457 .457 in the high court of south africa gauteng local division, johannesburg ... contents of this

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  • 457 IN THE HIGH COURT OF SOUTH AFRICA

    GAUTENG LOCAL DIVISION, JOHANNESBURG

    In the matter between:

    MOBILE TELEPHONE NETWORKS (PTY) LTD

    and

    THE CHAIRPERSON OF THE INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA

    THE INDEPENDENT COMMUNICATIONS AUTHORl,TY OF SOUTH AFRICA

    VODACOM (PTY) LTD

    CELL C (PTY) LTD

    TELKOM SA LTD

    NEOTEL(PTY)LTD

    CASE NO: 2014/04699

    Applicant

    First Respondent

    Second Respondent

    Third respondent

    Fourth Respondent

    Fifth Respondent

    Sixth Respondent

    TWENTY-FIVE FURTHER RESPONDENTS Seventh to thirty-first respondents

    And in the matter bet\Neen:

    VODACOM (PTY) LTD

    and

    THE CHAIRPERSON OF THE INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA

    THE INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA

    MOBILE TELEPHONE NETWORKS (PTY) LTD

    CASE NO: 2014/06701

    Applicant

    First Respondent

    Second Respondent

    Third Respondent

    CELL C (PTY) LTD

    TELKOM SA SOC LTD

    NEOTEL (PTY) LTD

    33 FURTHER RESPONDENTS

    458

    Fourth Respondent

    Fifth Respondent

    Sixth Respondent

    Seventh to thirty~ninth respondents

    FIRST AND SECOND RESPONDENTS' ANSWERING AFFIDAVIT: PART A

  • 459

    TABLE OF CONTENTS

    THE CALL TERMINATION PROCESS AND ITS IMPLICATIONS ........................... 7

    AN OVERVIEW OF ICASA'S POSITION IN RELATION TO PART A .................. 11

    THE NATURE OF THE PROBLEM SOUGHT TO BE RESOLVED BY THE 2014 REGULATIONS AND ICASA'S POWERS TO MAKE THOSE REGULATIONS .... 21

    The regulatory framework.-- ..................... .

    The objects of the EGA and the role of /CASA

    International obligations.

    .. 21

    ........ 25

    ........ 28

    The background to the publication of the Gaff Termination Regulations, 2014 ..... 32

    THE QUESTION OF A PRIMA FACIE RIGHT ......................................... 43

    THE PROCEDURAL FAIRNESS AND ULTRA VIRES ATTACKS ON THE 2014 REGULATIONS ....................................................................... 44

    Introduction .... .............. 44

    ICASA's early requests for firm~specific information from licensees ..................... 49

    Cell G's request to suspend the 2010 regulations...... .. 57

    The cost to communicate programme ......... ..

    The 2013 Call Termination Questionnaire

    MTN's responses to the 2013 questionnaire .....

    Vodacom's responses to the 2013 questionnaire .....

    The 2013 Draft Call Termination Regulations ..... .

    . .. 60

    .... 62

    ............................ 65

    ... 66 . .. 67

    Basis of determination of termination rates in the draft regulations ............ . ...... 67

    .. 68 Basis of determination of asymmetry in the draft regulations .....

    The decision to hold one-on-one meetings ........ .

    The MTN one-on-one meeting .......... .

    The Vodacom one-on-one meeting ............ .

    The Cef! C one-on-one meeting.

    MTN's written submissions ............. .

    Vodacom's written submissions .... .

    Cell G's written submissions .............. .

    . .... 69

    ................ 71

    " ............. 73

    .. 74

    .74

    . ........ 76

    "77

    The 2014 Regulations...... ................ . 77

    THE SUBSTANTIVE ATTACKS ON THE NEW REGULATIONS ........................... 78

    460

    The principles behind reducing termination rates through regulation and the determination of the final base price.. ..................... . ........................ 78

    The adoption of different glide paths for small and large operators resulting in asymmetric termination rates.. .......................................... . .. 84

    The determination of the periods of the glide paths and the rates to be charged by smalf and large operators during those periods.. . ...... 87

    The detennination of who benefits from the more gradual glide path ......... ., ....... 89

    The provision for indefinite asymmetry after April 2017 ........ . ""' 93

    The determination of rates and a glide path for tennination on a fixed fine network .............................. .. .... 94

    THE IMPACT OF THE RELIEF SOUGHT ON THE SEPARATION OF POWERS .. 95

    THE QUESTION OF IRREPARABLE HARM TO MTN AND VODACOM ............... 97

    MTN and Vodacom wilf continue to make profits on call termination.......... . .. 99

