South African mobile service provider Cell C formally lodged a complaint on Tuesday with the Competition Commission against the dominant incumbent mobile operators, MTN and Vodacom, for anti-competitive conduct.
The crux of the complaint relates to the manner in which the dominant incumbents discriminate between their on-net and off-net effective prices, which has a dramatic and direct impact on smaller operators’ ability to acquire new customers.
“The two dominant incumbents discount their effective on-net prices substantially while charging a premium for their customers to call off-net. This amounts to discriminatory pricing and is without doubt anti-competitive when adopted by dominant operators,” says Cell C CEO Alan Knott-Craig.
Cell C has been fiercely competing on all fronts with the ultimate aim of driving down prices for the consumer, which is also beneficial for Cell C. “Customers that call off-net are being penalised often without them realising it. With number portability, customers don’t always know if they are calling on- or off-net anymore, so they don’t actually know what rate they are paying,” says Knott-Craig.
In many mobile markets around the world, regulators are opposed to differential on-net and off-net pricing, and in some instances, dominant mobile network operators are facing stiff fines for this kind of discriminatory pricing, which locks in customers and prevents switching.
At the end of 2012, the French Competition Authorities imposed a fine on Orange France and SFR for €183.1 million in total for anticompetitive practices in the mobile telephony sector, specifically for discriminatory on-net pricing.
Papua New Guinea, in a bid to prevent market failure, introduced regulations that prevent operators from offering discriminatory off- and on-net pricing in 2013.
Also in 2013, the Nigerian regulator called on MTN Nigeria to introduce flat rates (where on-net tariffs are the same as off-net tariffs) as 85% of MTN’s traffic is on-net in that country.
All of these cases support Cell C’s position in its Competition Commission complaint.