Data costs to go down as Mascom loses case
Local leading telecommunications giant, Mascom wireless Botswana has lost with costs a case in which they were challenging the lawfulness of a directive promulgated and issued by Botswana Communications Regulatory Authority (BOCRA) to regulate Mobile Termination Rates (MTR).
MTR are the wholesale rates per minute that operators charge each other for voice calls that terminate in their respective networks, but that originate from one of the other operator’s networks. For example if a Mascom mobile telephone customer of makes a voice call to Orange customer, Mascom has to pay Orange for enabling the Mascom customer’s call to be connected to the Orange customer’s mobile telephone device via Orange network.
The operators settle the net fees payable (calculated with reference to the prescribed MTR) on a regular basis through a clearing house system. MTR’s are a component of the cost (to operators as well as their customers) of the off-net calls referred to in the directive.
This consequently means mobile network users will see a substantive reduction in the cost of making calls particularly across different networks. Mascom complained that the level of the MTRs set out in the Draft Final Report were too low.
The issues as presented by Mascom sought to question whether BOCRA – in issuing regulatory Directive No 1 of 2017, on the 24th March 2017, determining charges that mobile network operators have to charge each other for network interconnections – acted in accordance with its statutory obligation to take regulatory decisions in an open, transparent, accountable, proportionate and objective manner.
Mascom also questioned whether BOCRA acted duly in terms of its common law duty, arising under public administrative law, to act fairly and in accordance with the legitimate expectations it had created with the operators that it would, regarding the charges in casu, complete the consultation process in which it was engaged with the operators .
On the 24tth of March 2017 BOCRA issued Directive No 1 of 2017, which inter alia, set MTR rules that were to apply from the 1st June 2017 and further directed the operators (Mascom, BTC and Orange) to review their prices to remove the Off Net Mobile voice calls by the 1st June 2018.
The stated purpose of the said Directive was to implement the final recommendations of the 2016 Cost Model and Pricing Framework Study. The said Study was conducted by a United Kingdom firm of consultants named and styled Interconnect Communications Ltd. The said final report was preceded by an interim report in March 2016 and a Draft Final report in September 2016.
On 15th June 2016, BOCRA held a collective meeting with Mascom, Orange and BTCL, whereat a presentation on the project status was given to the operators. On September 2016, BOCRA issued the Draft Final Report, which set out preliminary results of the study. The consultants on the 26th of September 2016 made a presentation to stakeholders, based on the draft Final report. All stakeholders including Mascom were afforded an opportunity to make representations and Mascom obliged through its written representations on the 24th October 2016.
It is in these representations that Mascom complained that it had not been furnished with full access to the cost model for purposes of verifying and validating the costs results and to provide a complete and well considered submission to the report. Mascom then proceeded to make further representations on the draft final report and further requested a further opportunity to engage with BOCRA. Mascom complained that the level of the MTRs set out in the Draft Final Report were too low.
On the 2nd November 2016, BOCRA updated the Draft Final Report and came with the Draft Final Report (version 13). More engagements and consultations followed in January where after Mascom still raised concerns but on the 6th of March 2017 BOCRA Board adopted the final report nonetheless and modified the recommendation of a three-year glide path, adopting a two-year glide path.
It was the reduction from the 3 years to 2 years that formed Mascom’s casus belli, hence its review application to the High Court.
According to Mascom at all relevant times during the consultation process, the consultants and BOCRA executive management team conveyed to the operators that a reduction in the MTRs will be implemented over a three-year glide path period.
The company argued that the recommendation from the consultants was a three-year glide path period; and further that BOCRA Regulatory Committee had accepted such recommendation, at its meeting on 30th January 2017.
The reductions from the said three-year glide path period, according to Mascom, was effected by BOCRA Board without any prior notice or consultation and further that it legitimately expected that a three-year glide path would be implemented and that if BOCRA was minded to vary the same, it should have given Mascom a further hearing.
“In short, Mascom contend that the consultation process was inchoate and incomplete,” Justice Leburu noted.
Leburu, however, pointed out that Mascom although attacking the entire process leading to the issuance of the said Directive , is not seeking to put aside the entire directive but its sharp-pointed arsenal is directed at paragraphs 11.2 and 11.3 of the said Directive dealing with MTRs.
Paragraph 11.2 illustrated costs oriented mobile termination rates to apply from 2016 gliding down to June 2017 and then June 2018 i.e. outlining the 2016 termination rate of 0.295 would reduce to o.220 from 1st of June 2017 and finally to the final rate of 0.130. Paragraph 11.3 directed all Public Telecommunications Operators including Masco , Orange Botswana and BTCL to review their prices to remove the off net premium for all off net mobile voice calls by 1st June 2018 and file for approval with the authority by 30 April 2018. The paragraph further state that on removal of the off net premium, PTOs shall not alter any pricing component of the off net price or ON Net price in an attempt to make up for reduced off net prices.
The Judge in his wisdom endorsed the Directive as being legal, proper and rational and applauded BOCRA for putting the interests of consumers above itself as an organisation in pursuing its mandate as a regulator.
In his own words at paragraph 77 the Judge said “As gleaned from the BOCRA Board Minute, the Directive was issued for the public good; particularly the reduction the MTRs rates as well Off-Net and On-Net tariffs. The assertion by Mascom that the consultation process was incomplete and inchoate, before the Directive promulgated in my view, is bereft of substance.”