Business / Companies
NetOne's notice on interconnection dispute with Econet: Full text
24 Aug 2012 at 11:12hrs | Views
NOTICE TO OUR VALUED CUSTOMERS: UNLAWFUL TERMINATION OF INTERCONNECTION SERVICES BY ECONET WIRELESS TO NETONE CELLULAR (PVT) LTD SUBSCRIBERS
Background 1996-2000
Historically the Post and Telecommunications Corporation (PTC) provided both regulatory and operational telecommunication services. As such there was no need for interconnection services as there was only one operator. There was a protracted legal battle between Retrofit ON ONE HAND AND THE Government of Zimbabwe and PTC on the other. This culminated in the Supreme Court ruling that the PTC's monopoly was unconstitutional as it did not provide customers with choice. This ruling resulted in the Government having to separate the Postal and Telecommunications regulatory functions from operations by establishing an independent regulatory body in the name of POTRAZ whilst liberalising the sector by granting licenses to other privately owned entities hence the existence of Telecel and Econet as mobile telecommunication licensees. NetOne and TelOne being state owned mobile and fixed telecommunications operators respectively, but operating in terms of the Companies Law.
Liberalisation of the Telecommunications Industry
The coming in of new telecommunications players required their networks to be interconnected to provide access and seamless communication between customers of different networks which is the primary objective of interconnection. Originally, all the three mobile networks were interconnected through the Public Switched Telephony Network (PSTN) owned by TelOne.
As mobile networks grew in size it was found more efficacious to interconnect directly and in that respect NetOne provided a high capacity fibre optic link to interconnect the respective mobile switches or exchanges which are in different locations. This system has been working well as subscribers of various mobile networks were able to communicate with each other. The licence issued by POTRAZ, besides providing for mandatory interconnection requirements also require operators to negotiate commercial terms for interconnection. However, the final agreement is subject to approval by POTRAZ as provided for in Section 61 ( 1) and (2) of the Postal and Telecommunications Act, Chapter 12:05 as read with Statutory Instrument 28 of 2001.
Interconnection Agreements
The last interconnection agreement which NetOne and Econet lodged with POTRAZ for approval before signature was executed in 2006 and was valid for 12 months. After its expiry the agreement was never renewed but the parties remained interconnected and only started renegotiating a new interconnection agreement in 2009. Issues pertaining to how interconnection settlements were to be done particularly in light of the abruptness, unusual nature and unanticipated introduction of a multi currency regime which negatively affected business and consumers due to acute lack of foreign currency were raised and eventually an appeal was made to the Minister in accordance with Section 96 of the Postal and Telecommunications Act. POTRAZ then issued a regulatory Notice Notice 3 of 2011, which directed that negotiations on interconnection agreements were suspended pending a determination on the issues that had been raised by both NetOne and TelOne with the Honourable Minister of Transport, Communications and Infrastructural Development.
The reasons for the appeal to the Minister partly explained above came after a culmination of events which affected interconnection of operators more specifically:
The Hyperinflationary environment under which prompted Econet in 2008 to unilaterally transfer its post paid customers to their prepaid platform on the pretext that their billing system was malfunctioning and yet the motive was to collect cash before its value was eroded by inflation. NetOne did not make such a move even in the face of hyperinflationary conditions and a genuine malfunctioning old billing system installed in 1997, continued to offer post paid subscription to its customers who would pay their bills at least not less than 30 days after consuming the service.
The effect of Econet's decision to transfer its post paid customers to its prepaid platform resulted in an increase in a higher number of outgoing calls from NetOne to Econet compared to incoming calls from Econet to NetOne as it was perceived to be cheaper to call from NetOne. When the cost of calls were netted off, NetOne remained a significant net payer to Econet thus creating undue obligations on NetOne to Econet. The same situation affected TelOne were most customers preferred to call Econet subscribers from landlines rather than using their mobile phones. These developments are clearly captured by an independent consultant who reviewed the interconnection traffic regime obtaining from 2008-2011 in Zimbabwe which confirmed the long held view that telecommunications traffic like water flows to the direction of least resistance.
This situation was further worsened by the implementation of the multi currency regime at different times by different operators as well as the uneven distribution of prepaid and post paid subscribers of various operators arising from the 2008 actions by Econet. Therefore, the obligation for interconnection charges worked at 7cents per minute weighed heavily against NetOne and TelOne as traffic was flowing from these operators to Econet due to these identified imbalances and inconsistencies.
