Cell C

ICASA reduction in MTR’s- some economic issues

15 June 2010

Dr. Nicola Theron Johann van Eeden Willem Boshoff

Table of Contents

1 2 3

Introduction ............................................................................................................. 1 Market Analysis ....................................................................................................... 3 Does Cell C have Significant Market Power (SMP) or Established Significant

Market Power (ESMP)? ................................................................................................. 5

3.1 3.2 3.3 3.4 3.5 SMP ............................................................................................................................................... 5 Established Significant Market Power (ESMP) ............................................................................. 9 Countervailing Buyer Power (CBP) ............................................................................................. 11 Consistency of Decisions ............................................................................................................ 15 Conclusions on SMP/ ESMP....................................................................................................... 16

4

Pro-competitive Remedies ................................................................................... 17

4.1 4.2 4.3 ICASA‟s Structuralist Model of Competition ................................................................................ 18 A Standard Microeconomic Model of Mobile Competition .......................................................... 19 The Case for Lower MTRs .......................................................................................................... 19

5

Why Asymmetry will be a Better Market Outcome ............................................. 21

5.1 5.2 5.2.1 5.2.2 5.2.3 5.2.4 5.3 5.3.1 5.3.2 5.4 International Precedent...