Local software company CSI challenges Econet’s position on bulk SMSs

In a response to an article published yesterday on bulk SMS blocking, Econet made a statement refuting claims that they block legitimate (not spam) bulk SMSs on their network. The software company that is making claims against Econet has however today challenged Econet’s position in a statement sent to Techzim.

Firstly, CSI is challenging Econet to explain why, if it indeed does not block legitimate bulk SMS, it is not terminating bulk SMSs from CSI’s clients. CSI claims it’s SMSs are fully compliant and include opt in and unsubscribe options.

CSI also challenges the Econet’s position on restricting  foreign bulk SMS aggregators saying this stance violates regulations as it is not illegal to push bulk SMSs through foreign SMS aggregators. CSI also claims that Econet is party to international treaties that CSI’s bulk SMS carrier, RouteSMS is also party to, hence Econet should explain its position on foreign aggregators.

In the statement, CSI introduces a “conflict of interest” angle alleging that Econet’s owning a bank violates international anti-monopoly and competition best practices.

This is the full response from CSI. It’s quite long but still interesting to read.

In its December 3 2013 TechZim statement, Econet insinuates that our clients use the SMSPlus service to “spam” mobile network subscribers. This allegation is dangerous and it deserves to be qualified and substantiated.

According to Section 4 of the Postal and Telecommunications Act of 2000 (Chapter 12:05) and a formal communication that we received from POTRAZ of the 29^th of October 2013, the SMS traffic that our clients originate cannot be defined as SPAM, because:

• The recipients of the SMSs opt-in to the service. They are not receiving unsolicited or unwanted communications.
• The SMSs that our clients send allow end users to opt-out of the service; i.e. they have a user-friendly unsubscribe facility that allows end users to cancel (free of charge) the SMS subscription.

Succinctly put, our communications comply with POTRAZ’s regulations. Therefore, we invite Econet to:

I.             Provide unambiguous evidence of the-said “spamming”, and;

II.            Formally lodge its evidence-based complaint with POTRAZ.

To explain how our clients use the SMSPlus service:

By and large, our clients use the SMSPlus service for real-time transaction receipting.

The main benefit of this service: it fosters greater transparency and makes it easier to track incidents of fraud. Otherwise put, it gives people the confidence to transact in the hyper-efficient e-environment.

We’ll cite the example of ZIMRA:

To seamlessly process tax transactions, ZIMRA uses a CSI-built payment gateway which is called The ZIMRA Online Payments platform (ZOP).

ZOP connects the back-end systems of Zimbabwean banks to ZIMRA. Generally, ZOP processes tax transactions in the following manner:

When a taxpayer makes a payment at any bank, ZOP automatically sends the transaction to ZIMRA for reconciliation. ZIMRA’s Tax and Revenue Management System then updates the entity’s tax records. And, it concludes the transaction by sending, to the taxpayer, a real-time SMS receipt of the tax transaction.

Generally, ZIMRA-SMS receipts account for the lions-share of the SMS traffic that is being routed by CSI’s gateway.

Hence, Econet’s actions are, in effect, encumbering ZIMRA’s revenue collection function.

Below you’ll find our (CSI) responses to specific sections of Econet’s  statement on TechZim:

1)      Members of the GSMA Association Pay Termination Charges to Econet

In its response Econet states and we quote:

“Econet restricts access to aggregators that use international gateways to terminate SMSs on the Econet network”.

A point that deserves to be appreciated: According to a formal communication that we received from POTRAZ on the 29^th of October 2013, it is not illegal for local SMS aggregators to use ‘International gateways’ to terminate SMSs on the Econet network. (Please note: We’re currently in the process of securing permission to share the-said communication with the readers of TechZim. Please bear with us).

Hence, it would be prudent for Econet to explain, in detail, the rationale that buttresses its actions.

Full disclosure: To route the bulk SMSs that underpin the SMSPlus service, CSI primarily employs the services of RouteSMS from India. As you can establish from the GSM Association (GSMA) website, see: http://www.gsma.com/membership/routesms-solutions-limited, RouteSMS is, like Econet, a member of the-said association. Basically, the GSMA is an association of mobile operators (and associated companies) which is devoted to supporting the standardization of the GSM mobile telephone system and the adoption of best practices. This serves to demonstrate that CSI’s SMSs do not originate from “grey routes”.

Further, like RouteSMS, Econet is a signatory to international telecoms treaties. The-said treaties oblige Econet to terminate traffic that originates from providers that have provisions in place to pay local SMS termination charges.

Hence, we do not understand why Econet encumbers our bulk SMS service. Again, it would be prudent for Econet to explain, in detail, the rationale that buttresses its actions.

2)      Econet is a Telecommunications Company with a Banking Footprint: It has conflicts of interest

In its response, Econet states and we quote:

“We are open to cooperating with SMSs aggregators, and we are working with our regulator to ensure this happens as smoothly as possible and within the regulations.”

A bit of background information: Econet has a 70%-80% share of Zimbabwe’s mobile market. On the 12^th of December 2012, Econet purchased 100% of the outstanding shares of TN Bank. This transaction solidified Econet’s position as a telecoms company with a footprint and strategic interests in Zimbabwe’s banking sector (through EcoCash and Steward Bank).

Hence, it is reasonable to assert that Econet is a competitor to all registered commercial banks and financial services players in Zimbabwe. Otherwise stated; Econet directly competes with the financial services players that use CSI’s SMSPlus service.

If CSI uses Econet as a provider of bulk SMSs, its banking clients would, owing to Econet’s (currently) exorbitant prices, be at a competitive disadvantage when it comes to effecting client communications via the SMS Channel.

Put otherwise, other financial services firms would fail to compete against Ecocash and a backward-integrated Steward Bank, if we “cooperate with Econet”. Eventually, they would die a slow and painful death. Not only would this destabilize Zimbabwe’s already ailing financial sector, this proposed arrangement would ultimately rob the general public of choice.

Hence, it is reasonable to argue that the arrangement that Econet is proposing breaches international antimonopoly and antitrust best practices and standards.

As a company that is making strides towards greater social responsibility, CSI refuses to be party to an arrangement that would: 1) Saddle the public with high transaction costs and 2) Stifle Zimbabwe’s already ailing banking sector.

We implore Econet to cease acting in a belligerent manner. And, we would welcome an opportunity to meet with Econet, in the presence of POTRAZ, to put this matter to rest.