Least-cost routing operator Orion Cellular is awaiting Telkom`s response to a complaint, filed before the Competition Commission, that the public utility is deliberately trying to squeeze it out of business.
Orion Cellular director Don Tredoux says his company filed a complaint with the Competition Commission, and, in what is believed to be the first of its kind for the telecommunications sector, has gone directly to the Competition Tribunal to obtain interim relief from what it claims are unfair practices by Telkom.
Telkom and Orion Cellular are already locked in a High Court battle as the fixed-line operator wants to have Orion`s landline-to-cellphone call device declared unlawful.
The Orion competition complaint accuses Telkom of using predatory contracts that take advantage of its market dominance. Orion says this is part of a two-pronged strategy to eliminate competition in the landline-to-cellphone arena.
The Competition Tribunal is the adjudicator of the competition process and is usually the final stage after the Competition Commission has completed its investigation of a complaint. However, complainants are allowed to go directly to the tribunal should they believe they have a strong enough case proving that their business is being unfairly prejudiced by the dominant market position of a competitor.
Until 2002, Telkom`s market position was protected by legislation. This has since fallen away, but government`s failure to award a second national operator fixed-line licence has left it in a default monopoly situation.
According to Tredoux, the complaint is that Telkom is specifically targeting Orion in its corporate contracts that offer a bulk discount to large users of its range of services including short- and long-distance calls, and data and fax transmission services.
"The contracts that Telkom is offering is affecting our business in an unfair manner and we really want the competition authorities to look into the matter - as it directly affects our business."
Tredoux says the unusual step of going to both the Competition Commission and the Competition Tribunal at the same time is because the commission can take between nine months to a year to investigate the matter and he feels this is too long.
Least-cost routing takes advantage of a pricing mechanism for landline-to-cellphones that was initially introduced to protect Telkom`s long distance business. However, a device, often called "primicell", that can be installed on PABXs by companies such as Orion Cellular, can help companies save up to 40% on their costs by billing the calls as cellphone-to-cellphone, which is a much cheaper rate. The use of this system causes a "private number message" to appear on a cellphone rather than the landline number where it originates from.
Telkom has made several attempts in the past to squash the system and is currently locked in a High Court battle that includes Nashua, Orion and MTN. Vodacom, of which Telkom owns 50%, has been excluded.
According to Orion Cellular`s complaint, Telkom is offering Orion`s customers a total telephony package of services at a discount in order to drive Orion out of this market, in return for the customers handing their cellular business back to Telkom.
"The package is attractive to the customer because the overall charge is less, but costs Telkom little or nothing because the money it loses is recouped from the proceeds of the lucrative landline-cell interconnection business it wins from Orion," the complaint states.
Orion believes Telkom`s exclusionary objective is evident in the way in which the package is being marketed as it is being offered exclusively to customers who are under an obligation to Telkom to keep it absolutely secret or forego the benefits it offers. The Telkom offer must be taken up within a month or it lapses (either in terms or by reason of options to renew) and the offer envisages a contract of very long duration - upwards of five years.
Tredoux is hoping the competition authorities will find in favour of the smaller company as they are inclined to do. "However, the confusion over Telkom`s protected status means that nothing is certain."
Attorneys Evan Scop filed Orion`s case with the competition authorities on 16 April.
Telkom says its reply was due to be filed this week, but has been delayed until next week. Attorney firm Brink Cohen Le Roux Roodt is representing the utility.
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