South Africa: MTN, Telkom butt heads over fees

Telecoms

MTN and Telkom, which recently signed a cellular roaming agreement, are facing off in a dispute over wholesale mobile termination rates. Telkom, which is due to launch its own mobile network within the next couple of months, wants to charge MTN — and presumably other operators — 93c/minute to carry calls onto its new network.
The details of Telkom’s proposed interconnection fee were revealed at a hearing held on Wednesday morning in front of the Independent Communications Authority of SA’s complaints and compliance committee.The fixed-line giant wants MTN to pay 93c to terminate calls on its new mobile network, arguing that any less would be unsustainable to Telkom.
However, MTN is not happy about the idea and negotiations between the parties have broken down. Telkom took the matter to the complaints committee, slamming MTN for dragging its feet in the negotiation process. Telkom argues that MTN is being disingenuous and is deliberately slowing down the pace of the discussions. It says MTN is “bleeding Telkom financially”.
However, MTN has hit back, saying Telkom’s request to charge 93c/minute for termination is unreasonable. “The rate Telkom is asking for is unreasonable and will have an impact on MTN,” according to the cellular operator’s submission to the complaints committee.
Telkom is seeking a higher rate for termination than the fees charged by other mobile operators. MTN, Vodacom and Cell C voluntarily reduced the peak-time interconnection rate to 89c/minute in March, from R1.25/minute previously.
The telecommunications regulator is in the process of creating new regulations that could result in the operators being forced to cut the rates again, to 65c/minute, and eventually to 40c/minute. Telkom was never party to the mobile rate cut discussions that took place earlier this year, and was therefore not asked to comply with the prices.
If Telkom wins the current dispute, MTN will have to pay it 4c/minute more in peak times than what Telkom will pay MTN for calls between their networks. A lawyer representing MTN at Wednesday’s proceedings says there is no way to know if the 93c Telkom proposes to charge is based on costs and has called for the committee to give it more time to present evidence.
The committee has agreed to give MTN more time, and both companies will have to present arguments in the form of affidavits over the next few weeks. A second set of hearings will take place at the end of September.