The problems were again worsened by the difficulties in collecting revenue from post paid customers in the new multiple currency regime due to acute shortage of foreign currency. It is against this background that the honourable minister's intervention was sought. The argument presented by NetOne was centred on the introduction and application of the principle of SENDER KEEPS ALL which entailed that the network of the originating caller collects the revenue and not pass it onto the terminating network. The effect of this proposal would mean that the cost of calling across networks would have been reduced by as much as 7 cents per minute. This was meant to benefit ALL CUSTOMERS INCLUDING ECONET'S. This meant that a call across the networks would cost 16 cents instead of 23cents per minute and that benefited the Zimbabwean public who were deprived of cash in the hyperinflationary environment.
The unilateral and unlawful action carried out by Econet to disconnect both NetOne's and its own customers from calling across these two networks is not only malicious, but a blatant violation of the law pertaining to interconnection in Zimbabwe and against international best practices. As things stand, the parties are supposed to remain technically interconnected pending the determination of the appeals currently before the Minister and the approval of the new agreements by POTRAZ in accordance with the provisions of Section 61 of the Postal and Telecommunications Act. Ironically, Econet were in the forefront of fighting for liberalisation of the telecommunications sector in Zimbabwe on the pretext of offering the people of Zimbabwe a choice on the means of communications and yet they are now denying the same members of the public an opportunity to call whatever network they wish. Their unilateral and unlawful action is tantamount to denying the same members of the public that same choice that they claim to have been fighting for.
As such NetOne has made an urgent application to the High Court to compel Econet to restore interconnection services immediately as it is against the Law and Public Policy and is a threat to national security.
NetOne also believes that Econet and its management have committed a criminal offence by unlawfully and wilfully impeding the transmission of communication services between customers of both networks in particular section 91 of the Postal and Telecommunications Act Section 91 (1) (b) and (c) which provides that any employee of a telecommunication licensee or a cellular telecommunication licensee who wilfully mistimes, intercepts or prevents the transmission of a communication or (c) wilfully or negligently omits to transmit or impedes or delays the transmission of the communication shall be guilty of an offence and be liable to a fine or imprisonment for a period not exceeding two years or to both such fine and imprisonment. In this regard we are holding the Board and Management of Econet Wireless liable for this offence and we shall accordingly be lodging a formal complaint with the Zimbabwe Republic Police.
Meanwhile we encourage our subscribers to enjoy the 'Dollar a Day promotion' which allows prepaid subscribers to call for free on NetOne to NetOne calls. All our subscribers including post paid can enjoy our fast growing mobile broadband services and enjoy chat services online like Whatsapp, Skype, GTalk, Facebook and other online communication services provided by NetOne.
Background 1996-2000
Historically the Post and Telecommunications Corporation (PTC) provided both regulatory and operational telecommunication services. As such there was no need for interconnection services as there was only one operator. There was a protracted legal battle between Retrofit ON ONE HAND AND THE Government of Zimbabwe and PTC on the other. This culminated in the Supreme Court ruling that the PTC's monopoly was unconstitutional as it did not provide customers with choice. This ruling resulted in the Government having to separate the Postal and Telecommunications regulatory functions from operations by establishing an independent regulatory body in the name of POTRAZ whilst liberalising the sector by granting licenses to other privately owned entities hence the existence of Telecel and Econet as mobile telecommunication licensees. NetOne and TelOne being state owned mobile and fixed telecommunications operators respectively, but operating in terms of the Companies Law.
Liberalisation of the Telecommunications Industry
The coming in of new telecommunications players required their networks to be interconnected to provide access and seamless communication between customers of different networks which is the primary objective of interconnection. Originally, all the three mobile networks were interconnected through the Public Switched Telephony Network (PSTN) owned by TelOne.
As mobile networks grew in size it was found more efficacious to interconnect directly and in that respect NetOne provided a high capacity fibre optic link to interconnect the respective mobile switches or exchanges which are in different locations. This system has been working well as subscribers of various mobile networks were able to communicate with each other. The licence issued by POTRAZ, besides providing for mandatory interconnection requirements also require operators to negotiate commercial terms for interconnection. However, the final agreement is subject to approval by POTRAZ as provided for in Section 61 ( 1) and (2) of the Postal and Telecommunications Act, Chapter 12:05 as read with Statutory Instrument 28 of 2001.
