Court name
High Court
Case number
26 of 2011
Case name
MobileTelecommunications Ltd v Namibia Communications Commission and Others
Media neutral citation
[2012] NAHC 94
Judge
Smuts J





IN THE HIGH COURT OF NAMIBIA







REPORTABLE







CASE NO: A 26/2011


IN THE
HIGH COURT OF NAMIBIA





In the
matter between:






MOBILE
TELECOMMUNICATIONS LTD
…............................
APPLICANT


and


NAMIBIA
COMMUNICATIONS COMMISSION
…...........1st
RESPONDENT


TELECOM
NAMIBIA LTD

….......................................
2nd
RESPONDENT


POWERCOME
(PTY) LTD t/a LEO
…..........................3rd
RESPONDENT








CORAM:
Smuts, J


Heard on:
20 March 2012


Delivered
on: 3 April 2012



______________________________________________________________________







JUDGMENT



______________________________________________________________________





Smuts,
J






  1. At
    issue in this review is the legality of the decision made by the
    telecommunications regulator, then the Namibian Communications
    Commission (“NCC”), concerning prices and the pricing
    structure charged by mobile telephone operators.







  1. The
    applicant (“MTC”) is one such operator. It has the
    lion’s share of the market. It initially approached this Court
    for urgent interim relief pending the review of the regulator’s
    decision. The application for interim relief was refused and the
    review has proceeded in the normal course, although the regulator’s
    regard for normality in this context has repeatedly tested the
    limits.







  1. Before
    I refer to the decision which is challenged in these proceedings, it
    may be conducive to clarity to first refer to the factual background
    which gave rise to this application as well as briefly set out the
    statutory framework within which the challenged decision was taken.







  1. The
    regulator (NCC) was established under the Namibian Communications
    Commission’s Act, 4 of 1992 (the Act) which subsequently
    underwent some amendment. The regulator’s functions include
    the power to issue telecommunication licenses and exercise control
    over and supervise the telecommunications industry. Under the Posts
    and Telecommunications Act, 19 of 1992, telecommunication services
    may only be conducted under the authority of a license granted by
    the regulator. Such a license is subject to the restrictions and
    conditions which may be imposed by the regulator generally or in a
    particular case. 1
    The regulator is authorised to impose these conditions generally by
    way of notice in the Government Gazette. 2







  1. The
    regulator’s empowering legislation was amended in 2004 to
    enable it to determine the procedures, fees and conditions relating
    to telecommunication licenses. The regulator was specifically
    authorised to take into account when considering granting a
    telecommunications license matters relating to fair competition and
    any other matter which the Commission considers relevant. 3
    The regulator is also expressly authorised to impose obligations and
    requirements on an applicant for a license regarding its rights and
    obligations relating to interconnection.







  1. Prior
    to the licensing of telecommunications operators brought about by
    the legislation referred to, services of that nature were the
    exclusive preserve of the State which thus had a legislated
    monopoly. One of the considerations which form the basis for this
    prior regime was a governmental imperative to ensure universal
    access to telecommunication services. 4







  1. This
    statutory framework has since changed. After the decision was taken,
    the Act was repealed and the NCC has been succeeded by the
    Communications Regulatory Authority of Namibia (“CRAN”)
    which formally substituted the NCC in these proceedings.







  1. The
    applicant (MTC) had been the sole mobile phone operator in the
    Namibian market from 1995 to 2006. A second operator, the third
    respondent (LEO) was then licensed, although it initially traded
    under a different name. The Act was amended in 2004 to empower the
    regulator to take into account relevant matters relating to fair
    competition when considering the granting of the requisite license.
    The mobile phone market thus transformed from a monopoly carried on
    by the applicant to one which contemplated fair competition and
    other participants. The amendment also brought about the authority
    to the regulator to determine procedures, fees and conditions
    relating to licenses.







  1. In
    the answering affidavit, the erstwhile chairperson of the NCC, Ms
    Beukes-Amiss, referred to the need for regulatory intervention,
    including regulating tariffs in order to create fair competition in
    this context so that new entrants like the third respondent (and the
    second respondent with its mobile offering) would be afforded the
    space to actively participate in the market.







  1. The
    former chairperson also explained certain terms which are, used in
    the mobile phone industry such as a club effect. It occurs where
    offerings are structured so that customers of a network which has a
    large pool of subscribers can benefit from calling and being called
    from that large pool of subscribers. This could have an adverse
    impact upon competition and also create traffic distortion across
    networks and thus negatively impact the consumer. There was also
    reference to cross-subsidisation and tying or bundling with prices
    being set below cost as a strategy for customer acquisition. This
    occurs where the use of one product is conditional upon the purchase
    of a second product or where discounts are offered to customers who
    take a combination of products or services. These strategies would
    not necessarily inhibit competition but could do so depending upon
    circumstances. There was also reference to the concept of predatory
    pricing where an existing operator prevents entrants from gaining
    any reasonable foothold within the market by aggressively charging
    very low prices. That incumbent would then be able to subsequently
    raise prices to recoup lost profits which resulted from such an
    exercise, after repelling its opposition.







  1. It is
    within this context that the regulator supervises the industry and
    exercises its powers with regard to licensing and setting of
    conditions including prices. The statutory injunction to take into
    account fair competition is underpinned by the introduction of the
    Competition Act, 2003. 5







  1. The
    erstwhile chairperson of the regulator stressed that a fundamental
    reason for tariff regulation would be to promote competition which
    is in the public interest and consonant with the values and
    principles set out in the Competition Act.







  1. This
    is statutory context which has given rise to this application in
    which MTC seeks to set aside the decision taken by the NCC as
    published in Government Gazette 36 of 2011. The relevant portion of
    the Gazette is as follows:








All Licencees and providers of public
mobile cellular services shall implement a price cap for off-net call
prices and call prices to fixed-lines to the level of their on-net
prices. Off-net prices and prices for calls to fixed-lines may no
longer exceed those of on-net calls for each product or service.
This
applies for voice and text messages
.







However, rates charged on voice calls between numbers belonging to
the same institution or company, where subscriptions are part of the
same contract (i.e. intragroup tariffs) are exempted from the above
resolution. Intra-group calls shall be classified as internal calls.







