Telkom drops LCR appeal

Least-cost routing (LCR) providers have welcomed the news that Telkom has dropped its appeal against the ruling that found LCR to be legal.

Telkom reached a settlement with Nashua Mobile and 11 parties, in terms of which Telkom accepts a Pretoria High Court ruling that LCR is legal.

The matter has been before the court for over three years, having started as Telkom SA vs Nedtel (Nashua Mobile`s former name), Vodacom and MTN, and evolved into a complex proceeding that also named Cell C and a number of service providers as respondents.

Telkom had argued, based on interpretations of parts of the Telecommunications Act and the licence agreements that govern the country`s cellular operators, that LCR was an illegal avoidance of the Telkom network.

Telkom had applied for leave to appeal against the ruling, passed down in October 2003, in which the court found that LCR is legal and always has been. Telkom was given leave to appeal in December 2003, but has decided not to pursue this.

The matter is now officially over and the judgment of the Pretoria High Court stands.

Welcoming the move, the first respondent in the case, Nashua Mobile, said the settlement secured the future of SA`s R2 billion a year LCR industry, and cleared the way for companies to take advantage of LCR without concerns that it was a legal grey area.

"We are pleased that Telkom has decided to accept the court`s judgement that LCR services are in no way illegal and have never been," says Mark Taylor, MD of Nashua Mobile. "Our own legal team is of the opinion that the judge`s original ruling would have been difficult to argue against, so a settlement was in the strongest interest of all parties concerned.

"We are confident the settlement will rapidly allow many organisations to take advantage of the full spectrum of LCR services, with an immediately positive impact on the industry, the national economy and consumers at virtually every level," says Taylor.

"Savings on SA`s notoriously high telecoms costs immediately help to make local business to become more globally competitive."

Jacques du Toit, a director at Orion Telecom, another of the respondents in the case, says the case has been a legal battle since 1996.

"In the original judgement handed down in April last year, the judge ruled that the implementation of LCR was 100% legal, but acknowledged that the magnitude of the case for the industry was such that Telkom should be allowed leave to appeal," he says.

"The judge also ruled that while their appeal was being considered, Telkom would be entitled to its own opinion and could continue with its policy of preventing its clients from installing LCR technology.

"Now that Telkom has withdrawn its appeal, it will no longer be able to claim that LCR is illegal and will be forced to allow even its own clients to include LCR options."

Du Toit says that anybody with lingering doubts about the legality of LCR technology can now investigate options without fear of being threatened with contract termination or the suspension of services.

Anton Potgieter, MD of LCR provider TelePassport, also welcomed the news. "This is more great news for South African telecoms users and the LCR industry in particular, in a year that just seems to be going from strength to strength for telecoms.

"While Telkom managed to put a lot of corporates off using LCR, their case against it never really made much sense, and one can`t help but get the feeling that it was initiated more for delaying and discrediting tactics than from a bona fide belief that LCR would or could be outlawed."

Potgieter describes LCR as nothing more than "the judicious use of existing, legal, licensed telecommunications providers".

"With the last stumbling blocks out of the way now, the South African telecommunications industry will certainly mushroom with new providers, new services and better costs. When VOIP [voice over Internet Protocol] can deliver true cost savings, even more choices will be available, and South African corporates, consumers and the economy will be the winners," he says.

Telkom confirmed the matter had been put to rest, saying this was "purely on strategic grounds".

Related story:
Telkom applies for leave to appeal LCR