in a constructive manner with the authority, in order to comply with all its regulatory obligations and at the same time meet the growing demands of customers".

MTN acknowledges that, as the regulator, ICASA needs to find the balance between enabling the sector and enforcing regulations. "There are, of course, differences and disagreements from time to time but that is certainly not evidence of a strained relationship. Our relationship is cordial and professional at all times."

Vodacom says ICASA has an important role to play and the company supports the entity in this. "We've got a constructive working relationship."

Telkom says it engages regularly with ICASA. "[Telkom] works to maintain a cooperative and collaborative relationship with the regulator."

Neither Cell C nor ICASA had commented by the time of publication.

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