The price cap will only have a small negative financial impact
on MTC and LEO since the majority of billable minutes are on-net, but
will be of greater benefit to their customers in providing affordable
services
. The amendment is based on the following reasons:







1. Mobile termination rates were reduced to the cost of an
efficient operator on 1st January 2011. Terminating a call
on another mobile network or on a fixed-line network therefore costs
approximately the same as on the own network.







2. The spirit of the licences granted is fair competition.
Operators are not allowed to engage in any anti-competitive
cross-subsidisation. Without an objective cost difference there exist
no reasons for discriminating in retail prices against other
networks.







3. Club effects which arises when consumers tend to have a
preference for a network with a large pool of subscribers in order to
benefit from the possibility to call and be called at a lesser
calling rate by the largest possible number of subscribers have
adverse impacts on competition and consumer welfare. The enforced
price cap will reduce any club effects and curb traffic distortions
.



Bundled voice minutes and text messages are expected to be network
neutral.
Bundled voice minutes and text messages are not
part of this regulation
. The Namibian Communications
Commission (NCC) will monitor market developments and regulatory
interventions may be undertaken if bundling is being used to create
club effects.







The Namibian Communications Commission (NCC) strives to ensure
fair competition in Namibia’s telecommunication sector.”






  1. The
    gazetting of the decision was preceded by notices to the operators
    being MTC and the second and third respondents. Their notifications
    did not include the underlined portions of the above text which
    appeared in the Gazette. The significance of this aspect is referred
    to below.







  1. The
    factual background to the taking of the decision of relevance to
    this application extended over some 18 months. On 12 June 2009, the
    third respondent (LEO) directed a written complaint to the
    Commission, taking issue with high off-net rates charged by MTC.
    These are the rates which MTC charged its customers to connect to
    other networks. It is self-evident that a practice of this nature
    could inhibit a new entrant from gaining a foothold within the
    market. In this context the previous chairperson of the Commission
    referred to the best international practice to address an issue of
    this nature would be to utilize wholesale price interventions known
    as termination rates to bring about fair competition. Only if this
    intervention did not achieve the desired degree of fair competition,
    should a regulator then resort to regulating retail prices.







  1. The
    process which was initiated by this complaint did not however lead
    to a reduction in off-net and on-net price differentials for most
    products offered by operators. In May 2010 the then chairperson of
    the NCC addressed MTC, raising the Commission’s concern that
    MTC was not passing on a reduction in termination rates to
    consumers. This letter specifically foreshadowed the NCC considering
    a price cap and rate of return regulation should termination
    reductions not be passed on to consumers. High off-net rates were
    specifically stated by the NCC as being seen as “anti-competitive
    pricing to misuse market dominance to cause traffic imbalances
    ”.







  1. The
    MTC and other operators were invited to propose off-net and fixed
    price reduction within some 10 days after the letter was addressed.
    The second and third respondents each referred to their initiatives
    in passing on a reduction of termination rates to consumers. The
    second respondent expressly stated that current off-net rates were
    anti-competitive. MTC responded by referring to its own initiatives
    which resulted in a decrease in off-net prices and sought to
    persuade the NCC not to regulate prices by asserting that its own
    prices were competitive within the context of the SADC region.







  1. The
    NCC then separately responded to the three operators in letters on
    27 July 2010. In its response, the NCC acknowledged the reduction in
    off-net prices. It confirmed to the second and third respondents
    that they each believed that a regulatory intervention was required
    by the NCC. In its response to MTC, the NCC stressed MTC’s
    license conditions which reserved the right to the NCC to enquire
    about tariffs or fees and the right to order an amendment to
    tariffs, fees or services with written reasons and justification.
    The letter proceeded to state:







The NCC understands from MTC’s
response that it believes that no regulatory intervention is
required. However, a Namibian operator lodged a complained with the
NCC regarding MTC’s high off-net and fixed-line rates. The NCC
has several options to deal with such a complaint. Conducting an
extensive market/tariff study, as MTC suggested, is one of them. For
now, the NCC seeks the opinions of operators regarding the need for
tariff regulation and the views for particular regulatory
interventions such as price caps for off-net and mobile to fixed-line
prices. A market/tariff study and subsequent regulatory interventions
would not be required if operators signal their willingness to reduce
off-net and fixed-line prices. The NCC would like to invite MTC to
comment the following proposed interventions:







  1. Price
    cap for off-net calls and calls to fixed line networks of N$1.80.








  1. Mandated
    reduction of off-net calls and calls to fixed-line networks in line
    with termination rate reductions for all operators.







  1. Setting
    off-net prices equal to on-net prices and equal to calls to
    fixed-line networks. This intervention removes advantages a network
    may have to size and eliminates “club” effects.







  1. Setting
    a price cap of on-net price plus termination rate for off-net call
    and calls to fixed-line networks. This is a softer cap compared to
    the intervention 3 and limits possible advantages from network size
    and club effects.








The NCC would like to invite MTC, as well as other mobile
operators, to comment on the suggested interventions and detail their
plans for off-net prices and prices for call to fixed line networks
by Tuesday August 10, 2010.







Please do not hesitate to contact me if two weeks is too short for
MTC to respond to this request.”






  1. The
    regulator’s approach was welcomed by the second and third
    respondents. The third respondent specifically supported
    non-discrimination between on-net and off-net rates on all tariff
    packages and promotional offers and to eliminate the club effect
    which would afford consumers the opportunity to choose between
    operators.







  1. In
    its response, MTC in a letter dated 9 August 2010 reiterated its
    position that the proposed interventions would be “unwise”
    and “unnecessary” and would hurt consumers. It
    did not respond to the invitation to address the four options set
    out in the letter of 27 July 2010 and instead raised what it termed
    three over-arching points”:







1. The NCC does not have the legal
authority to take the actions it has proposed;







  1. The
    NCC has not followed proper procedures; and








  1. The
    rate regulation that the NCC threatens is unwise, unnecessary and
    will end up hurting consumers more than it helps.”







