Are Vodacom and MTN too greedy?

Cell C has launched a marketing campaign with a new video on its YouTube channel which has South Africans sharing their views on MTN’s court application against Icasa’s call terminate rate (CTR) cuts.

Near the start of the video, Cell C asks “What is upsetting South Africans?” and explains the CTR situation as follows:

The national regulator has ordered cellular networks to reduce interconnect rates.

These are the fees that networks charge each other when you make calls from one network to another.

Now, if interconnect rates are reduced this will mean more competition in the industry and ultimately could result in lower prices for you.

However, not every is happy about this.

In fact, one of South Africa’s biggest and most profitable cellular companies is taking the regulator to court to fight this.

Here’s what South Africa had to say.

The video, which is embedded below, goes on to show a number of South Africans expressing their anger and making allegations such as, “It comes down to corporate greed”, and, “Now it’s corruption. It’s not a business anymore, it’s something else.”

Cell C then asks, “Is your network treating you fairly?”

It then suggests that consumers switch to a mobile network that is on their side.

Cell C has also put together a radio ad that rips into MTN over its court action, telling consumers that if they stay on MTN their money could be used to pay for the lawyers trying to stop Icasa’s new call termination regulations:

Cell C has also been posting messages to Twitter and Facebook such as, “Are the giant cellular networks too greedy?”, and, “Do you feel that big cellular networks are making obscene profits?” bearing the hashtag #TalkIsCheap.

Twitter users have already started responding to the campaign, with some voicing support while a few have also used it as an opportunity to complain about Cell C’s network quality.

“Good on you Cell C, shame MTN until they stop the madness,” one user posted.

“#TalkIsCheap shame you might be cheaper but I wish you would jack up your network, I might be paying more but at least I’m always connected,” another responded.

What’s all the ruckus?

The battle between Cell C and MTN stems from the new call termination regulations recently published by the Independent Communications Authority of South Africa (Icasa).

In the new regulations, Icasa outlines a significant reduction in mobile termination rates from its current level of 40c/minute to 10c/minute by 1 March 2016.

It also specifies high levels of asymmetry for smaller operators, which means Cell C and Telkom Mobile would be able to charge Vodacom and MTN more for sending calls to their networks than the larger networks could charge them.

The table below summarises the new CTRs that were set to kick in on 1 March every year until 2017.

Year Mobile termination rates Fixed termination rates
Regulated rate Asymmetry Regulated rate Asymmetry
W0N B0N W0N B0N
2014 R0.20 R0.44 R0.12 R0.16 R0.13 R0.21
2015 R0.15 R0.42 R0.12 R0.12 R0.13 R0.13
2016 R0.10 R0.40 R0.10 R0.10 R0.13 R0.13
2017 R0.20 R0.13 R0.13
W0N: Within Area Code | B0N: Between Area Codes

MTN and Vodacom have expressed unhappiness at the termination rate regulations since Icasa first proposed them in October 2013.

When Icasa made them official during January 2014, both operators threatened legal action, with MTN eventually filing a 399 page urgent application with the High Court.

MTN went on to name Icasa, Icasa’s chairperson, and 29 other industry players as respondents to the application.

To give everyone enough time to respond to MTN’s application, Icasa said it opted to postpone the commencement of its termination rate regulations.

As per the amendments that the regulator recently published, the new CTRs are now set to kick in on 1 April 2014 rather than the beginning of March.

Although Cell C’s campaign appears to be mainly directed at MTN, it’s worth noting that Vodacom also has money on this fight.

Vodacom shied away from answering questions about whether they would join in MTN’s application, saying only that it appears as though Vodacom and MTN have similar concerns.

“We’re obviously not in a position to comment on the merits of their approach,” Vodacom said at the time.

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Are Vodacom and MTN too greedy?