ID President Patricia de Lille has received a response from Shan Ramburuth, the Competition Commissioner just 6 days after she lodged a complaint over the high costs of mobile phone calls in South Africa.

In her letter [below], Ms De Lille called on the Commission to investigate, ‘in terms of the Act, whether the operators, particularly the dominant players, are acting anti-competitively or are guilty of any prohibited practices.'

De Lille says she is ‘pleased by the speedy response of the Commissioner,' who wrote that "The Competition Commission shares your concerns about the high costs of telecommunications in South Africa and indeed we have initiated a few investigations in the sector.

"I would be happy to brief you on these cases should you wish," the Commissioner continues. "Regarding your specific request, I have forwarded this to the Commission's Enforcement Division where it will proceed in the normal course. We will communicate the outcome of the Commission's decision to you."

De Lille welcomed the news that the Commission had already initiated investigations in the telecommunications sector and says she will be ‘setting up a meeting with the Commissioner in the next few weeks.

‘The Competition Commission has over the past few years aggressively taken on price fixers involved in anticompetitive behaviour and it is up to us as citizens to give the Commission even more teeth,' says De Lille.

‘Ordinary South Africans can no longer be expected to bear the brunt of the actions of those that have scant regard for the daily economic struggles of our people.

From the office of ID President Patricia de Lille
patriciadl@id.org.za

The Commissioner
The Competition Commission
Private Bag X23
Lynwood Ridge 0040

Dear Commissioner

INITIATION OF A COMPLAINT: MOBILE (CELL) PHONE OPERATORS

South Africa has some of the highest mobile telephone call costs in the world, and I believe there are sufficient alarming markers to warrant an urgent investigation by The Competition Commission, in terms of the Act, as to whether the operators, particularly the dominant players, are acting anti-competitively or are guilty of any prohibited practices.

This is my formal request for the initiation of a complaint given that:

1. South Africa is the least competitive mobile market amongst its peer group countries which include Brazil, Chile, Korea, India and Malaysia.
2. South Africa apparently has high penetration of cell phone handsets but low monthly usage (i.e. - low monthly calling minutes) due to the high costs of calls. This effectively leaves low income South Africans marginalised when it comes to telecommunications.
3. South Africa's mobile operators are charging approximately 1000% more than Indian mobile operators.
4. Interconnection rates increased 500% over a 12 year period ending in 2007 and 515% from 1998 to 2001.
5. South Africa's interconnection rates are among the highest on the African continent.
6. High interconnection rates stifle competition. Cell C has struggled to make substantial market penetration and so South Africa is dominated by two operators: Vodacom and MTN.
7. Vodacom and MTN are possibly "dominant firms" in terms of the Act - in that they are considered to have 90% of the market share (55% and 35% respectively).
8. Dominant operators are able to use high interconnection rates as a means to disadvantage their smaller competitors.

It is my request that the Commission conducts an investigation that includes, amongst other possible contraventions:

a. The possible collusion between the dominant operators, particularly with regards to interconnection fees.
b. Whether the substantial increases in the cost of interconnection during the period immediately prior to the launch of Cell C was aimed at limiting Cell C's market penetration and resulted in inflating South Africa's retail cost of calls.
c. Whether the operators have acted, or are acting, anti-competitively or in any other way in contravention of the Competition Act.

I believe that South Africans have long suffered poor competition and exorbitant telecommunications costs, unnecessarily, and that it is vitally important that this be investigated by the Competition Commission urgently. Our economy and all South Africans, but especially the poor, are affected by this.

Yours faithfully

PATRICIA DE LILLE MP
ID President