SA's third mobile operator has tabled its objections with the Independent Communications Authority of SA (ICASA) against the proposed call termination rate cuts, arguing that it should not be considered an established significant market power (SMP), as Vodacom and MTN are.
Speaking at the public hearings into the draft Call Termination Rate regulations, held in Midrand yesterday, Cell C CEO Lars Reichelt argued that the authority has in its draft regulations lumped Cell C into the same basket as MTN and Vodacom, without any real justification for this categorisation.
The operator noted that previously ICASA had not considered it to be an established SMP, as the authority had never before requested Chart of Accounts and Cost Allocation Manual (COA/CAM) figures from the operator.
The criteria, as they stand in the draft regulations, explain that established SMPs are those that have a 10% market share holding. The Competition Act suggests using a 35% market share criteria; however, Cell C indicated a preference in its written submission that the European Union uses a 25% market share criteria.
Cell C argued that the criteria being used was arbitrary and legally incorrect, because despite having the required market share, the operator does not have pricing power, either in the wholesale market or in the retail interconnect market.
Should the criteria remain as it is, Cell C will be forced, together with Vodacom and MTN, to drop it's interconnect rates to 65c per minute from today, to 50c in 2011, and to 40c from July 2012.
However, if the market share requirement is changed, Cell C would not qualify as an established SMP and would instead be treated as a new entrant.
ICASA hit back, saying the Electronic Communications Act requires the authority to define relevant markets and identify the players' SMP status so as to impose appropriate pro-competitive remedies.
“We have made a determination that everybody has significant market power on their networks in terms of terminating calls, and as a result, everyone should be subject to pro-competitive measures,” noted the authority.
“However, we came to the conclusion that it is not everyone who is in a position to exercise market power so we made that differentiation in the market share criteria,” conceded ICASA.
What Cell C is contending is the criteria which ICASA has used, continued the authority. “We used market share value, as well as the previous licensing regime as the criteria. The onus is now on Cell C to indicate what appropriate criteria we should be using,” suggested the authority.
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