  1. The
    MTC response further stated:







Around the world, consistent with proper
regulatory practice and common law principles, to determine both the
need for and method of regulating both retail and wholesale rates,
regulators are required to undertake a fair and transparent process
that allows for effected (
sic)
parties to present legal, economic, and technical arguments so that
the regulator avoids decisions that are arbitrary or that undermine
good public policy. Here, in sharp contract to proper procedures, the
NCC is attempting to make its determination based simply on a series
of brief letters demanding comment within incredibly short turnaround
times – and referring to a complaint that MTC has seen, which
was filed by an anonymous party. This in our view violates MTC’s
rights to a fair and reasonable administrative justice or action.
Such a process imply cannot result in an informed decision. A
thorough and proper proceeding must therefore take place before the
imposition of dramatic new regulations, in which MTC is presented
with the specific reasons for regulation rather than generalities,
and in which MTC is afforded adequate time to respond with legal and
economic testimony on these complex and important issues. Without
such a proceeding the NCC will not comply with section 18.8 or well
established principles of Namibian Administrative Law.”







  1. The
    reference to “section” 18.8 is a paragraph of that
    number included in MTC’s license conditions which permits the
    NCC to order an amendment to its tariff, fees or services with
    written reasons and justification to which I have already alluded.







  1. Instead
    of seeking further time to respond to the regulator’s
    invitation for comment on the four specific proposals, MTC instead
    reacted in this manner to that invitation. It did not subsequently
    seek further time to respond to the four specific proposals.







  1. The
    third respondent (LEO) subsequently addressed the NCC on 20 October
    2010 requesting it to take speedy and effective action in respect of
    the regulation of cross-network tariffs and specifically stated:







MTC has always charged higher tariffs to
other networks than on their own network. This is a typical abuse of
a dominant position …”.







and







It is clear from these packages that MTC
abuses its dominant position with impugnity.”







  1. This
    approach was followed up by LEO with further letters in November
    2010 referring to MTC’s “abuse of dominant market
    power and anti-competitive practices”
    .







  1. The
    regulator then on 9 December 2010 addressed a further letter to the
    operators, including MTC, entitled “Off-Net Rates, Dominant
    Market Position and Anti-Competitive Behaviour”
    which
    reads as follows:







During the past few months, some
operators have lodged complaints pertaining to the issues of off-net
rates, dominant market position and anti-competitive behaviour.







The same complaints were also lodged with the Political Office
Bearers of the Ministry of Information and Communication.







In pursuant to address these concerns the Chairperson of
Commission and the Honourable Minister of Information and
Communication deliberated on these issues and concluded that amicable
solution should be obtained for these concerns as a matter of
urgency.







Kindly take notice that the Commission is currently perusing the
various alternatives and suggested suitable options regarding the
modes operandi in solving the issues relating to the different
concerns areas.







Further take notice that should the Commission be eventually
convinced of the identified and/or proposed suitable options as
solutions to various concerns, the Commission would make a ruling /
directive to be published in the Government Gazette as a General
Notice and all the Operators will be informed accordingly and
required to adhere thereto.







It is against this background that the Commission would like to
inform you that the mentioned issues are receiving its attention,
hence, you will be informed of the Commission’s final position
pertinent to all the concern areas in due course.







I trust that the above is to your satisfaction.”






  1. This
    letter resulted in a swift response from LEO on 13 December 2010
    encouraging action on the part of the regulator. On
    29 December
    2010, MTC set out its position with regard to off-net rates. It
    complained that the NCC had not spelt out its written reasons and
    justifications for regulations. It further asserted that “proper
    regulatory practice and common law principles”
    require
    that regulators undertake “a fair and transparent process
    that allows for affected parties to present legal, economic and
    technical arguments in response”
    . In the absence of this,
    MTC contended that the regulator’s decision would be arbitrary
    or undermine good policy. It also asserted that its rates are
    reasonable and competitive and that it offered a variety of service
    offerings to consumers. It complained that the complaint had not
    been provided to it. MTC also asserted in this letter:







In sharp contrast to the proper
procedures mentioned above, the NCC is saying that a decision will be
taken if the Commission be convinced of the suitability of the
proposed options to the various concerns, which we deduce to mean
policy solutions suggested by the complainants. In our views, that it
would be a tremendous violation of MTC’s rights if we were not
given an opportunity to make our written comments, and if our points
of views were not taken into consideration as well.”

(
sic)







  1. The
    erstwhile chairperson of the Commission points out with regard to
    this passage that the MTC was afforded an unlimited opportunity to
    present legal, economic and technical arguments in response to the
    NCC letter of 3 May 2010 informing MTC and other operators that it
    had intended to regulate retail prices through price caps for
    off-net and fixed line calls. The MTC response of 29 December 2010
    also included reference to data in a study conducted by Frost and
    Sullivan concerning pricing within the region. The MTC further
    stated that the complainants should be required to make public their
    legal, economic and technical arguments and an opportunity afforded
    to MTC to defend or comment in order for the process to be
    transparent. It further stated:







Only having this participatory
methodology, with the possibility for the parties to produce their
written submissions, can the conditions be created for the industry
to reach the desirable amicable solution. This way forward is
paramount, rather than taking a decision as mentioned in subparagraph
(e) above which might force MTC to defend its rights to have a fair
and reasonable administrative justice or action and which could
expose NCC to all procedural fragilities mentioned above.”

(sic)







  1. On 19
    January 2011, the NCC invited MTC and the other operators to an
    industry hearing to make representations regarding retail price
    regulation. The letter of invitation stated:







The proposed regulatory intervention is
to set a price cap limiting retail prices for off-net calls and calls
from mobile to fixed line to the level of on-net price for all
license services.”






  1. The
    NCC provided background in the letter with reference to complaints
    raised by the second and third respondents and also referred to the
    four options referred to in the NCC’s earlier letter (of May
    2010) to the operators. It was expressly stated by the NCC in the
    letter that:




The industry hearing aims at giving
operators a platform to express their opinions additionally to the
written comments made to the NCC. Operators are expected to provide
legal, technical and economic arguments for or against the proposed
intervention.”







  1. The
    hearing was thus set for 3 February 2011, giving the operators two
    week’s notice. On 21 January 2011 the Commission also
    addressed the operators including MTC and requested their tariffs on
    all products for approval in accordance with their licenses by no
    later than 31 January 2011. There was express reference to the
    license condition which gave the NCC the right to request details of
    tariffs or fees and to order an amendment to tariffs, fees or
    services with written reasons and justification. There was also
    reference to the license condition which required MTC not to charge
    any tariff or fee until lodged in writing with the regulator.







