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COSATU: Statement by the Congress of South African Trade Unions, welcomes cut in cell-phone rates (02/04/2014)

COSATU: Statement by the Congress of South African Trade Unions, welcomes cut in cell-phone rates (02/04/2014)

2nd April 2014

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/ MEDIA STATEMENT / The content on this page is not written by Polity.org.za, but is supplied by third parties. This content does not constitute news reporting by Polity.org.za.

The Congress of South African Trade Unions welcomes the ruling by the High Court that MTN and Vodacom must immediately cut their interconnection fees for mobile operators by half.

Interconnection fees, officially known as mobile termination rates (MTRs), are the fees that cell-phone networks charge each other for calls made between them. The order compels Vodacom and MTM to reduce their MTRs from 40c a minute to 20c a minute, while Cell-C and Telkom Mobile and other smaller companies, will still be allowed to charge 44c a minute.

This ruling came despite the court finding in favour of MTN and Vodacom and declaring that the new regulations introduced by the Independent Communications Authority of SA (Icasa) were unlawful “on more than one ground”, under the Promotion of Administrative Justice Act.

Icasa`s proposed new rates were invalid because they had not followed the proper process. The court gave them six months to review the new rates and regulate the process in accordance with the law.
Icasa has been trying to drive MTRs down to a level based on the actual cost of interconnection and thus cut costs for consumers and create a more competitive environment, by making the big companies, Vodacom and MTN, drop their rates faster than the smaller ones like Cell C and Telkom Mobile, through “asymmetrical rates”.

Judge Haseena Mayat agreed that the regulations were “irrational and arbitrary”, but conceded that Icasa was burdened with the difficult task of promoting competition in the market place and making calls more affordable.
The market for cell-phones has exploded in the last 20 years and they have become the main medium of communication for millions of South Africans. MTM and Vodacom were able to exploit their former duopoly position to make massive profits at the expense of both consumers and competitors companies.

In the year ending December 2013, Vodacom made a R13.2 billion profit, a rise of nearly 30% on the previous year.
The “Africa Prepaid Mobile Price Index 2012: South Africa” report by Research ICT Africa showed that South Africa ranks poorly for prepaid mobile telephony affordability when compared to other African countries, ranking 30th out of the 46 African states included in the report.

It found that “South Africa is now far behind countries where the regulator, unlike in South Africa, has enabled competition by enforcing cost-based mobile termination rates… Mobile prices are cheaper in over 30 African countries than they are in South Africa with prices in Kenya, Mauritius, Egypt and Namibia only a fraction of the price of even the lowest priced services in South Africa”.

This is further evidence of the lack of genuine competition in many sectors of the South African economy and explodes the myth that we have a “free market economy”. The cell-phone MTR saga adds to the list of proven cases of anti-competitive practices already uncovered by the Competition Commission in the dairy, bread and construction sectors.
The main victims of these cases of collusion and price-fixing are the poor consumers and emerging businesses, which are both exploited by big, often foreign-owned, monopolies. At lease the ruling on Vodacom and MTM is a small victory and we insist that the cut in MTRs must be fully passed on to the consumers. - See more at: http://www.cosatu.org.za/show.php?ID=8601#sthash.rTvRKBQZ.dpuf
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