Telkom finally concedes on least-cost call routing

telkom has finally given up its battle to stop companies using least-cost routing by deciding not to challenge a high court ruling that the service is perfectly legal.


the battle saw telkom pitched against a dozen private telecommunications operators and practically every large company in the country, which slash their phone bills by diverting calls off telkom’s lines and onto the cellular networks instead.

the pretoria high court had ruled that least-cost routing was legal in october 2003. yet telkom had planned to appeal that verdict, in a move that may have prevented some companies from using the service in case its legality was eventually overturned.


now any company can alter its switchboards to divert calls off telkom’s lines without the fear of litigation.


capitulation finally came when telkom told nashua mobile, the first respondent, and 11 other parties that it had accepted the validity of the 2003 ruling and would not be pursuing its leave to appeal.

that was a victory for users and private telecommunications companies in sa, said nashua mobile md mark taylor.


companies that had held back from adopting the technology during the three-year battle could now enjoy the cost-savings in the knowledge that it was no longer a legal grey area. those organisations could have been benefiting for years if telkom had not threatened to challenge the high court ruling.


“we are pleased that telkom has decided to accept the court’s judgment that least-cost routing services are in no way illegal and have never been. our own legal team is of the opinion that the judge’s original ruling would have been difficult to argue against, so a settlement was in the strongest interest of all parties concerned,” said taylor.


"we are talking about an industry worth at least r2bn a year and which is growing at a rapid clip.”

since least-cost routing could save about 25% on the cost of calls, more companies could now avoid sa’s notoriously high communications costs and become more globally competitive, he said.

telkom had argued that the service was an illegal avoidance of its network, and was flouting the telecommunications act. in his judgment in 2003, judge iwb de villiers ruled that the systems were not illegal and did not infringe telkom’s legal rights. telkom's application was dismissed with costs.

yesterday telkom told the supreme court of appeals that it was withdrawing its appeal on the basis that each party would pay its own legal costs.

taylor said the case had cost each of the private operators about r1m to defend, but they agreed to bear the costs when telkom made it a condition of dropping any further action. in the overall scheme of things it was a small price to pay for certainty, he said.

other respondents in the case included nedtel, orion telecom, autopage and supercall cellular which provide the services, and mtn and cell c, which benefit from the extra traffic being routed over their networks.

vodacom, which is 50% owned by telkom, was initially cited as an offender, but telkom dropped the legal action against vodacom after striking a deal to let that operator carry on offering the service.