  1. On 31
    January 2011, MTC addressed a letter the NCC concerning the industry
    hearing, confirming that it would attend, but stressed that the
    regulator was “not following appropriate procedures that
    are required before holding the hearing and envisaged regulatory
    intervention”
    . It complained again that the complaint had
    not been forwarded to it and requested the NCC to postpone further
    regulatory action until it had conducted a proper market study. The
    letter further stated:




Importantly, NCC’s actions are
also inconsistent with its obligations under section 28.1 of MTC’s
license which requires that the NCC act reasonably having regard to
all surrounding circumstances before taking any decision, afford the
operator reasonable opportunity to make representations in respect of
all relevant issues and furnish written reasons for any decision so
made. Clearly NCC neither responded to substantive issues raised in
our letter of 9 August 2010, nor has it given MTC a written detailed
explanation (and/or conducted any market study) before these
decisions and regulatory intervention were taken. We have not
received such an explanation, but only cursory letters with
inadequate information and detail.”








  1. Despite
    this approach, the letter did not request any specific information
    or details from the NCC.







  1. The
    NCC through its chairperson responded to this letter by making it
    clear that no decision had as yet been made and that once it would
    be made, reasons would be provided. It was also pointed out that
    legislation relied upon for some of MTC’s contentions, the
    Communication Act, 8 of 2009, had not as yet been put into
    operation. The NCC also referred in its response to five written
    submissions made by MTC regarding price regulation in letters of 14
    May 2010, 9 August 2010, 29 December 2010 and two of 31 January 2011
    and stated that these responses had been considered by the NCC. It
    was also stressed that the hearing would provide MTC with the
    opportunity to be heard by presenting its position and discussing it
    with the regulator, (and responding to the other operators) and
    which had followed consultation over a nine months and was not
    premature – and thus there was no need to postpone it. The
    letter concluded by again inviting MTC to comment on the four
    possible regulatory interventions regarding off-net retail prices in
    the NCC letter of 27 July 2010. It was pointed out that MTC had not
    commented on any of these and was granted yet another opportunity to
    be heard in that regard at the hearing.







  1. The
    industry hearing proceeded in 3 February 2011. It was attended by
    MTC and the other operators, second and third respondents. An
    expert, advising the NCC, Dr Christoph Stork, was also in attendance
    and served as the facilitator at the hearing. He stated that the
    purpose of the hearing was for the Commission to receive industry
    concerns and input and to discuss the proposal of a price cap for
    off-net calls and calls to landlines from mobile phones. He referred
    to the reason for the proposed options being to ensure fair
    competition and pointed out that the regulator would choose to
    intervene as little as possible and only to the extent necessary for
    this purpose. He further provided an analysis of the different
    operators’ pricing structures. He referred to the fact that
    MTC had a market share of 85% and that one would ordinarily expect
    its traffic to be 85% on-net and 15% off-net, but that this proved
    not to be the case. In fact a survey had revealed that 96.4% of its
    traffic was on-net and only 0.08% was off-net, contrasting with the
    statistics obtained from the other operators. He thus explained that
    the consequence of a price cap would be that the network size would
    no longer be a factor which consumers would need to take into
    account in choosing an operator or service. Dr Stork also dealt with
    the financial impact of a price cap for the different operators and
    pointed out that a loss of revenue of less than 1% would arise for
    MTC and that there would also be a loss of revenue for LEO. A number
    of further aspects pertinent to the issue were outlined by Dr Stork
    in his presentation.







  1. The
    operators were then afforded the opportunity to present their
    arguments on this and other relevant issues. Each of them did so,
    including MTC. The latter’s was in the form of reading out a
    statement similar to that contained in its correspondence with the
    Commission and again not specifically addressing the actual
    interventions proposed by the Commission, despite being repeatedly
    invited to do so.







  1. On 9
    February 2011 the Commission met to make a decision on the issue.
    Details of its meeting in the form of contemporaneous minutes are
    inexplicably cryptic and extremely brief, particularly in view of
    the statement by the erstwhile chairperson in the answering
    affidavit that the meeting lasted some 8 hours. No minutes of this
    meeting were provided when the record of the decision making first
    was made available and even at a later stage when compelled by way
    of court order to provide a more complete record. Other
    documentation was provided. It was only after a yet further
    application was made and a further order was granted that these
    cryptic minutes emerged and well after MTC had filed its
    supplementary affidavit under Rule 53(4).







  1. Under
    the heading of matters arising from minutes of a previous meeting,
    item 6.1.1 with the heading “Off-net and on-net rates of
    the operators [MTC, LEO and Telecom]”,
    the minutes stated
    the following on the issue:







The operators should be informed in
writing about the proposed ruling to be published as a general notice
and advised to comment. The chairperson has prepared the letters to
be forwarded to the operators as well as the general notice. The
Commission resolved that, if no response or comment is received from
the operators, the Secretariat should formalise the general notice
and submit it to the Ministry of Justice for publication in the
Government Gazette.”






  1. That
    was the extent of the recordal of this item in the minutes of the
    meeting of 9 February 2011. No subsequent minutes were provided
    which adopted these minutes. This cryptic minute is to be read with
    NCC’s chairperson’s answering affidavit. The minutes, as
    confirmed by her affidavit, stated that two of the Commissioners
    were present with the one being absent with apology. It was also
    reflected in those minutes with reference to the apology that







The Commission said that all resolutions
should be forwarded to Ms S Ankambo
(the
Commissioner who was absent with apology)
to
endorse or ratify.”







  1. No
    written recordal of any endorsement or ratification by Ms Ankambo
    was provided as part of the record. Nor is any affidavit filed by
    her on this or on any other issue.







  1. At
    the industry meeting, a further invitation was extended to the
    operators to provide further presentations. In view of that
    invitation, MTC forwarded a further letter to the regulator
    proposing a compromise and expressing certain concerns in respect of
    the proposed cap on on-net and off-net rates favoured by the other
    operators. This letter was faxed to NCC on 9 February 2011 in the
    late afternoon (at 17h42). The erstwhile chairperson stated that
    this letter was handed to the Commission and tabled during its
    meeting. This letter reiterated MTC’s view that the proposed
    intervention limited competitive behaviour and did not best serve
    the interests of consumers. Ms Beukes-Amiss stated that it was fully
    considered by the Commission in reaching its decision. She points
    out many of the issues raised in it had been previously considered
    and addressed in the preceding process. She also stressed that the
    question was not essentially whether the MTC rates were affordable
    or not and reasonable within the context of the region, but rather
    that club effects combined with the high market share could impact
    upon competition by hampering the passage of new entrants to the
    market.