Interconnection Agreements
The last interconnection agreement which NetOne and Econet lodged with POTRAZ for approval before signature was executed in 2006 and was valid for 12 months. After its expiry the agreement was never renewed but the parties remained interconnected and only started renegotiating a new interconnection agreement in 2009. Issues pertaining to how interconnection settlements were to be done particularly in light of the abruptness, unusual nature and unanticipated introduction of a multi currency regime which negatively affected business and consumers due to acute lack of foreign currency were raised and eventually an appeal was made to the Minister in accordance with Section 96 of the Postal and Telecommunications Act. POTRAZ then issued a regulatory Notice Notice 3 of 2011, which directed that negotiations on interconnection agreements were suspended pending a determination on the issues that had been raised by both NetOne and TelOne with the Honourable Minister of Transport, Communications and Infrastructural Development.
The Hyperinflationary environment under which prompted Econet in 2008 to unilaterally transfer its post paid customers to their prepaid platform on the pretext that their billing system was malfunctioning and yet the motive was to collect cash before its value was eroded by inflation. NetOne did not make such a move even in the face of hyperinflationary conditions and a genuine malfunctioning old billing system installed in 1997, continued to offer post paid subscription to its customers who would pay their bills at least not less than 30 days after consuming the service.
The effect of Econet's decision to transfer its post paid customers to its prepaid platform resulted in an increase in a higher number of outgoing calls from NetOne to Econet compared to incoming calls from Econet to NetOne as it was perceived to be cheaper to call from NetOne. When the cost of calls were netted off, NetOne remained a significant net payer to Econet thus creating undue obligations on NetOne to Econet. The same situation affected TelOne were most customers preferred to call Econet subscribers from landlines rather than using their mobile phones. These developments are clearly captured by an independent consultant who reviewed the interconnection traffic regime obtaining from 2008-2011 in Zimbabwe which confirmed the long held view that telecommunications traffic like water flows to the direction of least resistance.
This situation was further worsened by the implementation of the multi currency regime at different times by different operators as well as the uneven distribution of prepaid and post paid subscribers of various operators arising from the 2008 actions by Econet. Therefore, the obligation for interconnection charges worked at 7cents per minute weighed heavily against NetOne and TelOne as traffic was flowing from these operators to Econet due to these identified imbalances and inconsistencies.
The problems were again worsened by the difficulties in collecting revenue from post paid customers in the new multiple currency regime due to acute shortage of foreign currency. It is against this background that the honourable minister's intervention was sought. The argument presented by NetOne was centred on the introduction and application of the principle of SENDER KEEPS ALL which entailed that the network of the originating caller collects the revenue and not pass it onto the terminating network. The effect of this proposal would mean that the cost of calling across networks would have been reduced by as much as 7 cents per minute. This was meant to benefit ALL CUSTOMERS INCLUDING ECONET'S. This meant that a call across the networks would cost 16 cents instead of 23cents per minute and that benefited the Zimbabwean public who were deprived of cash in the hyperinflationary environment.
The unilateral and unlawful action carried out by Econet to disconnect both NetOne's and its own customers from calling across these two networks is not only malicious, but a blatant violation of the law pertaining to interconnection in Zimbabwe and against international best practices. As things stand, the parties are supposed to remain technically interconnected pending the determination of the appeals currently before the Minister and the approval of the new agreements by POTRAZ in accordance with the provisions of Section 61 of the Postal and Telecommunications Act. Ironically, Econet were in the forefront of fighting for liberalisation of the telecommunications sector in Zimbabwe on the pretext of offering the people of Zimbabwe a choice on the means of communications and yet they are now denying the same members of the public an opportunity to call whatever network they wish. Their unilateral and unlawful action is tantamount to denying the same members of the public that same choice that they claim to have been fighting for.
As such NetOne has made an urgent application to the High Court to compel Econet to restore interconnection services immediately as it is against the Law and Public Policy and is a threat to national security.
NetOne also believes that Econet and its management have committed a criminal offence by unlawfully and wilfully impeding the transmission of communication services between customers of both networks in particular section 91 of the Postal and Telecommunications Act Section 91 (1) (b) and (c) which provides that any employee of a telecommunication licensee or a cellular telecommunication licensee who wilfully mistimes, intercepts or prevents the transmission of a communication or (c) wilfully or negligently omits to transmit or impedes or delays the transmission of the communication shall be guilty of an offence and be liable to a fine or imprisonment for a period not exceeding two years or to both such fine and imprisonment. In this regard we are holding the Board and Management of Econet Wireless liable for this offence and we shall accordingly be lodging a formal complaint with the Zimbabwe Republic Police.
Meanwhile we encourage our subscribers to enjoy the 'Dollar a Day promotion' which allows prepaid subscribers to call for free on NetOne to NetOne calls. All our subscribers including post paid can enjoy our fast growing mobile broadband services and enjoy chat services online like Whatsapp, Skype, GTalk, Facebook and other online communication services provided by NetOne.
Source - NetOne