    The scale r.>fthe calf termination rate reductions is not unprecedented ............ 104

    The harm relied on is speculative and untenable... . .... 105

    Alleged impacts of asymmetry on market structure and the businesses of MTN and Vodacom are overstated and wif/ not cause irreparable harm ..................... 113

    THE ISSUE OF THE BALANCE OF CONVENIENCE .................................... 120

    AD SERIATIM RESPONSE TO THE FOUNDING AFFIDAVIT OF MTN ............... 124

    AD SERIATIM RESPONSE TO THE SUPPLEMENTARY AFFIDAVIT OF MTN . 157

    AD SERIATIM RESPONSE TO THE FOUNDING AFFIDAVIT OF VODACOM ... 160

    CONCLUSION .......................................................................................... 183

  • 461

    I, the undersigned,

    NOMVUYISO BATYI

    do hereby make oath and say:

    ! am a councillor of the !ndependent Communications Authority of South Africa

    {"ICASA"), the second respondent in these applications. I was appointed to the

    Council of ICASA in accordance with the procedures stipulated in section 5 of

    the l1

    ndependent Communications Authority of South Africa Act 13 of 2000

    ("ICASA Act").

    2 I am duly authorised to depose to this affidavit on behalf of the first and second

    respondents in each of these applications.

    3 I was involved on behalf of the ICASA Council throughout the process leading

    to the enactment of the Call Termination Regulations, 2014 ("the 2014

    Regulations"). Accordingly, save where appears otherwise from the context, l

    have personal knowledge of the facts that appear in this affidavit. Where

    necessary confirmatory affidavits are filed together with this affidavit. The

    contents of this affidavit are to the best of my belief true and correct

    4 Two mobile operators - Mobile Telephone Networks (Pty) Ltd (UMTN") and

    Vodacom (Pty) Ltd ("Vodacom") - have each instituted urgent applications

    before this Court concerning the 2014 regulations. MTN and Vodacom seek:

    4.1 In Part A of their applications, orders suspending the operation of

    5

    "\62

    numerous regulatlons contained in 2014 Regulations, pending the final

    outcome of Part B; and

    4.2 In Part B of their applications, orders reviewing and setting aside

    numerous regulations contained in the 2014 Regulations.

    Given that Vodacom seeks to have its application consolidated with MTN's

    application (the first and second respondents do not oppose this) and given that

    there is a measure of overlap between the two applications, l deal with both

    appl!cations in this answering affidavit.

    6 This answering affidavit has been prepared under considerable time pressure.

    It is also specifically confined to dealing with Part A of the MTN and Vodacom

    applications. I specifically reserve JCASA's rights to deal with all aspects of the

    founding papers in detail, in due course, should the need arise.

    7 In what follows, I deal with the following issues in turn:

    7.1 An explanation of the call termination process;

    7.2 An overview of ICASA's position in relation to Part A of this matter;

    7.3 The nature of the problem sought to ~e resolved by the 2014

    Regulations;

    7.4 The question :if a prima facie right, which includes ICASA's response

    to:

  • 463

    7.4.1 the procedural attacks on the regulations by MTN and

    Vodacom;

    7.4.2 the substantive attacks on the regulations by MTN and

    Vodacom;

    7.5 The impact of the relief sought on the separation of powers;

    7.6 The question of irreparable harm to MTN and Vodacom; and

    7.7 The question of the balance of convenience.

    THE CALL TERMINATION PROCESS AND ITS IMPLICATIONS

    B

    9

    This matter concerns the 2014 Regulations made by !CASA regarding call

    termination rates.

    The 2014 Regulations were made by ICASA in terms of its powers under

    section 67 of the Electronic Communications Act 36 of 2005 ("the EGA"). I deal

    with the nature and ambit of section 67 of the ECA below.

    10 It is important to begin, however, by properly '-:lnderstanding the nature of call

    termination,

    11 There are two kinds of mobile calls made by consumers - "off-net" calls and

    "on-net" calls.

    11.1 "Off-net" calls occur when a consumer from one network (say MTN)

    464

    makes a call to a consumer on another network (say Cell C).

    11.2 "On-net'' calls occur when a consumer from a network (say MTN)

    makes a call to a consumer on that same network.

    12 In the context of off-net calls, call termination is a service provided by one

    mobile operator to another to facilitate calls between consumers who are

    subscribers of the various mobile operators.

    13 By way of example, when a consumer who subscribes to MTN calls a

    cons1

    umer who subscribes to Cell C, the call originates on MTN's network but

    terminates on Cell G's network, Cell C is therefore required to collect the call at

    a point of interconnection and then direct it to its consumer's handset

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