  1. As
    far as the compromise proposed by MTC was concerned, Ms Beukes-Amiss
    stated that the regulator would only accede to the second condition
    relating to intra group traffic exclusion as an exemption. Ms
    Beukes-Amiss further stated that, “after a very full and
    detailed consideration of all the documentation and submissions
    before it, both written and oral, and the consideration of the
    environment within which the operators conduct business within the
    industry in Namibia, …”
    , the Commission made the
    decision set out in the letters sent to the three operators
    quoted above - with the exception of the underlined portions which
    were subsequently added to the decision, as subsequently appeared in
    the Gazette. The letter to operators is referred to in the minutes.
    It had been tabled and adopted by the Commission and also called
    upon operators to “resubmit amended tariffs for all
    products and services to NCC for approval by the 7
    th
    of March 2011.







  1. The
    then chairperson of the NCC confirmed in her affidavit, as is
    foreshadowed in the cryptic minutes of the discussion, that she had
    tabled the latter to the operators for approval in the form of the
    text contained in the Gazette, with the exception of the underlined
    portions. It follows that the underlined portions of the text which
    were subsequently gazetted did not serve before that meeting and
    were thus not approved by that meeting. Nor did they serve before
    the commission prior to publication.







  1. It
    was contended by Mr Frank on behalf of MTC that the decision taken
    at the meeting contemplated a further decision making stage prior to
    completion and to publication in the Gazette, in the sense that
    there would be consideration of comment from the operators before
    finalising the decision which would then be published in the
    Gazette. He submitted that the decision making process had not been
    completed. As is clear from the facts, the operators did provide
    some further input which was then incorporated in the underlined
    portions of the text which was published in the Gazette. But these
    comments would not appear to have properly served before the NCC.
    They had rather been inserted by the chairperson or the Secretariat
    prior to publication. Mr Frank submitted that these portions had
    thus not been approved by the Commission and at the very least
    should be struck and removed from the text published in the Gazette
    or that the Gazette should be read down to that extent.







  1. Mr
    Heathcote who appeared for the second and third respondents argued
    that the underlined portions made no difference to the decision and
    merely served to amplify the decision already taken and did so
    within permissible limits.







  1. Whilst
    it is correct that certain of the underlined portions were included
    as part of the reasons and did not alter the decision, two of the
    underlined sentences however purport to form part of the decision.
    Firstly, there is a sentence stating that the decision applies to
    voice and text messages. Secondly, there is the further sentence
    that bundled voice minutes and text messages do not form part of the
    decision.







  1. Mr
    Heathcote submitted that it was not necessary for these statements
    to have formed part of the original decision by virtue of the
    definition of “call” contained in the applicable license
    conditions which had been gazetted in 2007.







  1. Whilst
    it is correct that this definition of call may address the first of
    these insertions, it was in my view not permissible for these
    insertions to have formed part of the text in the Gazette if they
    had not served before the NCC. They may form the subject of
    interpretation with the assistance of the definition of call
    contained the gazetted conditions. But it was not open to the
    chairperson or secretariat of the Commission to amplify or alter the
    decision without the NCC convening to do so. In the NCC’s
    answering affidavit, the then chairperson clarified that the
    additional matter inserted in the Gazette (which did not serve
    before the Commission when it made its decision on 9 February 2011)
    was inserted to remove ambiguity. But it was clearly not for her or
    members of the Secretariat to do so. It was for the Commission
    itself to revisit its decision in order to improve or clarify it and
    then to pass a resolution to that effect.







  1. As a
    matter of process the NCC had not acted properly by publishing the
    text as its decision when the actual text had not served before the
    NCC. If it were to amend its decision to incorporate comment from
    the operators before being published in the Gazette, then it should
    have convened for the purpose of considering those comments and
    adopting them before they could be included in the decision which
    was to be gazetted.







  1. Mr
    Frank’s submission that these portions should be excised from
    the decision is in my view sound.










  1. It
    would follow that the notices to operators represent the decision
    taken by the NCC and not the amplified version gazetted which was
    not approved by the Commission.


  2. It is
    also clear that as a matter of process, the minutes of the NCC
    should have properly reflected the decision taken by it. This is
    unfortunately not evident from its own minutes. This is again
    inexplicable from a regulator whose decision making must be the
    outcome of a proper process in accordance with its empowering
    legislation and sound principles of governance. The fact that these
    sentences may in any event be a matter of interpretation when
    considering the definition of call does not in my view address the
    severe shortcomings in the process adopted by the regulator in
    reaching its decisions.







  1. The
    Commission as a statutory body has a duty to properly keep minutes
    and record the decisions it takes. This is especially the case where
    those decisions are taken as regulator and which impact upon
    operators regulated by the Commission’s decision making. There
    was thus a failure on the part of the Commission to meet this basic
    standard in conducting meetings and in governance. The reasons for
    compliance with this duty are self-evident. There needs to be a
    proper record reflecting the contents of resolutions of a body which
    has perpetual succession. They need to be ascertained with accuracy.
    6
    The Commission failed dismally in this fundamental duty. Its
    decision is however ultimately ascertainable from the minutes read
    with the notices which were then given to the operators and read
    with the chairperson’s affidavit.







  1. Mr
    Frank also urged me to find that there had been no resolution in
    view of the conditional nature of the wording of the Commission’s
    resolution with reference to the absent member who was afforded the
    opportunity to endorse or ratify its decisions. He also submitted
    that it was provisional and not final, also in the sense that
    operators’ comments would first be considered before a final
    decision would be published in the Gazette. Mr Corbett, who appeared
    for the first respondent, referred to the statutory regime governing
    the NCC and in particular to s 9(2) of the Act. It provides that the
    majority of the Commission forms a quorum for its meetings and that
    the decision of the majority of the members present at the meeting
    constitutes the Commission’s decision. Mr Corbett submitted
    that the decision was valid because it met this statutory
    requirement and did not require the absent member’s
    endorsement or notification. He also questioned whether it was open
    to Commission members to decide that a unanimous decision would be
    required in the face of this provision.







