Cell C faces competition complaint

Wireless application service providers have resolved to lodge a complaint against Cell C at the Competition Commission after the mobile operator allegedly offered preferential treatment to Blue Label Telecoms. By Duncan McLeod.

The Wireless Application Service Providers’ Association (Waspa) resolved at its annual general meeting on Thursday to file a complaint against mobile operator Cell C at the Competition Commission over alleged favouritism that industry players say is destabilising the industry.

Waspa members are unhappy that Cell C is allegedly offering Cellfind, a company owned by Blue Label Telecoms, preferential wholesale rates for carrying machine-generated or application-to-person (A2P) SMS traffic. Industry players say this alleged favouritism may stem from the longstanding and close business relationship between Cell C CEO Alan Knott-Craig and brothers Mark and Brett Levy, the founders and co-CEOs of Blue Label.

Mark Levy told TechCentral recently that rival bulk SMS companies were complaining because Cellfind was “giving them a nice run for their money in the marketplace”. He said Blue Label’s bulk SMS business was doing well because of its buying power and ability to “add value to an aggregated offering”, adding that the competition was “healthy” and that rivals needed to “respond with smarter offerings, not by complaining”.

TechCentral understands that Waspa could file the complaint against Cell C as early as next week, despite talks that were scheduled for Friday between its members and the mobile operator. Those talks were set to take place at Cell C’s head office in Sandton.

TechCentral is in possession of a letter penned by Cell C chief legal officer Graham Mackinnon and sent to Waspa chairman Leon Perlman in which he denies that the mobile operator has acted anticompetitively.

“Cell C was conducting a technical trial with one of its Wasps that has been successfully concluded. Any Wasp who sought to conclude an agreement with Cell C during the technical trial phase was advised that until the trial was successfully concluded, Cell C could not take the risk to its network and its business of rolling out a technical solution more widely,” Mackinnon says in the letter.

“Following the technical trial, Cell C has decided to implement a new commercial model for Wasps,” the letter continues. “The terms of this commercial model will be applied in a uniform manner.”

Mackinnon suggests, too, that Waspa is being used as “a vehicle by certain Wasps to advance their own interests”.

“Cell C does not consider there to be any merit in the allegations of anticompetitive activity on its part and will vehemently resist any action that Waspa may bring in this regard.”

But BulkSMS MD Pieter Streicher told TechCentral two weeks ago that Cell C was offering Cellfind something it wasn’t offering other wireless application service providers (Wasps): the ability to send and receive messages to and from any operator using the mobile provider’s network. Other players don’t enjoy this benefit.

“It’s not just about the preferential rate; it’s also about offering additional features like cross-network A2P messages,” Streicher said.

According to Streicher, the Electronic Communications Act requires that service providers all be charged the same wholesale rate.

On Friday, in reply to questions from TechCentral about unhappiness among Waspa members, Knott-Craig said that Cell C was in the process of implementing a new commercial model for Wasps.

“We have invited them to negotiate revised commercial agreements for A2P [messages] to give effect to the new commercial model.”

Knott-Craig said this new model took into account the fact that Cell C has been “pressured into implementing SMS interconnection rates”.

“While Cell C has conceded to interconnect rates on A2P messaging, since these do have a different cost structure, the company has flatly refused to implement person-to-person SMS interconnect rates, which would have increased the cost to consumers.”  — (c) 2013 NewsCentral Media

• See also: Angry Wasps attack Cell C