Telkom refuses to reconsider new tariffs

By Phillip de Wet for Telkom
Johannesburg, 11 Dec 2001

Telkom missed the deadline to re-submit the tariff increases it plans to implement in January and could see itself end up in court because of it.

The Independent Communications Authority of SA (ICASA) requested that Telkom make a new tariff filing after communications minister Ivy Matsepe-Casaburri approved regulations which severely limit the freedom the company has to increase its rates.

But Telkom yesterday refused to do so, taking on not only ICASA, but the minister in the process.

The company issued a statement requesting that ICASA withdraw its request for a new filing and calling the regulations enacted by the minister "invalid" and "defective".

"Telkom reiterates that it has already appropriately and correctly notified ICASA of its 2002 tariffs on 14 November 2001," the company said.

Those tariffs, Telkom says, will see the average residential user pay 7.2% more, and large corporate clients pay 2.2% more.

However, using the same figures, ICASA calculates that the increases amount to 23.9%.

Telkom also said it was in discussions with ICASA "with a view to remedy these defects such that new regulations can apply in 2003".

The company believes that at the time of its original filing there were no regulations binding it, as the previous rate regime had lapsed and the subsequent regime had not been officially recognised by the minister.

As such, it said, it was free to flout both the previous and planned regulations by increasing the rates on its basket of exclusive services by 5.5%, significantly higher than allowed under either set of regulations.

ICASA has to date refused to comment on the latest developments, but said it would issue a statement on the matter in time.

However, it seems likely that the matter will go to court, with the regulator applying for an interdict to prevent the increases.

Lisa Thornton, a lawyer specialising in telecommunications regulation who has long followed the issues surrounding Telkom and the regulator, says ICASA has a clear right to disapprove of new tariffs should they be in breach of any law or not within the formula set out by the regulator. In such a case, she says, a law-abiding entity would either abide by the regulator`s decision or go to court to challenge it.

"If Telkom chooses to ignore the law and ignore the enforcing agency, then ICASA has a number of ways to deal with the situation," she says. These include issuing a cease-and-desist order, imposing fines, or even as a last resort revoking the company`s operating licence.

Thornton also believes there is room for ICASA to make an anti-competitive finding on the tariffs, because of the influence they could have on the rest of the industry.

However, Telkom could still ignore the sanctions imposed by the regulator as it has been known to do in the past.

"The only practical solution is then for ICASA to go to court," she says. "If ICASA gets an urgent interdict to prevent the increase and Telkom ignores a court order, then they`re in the realm of contempt of court and all the relevant sanctions would apply."

The regulator, although no stranger to courtroom brawls with Telkom, is thought to be loath to enter another protracted legal battle, but industry watchers say it will have no choice but to do so if it is to retain any credibility.