  1. It
    may not necessarily be ultra vires the Act if the Commission
    expresses a preference to make an important decision by way of
    unanimity, if possible. But in the absence of unanimity on an issue,
    the Commission would then need make its decision by way of majority
    vote in accordance with s 9 of the Act. It would however not seem to
    me to be open to the NCC to require unanimity given the
    express dictates of the Act. A condition to that effect would thus
    be in conflict with its own empowering statute and not competent.







  1. On
    the facts before me, there is nothing to suggest that the absent
    member did not endorse or ratify the decision. It would have been
    preferable for this to have been addressed in an affidavit by her.
    In the answering affidavit this aspect is not even dealt with.
    Unfortunately no affidavit was filed by the absent member.







  1. It
    would have been open to the absent member to have subsequently
    ratified the decision given that was what the Commission
    contemplated. Even though this has not been expressly dealt with, it
    would seem to me that there had been an implied ratification on her
    part.







  1. Both
    Mr Corbett and Mr Heathcote stated that this point should have been
    raised in the applicant’s founding or supplementary affidavit
    and that review grounds cannot be raised in a replying affidavit or
    even subsequently in heads of argument. Whilst this proposition is
    entirely correct, 7
    I hasten to point out that the minutes of the decision were only
    provided after the second Court Order had compelled its production,
    given the incomplete record previously provided. MTC had already by
    then filed its supplementary affidavit under Rule 53(4). If it
    sought to raise this aspect as an additional review ground, it
    should then have applied for leave to file a further supplementary
    affidavit so that the decision maker would have had the opportunity
    to address the issue. Leave would certainly have been given for such
    a further affidavit to be filed for that purpose, given the
    extremely dilatory and unacceptable manner in which the record had
    been provided.







  1. Mr
    Frank countered by arguing that the point arises from the minutes
    themselves and that it is open to MTC to raise it by virtue of what
    is stated in the minutes. This is also correct but then MTC is
    confined to what is stated in the minutes. In the absence of this
    aspect having been canvassed further factually, it would seem to me
    from the minutes and subsequent developments that there has at least
    an implied ratification of the decision on the part of the absent
    member. Given the provisions of s 9 of the Act, the actual consent
    of the absent member could in any event not be required for its
    validity. I accept that the decision taken was not provisional in
    the sense that it could not take effect.







  1. Although
    MTC has with justification criticised the slovenly manner of
    decision making and record keeping by the regulator, it would seem
    to me that a decision was taken as is reflected in the notice sent
    to the operators. Insofar as the Gazette goes further in the
    respects I have already referred to, those further portions are to
    be excised.







  1. Although
    the attack upon the NCC’s decision was wide ranging in the
    founding and supplementary affidavits, Mr Frank narrowed the attack
    to two further issues, as I understood his argument. The two further
    review grounds raised against the Commission’s decision relate
    to its reasonableness (and rationality) and secondly a claim that
    MTC was not afforded a proper hearing in the sense of being able to
    address the interest of the consumer as this issue had not been put
    to MTC during the process of consultation, so it was contended by Mr
    Frank.







  1. Mr
    Frank submitted that the NCC did not show a rational basis for what
    he termed as its interference with the tariffs in the industry and
    to interfere in the market, given the fact that it had also stated
    that it was not necessary to investigate the issue of abuse of a
    dominant position and by virtue of the NCC statement to the effect
    that cross-subsidisation, tying or bundling would not necessarily
    impede competition or that there was predatory pricing. In the
    absence of establishing these aspects and a market failure by way of
    a market survey or having demonstrated abuse of a dominant position
    or anti-competitive practices, he submitted there was thus no reason
    for the Commission to interfere with pricing and thus no rational
    basis for its decision.







  1. Mr
    Frank also submitted that the question of forcing prices down in the
    interest of the consumer was not raised until the decision had been
    attacked. The consumer interest had not been put to the industry in
    the process of consultation. He submitted that the process was
    flawed as a consequence and that MTC had not been recorded its full
    right to be heard in the absence of the opportunity to respond to
    this adverse issue.







  1. With
    reference to the first component of this challenge, asserting that
    there was not a rational basis for the decision making, the starting
    point is an examination of the Commission’s powers within its
    statutory and regulatory context. In terms of its empowering
    legislation read with the license conditions, the Commission
    enjoyed the right, with written reasons and justification, to order
    an amendment to the tariffs, fees or services charged by operators.
    In doing so, the conditions also require that the Commission is to
    act reasonably having regard to all surrounding circumstances and
    afford licensees every reasonable opportunity to make
    representations in respect of all relevant issues. These license
    conditions essentially embody the requisites of Article 18 of the
    Constitution which require statutory bodies to act fairly and
    reasonably and comply with the requirements imposed upon them by
    common law and their empowering legislation.







  1. In
    assessing whether the NCC acted fairly, the nature of the
    Commission’s impugned decision is to be considered within its
    context, namely being that of price regulation of a specialist
    regulatory body authorized to do so. The legislature appointed the
    Commission to regulate the telecommunications industry. Its
    empowering legislation was amended to accord it the power to set
    restrictions and conditions for the licenses of operators,
    specifically including pricing, tariffs and fees for services. In
    this context, the Commission may also take into the considerations
    of fair competition.







  1. The
    choice made by the legislature to enact a statutory scheme which
    could include price regulation as opposed to market forces
    determining prices was justifiably not challenged in these
    proceedings.8
    What is challenged is the exercise of that power.







  1. The
    regulation of fees or prices for specialist services was recently
    the context of a decision by the Supreme Court in Trustco Ltd v
    Deeds Registries Regulation Board and others
    9.
    The Court dismissed a challenge upon the regulation setting
    conveyancing fees. O’Reagan AJA, speaking for a unanimous
    court referred to the nature of the enquiry in that context in the
    following way:




What will constitute reasonable
administrative conduct for the purposes of art 18 will always be a
contextual enquiry and will depend on the circumstances of each case.
A court will need to consider a range of issues including the nature
of the administrative conduct, the identity of the decision-maker,
the range of factors as well as the impact of the relevant conduct on
those affected. At the end of the day, the question will be whether,
in the light of a careful analysis of the context of the conduct, it
is the conduct of a reasonable decision-maker. The concept of
reasonableness has at its core, the idea that where many
considerations are at play, there will often be more than one course
of conduct that is acceptable. It is not for judges to impose the
course of conduct they would have chosen. It is for judges to decide
whether the course of conduct selected by the decision-maker is one
of the courses of conduct within the range of reasonable courses of
conduct available.”
10






  1. An
    important factor in this context, as was stressed by O’Reagan
    AJA in that matter, was decision making by a specialist body within
    a specific industry or area of endeavour.




