Third operator Cell C has lodged a formal complaint against SA's two mobile giants with the Competition Commission, citing "anti-competitive conduct".
Cell C says the crux of the complaint, lodged yesterday, relates to the manner in which Vodacom and MTN discriminate between their on-net and off-net effective prices, which the operator says has a "dramatic" and direct impact on smaller operators' ability to acquire new customers.
"The two dominant incumbents discount their effective on-net prices substantially, while charging a premium for their customers to call off-net. This amounts to discriminatory pricing and is without doubt anti-competitive when adopted by dominant operators," says Cell C CEO Alan Knott-Craig.
Cell C asserts that it has been competing fiercely on all fronts, with the ultimate aim of driving down prices for the consumer - a strategy also beneficial for Cell C. "Customers that call off-net are being penalised often without them realising it. With number portability, customers don't always know if they are calling on- or off-net anymore, so they don't actually know what rate they are paying," says Knott-Craig.
This comes four days after the Independent Communications Authority of SA (ICASA) announced new mobile termination rates and asymmetrical rates that favour smaller players.
International example
He notes that, in many mobile markets around the world, regulators are opposed to differential on-net and off-net pricing, and in some instances, dominant mobile network operators are facing stiff fines for this kind of discriminatory pricing, which locks in customers and prevents switching.
"At the end of 2012, the French competition authorities imposed a fine on Orange France and SFR for EUR183.1 million [about R 2.5 billion] in total for anti-competitive practices in the mobile telephony sector, specifically for discriminatory on-net pricing."
Another case in point, says Knott-Craig, is Papua New Guinea. "In a bid to prevent market failure, [the country] introduced regulations that prevent operators from offering discriminatory off- and on-net pricing in 2013."
On the home-front, he points out that, in 2013, the Nigerian regulator called on MTN Nigeria to introduce flat rates (where on-net tariffs are the same as off-net tariffs) as 85% of MTN's traffic is on-net in that country.
"All of these cases support Cell C's position in its Competition Commission complaint."
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