Court records detail a war of words which has been simmering behind the scenes between Mascom Wireless and Botswana Communications Regulatory Authority (BOCRA) over the reduction of tariffs.
The tension between the regulator and Mascom broke into the open after BOCRA issued a directive on 24th March 2017, giving mobile operators an option to either remove Off-net premium simultaneously with reductions in of mobile termination rates or remove Off-net premium in a shorter period.
Mascom then dragged BOCRA and rival Orange Botswana and bemobile before the High Court.
In his founding affidavit, Chief Executive Officer of Mascom Jose Vieira Couceiro says that it was crucial for BOCRA to complete consultations with Mascom because Mobile Termination Rates (MTR) costs cannot be determined without the input of the operators where a coast model is used.
He said in reviewing the cost model, Mascom picked up a number of errors and provided its comments to BOCRA.
“BOCRA engaged in consultations with Mascom regarding such comments. However, in the middle of such consultations, BOCRA issued the Directive, reliant upon the cost model, yet the Directive was so issued without BOCRA even sharing the final cost model,” Couceiro said.
He argued that Mascom had a legitimate expectation that BOCRA would prior to issuing the directive give access to the updated cost model and share the final report which had taken into account revisions made of the Cost Model.
“It is improper for the simple reason that the consultation regarding the cost model was not completed and the final cost model was not shared when the Directive was issued. There could not therefore have been a final report that took into account the final model revisions,” said Couceiro.
The actions of BOCRA in this regard, he said deviated from the objective of the Communications Regulatory Act (CRA) which enjoins BOCRA to be objective in its decision making process and not give undue preference to any party.
“By not completing the cost model consultations, BOCRA failed to take into account the effect of the results of the cost model on Mascom,” Couceiro argued.
He argued that the key reason for the importance of MTRs is that the level of the MTRs has substantial financial implications for the affected operators. “Therefore, the regulations on MRts in place from time to time must ensure that the MTRs are fair, reasonable and reflect the underlying costs, whilst providing reasonable predictability to the affected operator’s business,” he said.
Couceiro explained that MRTs are the wholesale rates per minute that mobile operators charge each other for voice calls which terminate on the respective networks.
“The wholesale MTRs should reflect the cost of the operators and such wholesale MTRs in fact have substantial effect on Mascom. Mascom is not disputing the use of the cost model as a basis for MTRs,” he said.
Couceiro added that “as has been stated Mascom has in fact made contributions towards the development of the cost model. The crux of the matter is that the process of setting the cost model must be transparent. It constitutes a breach of the CRA when BOCRA seeks to not act openly and transparently in the process of developing the cost model.”
BOCRA’s acting Chief Executive Tshoganetso Kepaletswe accuses Mascom of abusing its dominant market position by distorting its charges through what he called “Club effect”.
“Club effect is where a service provider, normally large operators create distorted pricing such that more and more customers are attracted to subscribing to this network because it offers the cheapest On-Net prices”, explained Kepaletswe.