The
board is specialist body with expertise in the field of conveyancing.
...Quite clearly, there was a range of other options that the Board
and the Minister could have chosen when they determined the tariffs.
They could have set the rates differently, or they could have, as the
appellants argue they should have, imposed a guideline or an hourly
rate. That there is a range of other policy choices, however, does
not mean that the route adopted is unreasonable.”
11






  1. In
    addressing the challenge against the compulsory conveyancing tariffs
    set by a statutory board of specialists (which tariffs were
    challenged inter alia because they inhibited competition), the
    Supreme Court further stated:




The respondents admit that the effect of
compulsory tariffs is to prevent conveyancers competing on price.
This effect is inevitable if certainty as to conveyancing charges is
to be achieved. Although there may be circumstances where preventing
competition on price would be unreasonable, there are considerations
relevant to this case that suggest the converse. These include the
following. First, the effect of a fixed tariff has not been shown to
be a material barrier to the practice of the profession of
conveyancer. Secondly, the service performed by conveyancers is a
service that must be used by all those who wish to own property, as
it is only conveyancers who are permitted to arrange for the transfer
of ownership of property and the registration of other rights against
property in the deeds office. Accordingly, it is appropriate that the
service be regulated in the public interest. Thirdly, although there
may be other advantages were competition on price to be permitted, a
fixed set of tariffs also has advantages. It permits people who are
calculating whether they can afford to buy a property to know at the
outset what the conveyancing charges will be... Fourthly, the board
that sets the tariff...is a committee of experts in conveyancing,
well placed to make the decision as to the approach in setting the
tariffs”
12







and concluded:







...(W)hile it may be that it would be
reasonable to permit competition on price, it cannot be said that to
prohibit it is, in the circumstances of this case, an unreasonable
course. Accordingly, the appellants have not established that the
tariffs constitute an infringement of art 18 of the Constitution.”
13






  1. The
    approach of MTC would appear to be premised upon the need for a
    range of specific findings by the Commission such as a market
    failure and an abuse on its part of a dominant position and/or of
    anti-competitive practices to exist before the Commission could make
    its decision to set prices in the way in which it did. That is in my
    view not required and thus not correct.







  1. The
    setting of prices for specific services is an option open to the
    Commission. It would need to justify the course selected by it with
    reasons. These would thus need to be reasonable and justifiable and
    have a rational basis. The Commission did not in my view first need
    to establish a market failure or wait for that to occur before it
    made its decision, although it could have done so. Nor did it need
    to make any specific findings against MTC before it could make its
    decision to set prices. It needed to select a reasonable option from
    those open to it. At the industry hearing, a presentation was made
    to the operators on the options open to the Commission, expanding
    upon four options which had been referred to in correspondence by
    the Commission to the operators.







  1. When
    the Commission made its decision, it also provided reasons to
    operators so as to justify it. The reasons are set out in the letter
    to operators, as later published in the Gazette. They are quoted in
    paragraph [13] above. There is a rational connection between them
    and the decision taken by the Commission and its statutory
    objectives, as set out in the Act and the licence conditions.







  1. Mr
    Frank’s attack was largely devoted to paragraph 2 of the
    notice. It referred to fair competition and that operators are not
    permitted to engage in anti-competitive cross subsidisation. It also
    tellingly stated that without an objective cost difference there
    existed no reason for discriminating in prices against other
    networks. As I have said, there was no need to have premised this
    upon any specific finding adverse to MTC. It was one of the
    considerations and reasons underpinning the decision to introduce a
    price cap for off net call prices. This and the other reasons thus
    provided in my view are rationally connected to the decision and
    justify it







  1. The
    reasons provided by the Commission within the context of its
    decision making in my view demonstrate that a reasonable choice was
    made by the Commission, exercising one of the reasonable options
    open to it. It is not for this Court to consider whether there may
    have been better options open to the Commission in setting prices,
    particularly in the context of a decision of a specialist
    administrative body, as long as the decision taken represented a
    reasonable option open to the NCC, as was stressed by the Supreme
    Court in the conveyancing fees matter. As was also emphasised by
    Shivute CJ in Waterberg Big Game Hunting Lodge v Minister of
    Environment
    14:







The purpose of judicial review is to
scrutinise the lawfulness of administrative action in order to ensure
that the limits to the exercise of public power are not transgressed,
not to give the courts the power to perform the relevant
administrative function themselves.”
15





Shivute,
CJ also referred to the need for deference to administrative agencies
when making decisions of a technical nature, in following the
Minister of Environmental Affairs and Tourism and others v
Phambili Fisheries (Pty) Ltd; Minister of Environment Affairs and
Tourism and others v Bato Star Fishing (Pty) Ltd
16
where it was stated:






Judicial deference is particularly
appropriate where the subject matter of administrative action is very
technical or of a kind which the Court has no particular
proficiency.”
17





This
approach was also carefully explained by Cameron JA in Logbro
Properties CC v Bederson NO and others
18
with reference to well reasoned articles by academics on the subject.






  1. In
    respect of MTC’s complaint that it was not accorded its right
    to audi alteram partem by the Commission because the interest
    of the consumer had not been put to MTC in the consultative process,
    this is likewise to be seen within the context of the decision
    making viewed as a whole. It had entailed a consultative process
    which had extended over a period of some 18 months.







  1. It
    had been initiated by a complaint by LEO. At an early stage of the
    process and in May 2010 already, the operators were specifically
    informed that the Commission considered a price cap and rate of
    return regulation should termination rate reductions not be passed
    on to consumers. Operators were then plainly put on notice that the
    interests of consumers were to be taken into account in determining
    the issue of setting prices by the Commission. This after all also
    encapsulates the public interest which the Commission would in my
    view be required to take into account in the exercise of its
    discretion in performing its functions and in reaching its
    decisions.







  1. It is
    thus accordingly not correct to assert, as is done by MTC, that it
    was not on notice to address the issue of consumer interests in the
    context of the complaint raised and in the context of the
    Commission’s range of options in addressing the complaint.
    Even if it had not been pertinently raised in the correspondence or
    at the industry meeting in the way in which the reason was
    subsequently given, it is an aspect which in my view the Commission
    was entitled to consider and address in its decision making and had
    apprised the operators would be a factor. But MTC could in any event
    in my view reasonably have expected that the Commission should take
    into account the interest on consumers19.







  1. In
    taking into account the consultative process viewed as a whole, it
    would seem to me that MTC had been accorded a very ample
    opportuninty to be heard. At a very early stage, its views were
    invited in respect of four specific options which the Commission
    considered taking. Instead of addressing those specific options in
    its representations, MTC chose rather to call foul before any
    decision was taken. It did so repeatedly, despite the reiteration of
    the invitation. It was only after the industry hearing, when point
    taking about the process was again raised, that there was an attempt
    to address those four options and a compromise was proposed. MTC
    only has itself to blame if it considers that its right to be heard
    had not been fully utilised or explored by it. Not only had the
    proposed options been spelt out, but MTC was repeatedly invited to
    place its views on the proposals to the Commission. It elected not
    to do so but instead chose to engage in point taking about the
    process.







  1. It
    follows in my view that MTC has likewise not established this review
    ground.







  1. It
    further follows that the application to review the decision taken by
    the Commission as communicated to the operators must fail. As I have
    indicated, the amplification of that decision in the Gazette, in the
    absence of a further resolution of the Commission to adopt that
    amplification, is set aside to that extent and the underlined
    portions of the Gazette referred to in paragraph [13] above are to
    be excised from the decision published in the Gazette.







  1. In
    view of the conclusion I have reached, the respondents including the
    Commission have been substantially successful in resisting the
    review application. The Commission would thus ordinarily be entitled
    to its costs. But the way in which it has approached this litigation
    cannot be overlooked. From the outset, it has been dilatory in
    dealing with this review. It was necessary for the applicant to
    compel it to comply with Rule 53(1) to provide a record of its
    decision making after failing to do so for some two months. Even
    after an order to this effect was granted, the record filed was
    found to be lacking in significant respects. Documents were
    requested but again not provided for an extended period. This court
    granted a further order directing the Commission to provide
    documents within 5 days of that order, (some four months after the
    record should have initially been provided). Not even the minutes of
    the meeting where the decision was taken had been provided at that
    stage and were included in the further documents sought. I have
    already referred to this aspect. The order was not timeously adhered
    to and further delays ensued. It was thus necessary for the NCC to
    apply for condonation for failing to comply with that Court Order
    and for its extremely late answering affidavit. Condonation was
    ultimately granted.







  1. When
    I raised these aspects with Mr Corbett, and whether these could
    result in this Court exercising its discretion not to grant the
    Commission the full measure of its costs, Mr Corbett correctly
    pointed out that the Court in the various orders and in granting
    condonation, had made costs orders adverse to the Commission. He
    submitted that the usual rule should follow and that the Commission,
    as a successful litigant, should be entitled to its costs. Even
    though the NCC has been required to pay the costs of the
    interlocutory applications involving its dilatory conduct, I
    consider that the exceedingly slovenly manner in which the NCC dealt
    with this litigation has unnecessarily protracted and delayed these
    proceedings. This in my view warrants censure and a mark of this
    Court’s disapproval. It is after all a litigant’s duty
    to avoid a course which unduly protracts a lawsuit or unduly
    increase its expense20.
    I have accordingly decided in the exercise of any discretion to
    deprive the Commission of a measure of its costs, namely 25%, even
    though successful, because of its conduct of consistently failing to
    act in accordance with the rules of Court. This conduct has led to
    these proceedings becoming unduly protracted. The parties were in
    agreement that any order as to the costs would include costs of two
    instructed counsel where they have been engaged.







  1. It
    follows that the order I make is that, save for excising those
    underlined portions in paragraph [13] from the decision as set out
    in the Government Gazette, the application is dismissed with costs,
    subject to the first respondent only being entitled to 75% of its
    costs. The applicant is thus required to pay 75% of the first
    respondent’s costs and the full measure of the party and party
    costs of the second and third respondents. These costs include the
    costs of two instructed counsel, where engaged.












______________



Smuts, J






























































ON
BEHALF OF APPLICANTS T. FRANK SC



Assisted by: S. AKWEENDA


INTRUCTED
BY: HENGARI, KANGUEEHI, KAVENDJII INC.







ON BEHALF OF 1ST RESPONDENT A. CORBETT



INSTRUCTED BY: SISA NAMANDJE & CO. INC.





ON
BEHALF OF 2ND RESPONDENT: R. HEATHCOTE SC


Assisted
by: N. BASSINGTHWAIGHTE


INSTRUCTED
BY: SHIKONGO LAW CHAMBERS


ON
BEHALF OF 3rd RESPONDENT: R. HEATHCOTE SC


Assisted
by: N. BASSINGTHWAIGHTE


INSTRUCTED
BY: ENGLING STRITTER & PARTNERS






1S
2(3) of Act 19 of 1992




2S
2(4) of Act 19 of 1992




3S
22(B)(4) of the Act




4Burns
Communications Law (2nd
ed, 2009) at 397-399




5Act
2 of 2003 put into operation on




6See
Minister of Agricultural, Economics and Marketing and another v
Peyper 1964(1) SA 206 (T) at 212




7Mostert
v Minister of Justice 2003 NR 11 (SC)




8Minister
of Health and Another NO v New Clicks South Africa (Pty) Ltd and
Others 2006 (2) SA 311 (CC) at par [263]




9See
2011(2) NR 726 (SC)




10Par
[31]




11Par
[32]




12Par
[34]




13Par
[35]




142010(1)
NR 1 (SC)




15Supra
at 31 H-I




162003(6)
SA 407 (SCA) at par [53]




17At
par [53]




182003(2)
SA 460 (SCA) at par [21] followed by the Supreme Court in Minister
of Mines and Energy v Black Range Mining
2011(1) NR 31 (SC) at
par [20] – [21] and in the Waterberg – matter at p 32-3.




19Dawn
v Malan NO en andere 1960(2) SA 734(A)




20Joubert
et al
The Law of South Africa
(First Re-isse) Vol 3 part 2 at par 304.