In rejoicing for Zero rated content, Facebook & WhatsApp bundles, let’s worry about net neutrality

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Locally, perceiving zero rated content packages, Facebook specific and WhatsApp specific bundled internet as anything less than positive feels like looking a gift horse in the mouth. It’s like pouring cold water over something that should be celebrated. But let’s have the net neutrality conversation for a minute.

These zero rated websites and app specific bundles create an internet that is uneven. Right now, in Zimbabwe, Facebook and WhatsApp are cheaper than, Google Plus and WeChat. So it’s no surprise therefore that anyone sharing something they hope many people locally will see, put it on Facebook. Either that, or your audience simply can’t afford to view it.

So if, for example, WeChat right now want a chance at being as popular as WhatsApp is to Econet users, they’ll have to beg Econet to be bundled too. Econet might ofcourse tell them ‘no’ and argue that it’s actually not the bundles that made WhatsApp popular. WhatsApp was popular already and Econet simply made a popular service available to more people at a lower price. They’d say that Econet is actually sacrificing some revenue to make this possible in the hope that subscribers stay on the network and use other paid services like voice and YouTube.

whatsapp-bundlesAnd Econet would be right in arguing this way. But WeChat could have a counter offer. WeChat could pay Econet money to be bundled. Or simply zero rated. It’s hard ofcourse to see a mobile operator saying no to an additional revenue stream that’s just come from nowhere. And seeing WeChat is as deep pocketed as they come, it’s not far fetched at all for such a scenario to play out.

WeChat are of course not what we are concerned about. They can handle up-fronting big money to have their app reach more internet users. What matters is the startup competing against WhatsApp, Facebook or WeChat themselves. Or worse still, what about when your startup is competing against a mobile operator funded internet startup?

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A mobile operator funded internet startup?

Yes, mobile operators are themselves in the trenches hoping to create the next big internet startup in Africa. That’s what MTN, Millicom and Rocket Internet are. All three are mobile operators first and then internet startups. They are doing eCommerce all over the African internet trying to catch up with Naspers who have been home on the internet for a while now.

In Zimbabwe, Econet will either start more of their own internet startups, or will at least be investing in/buying them. That’s what EcoSchool is; an internet startup selling books and internet to students. it was actually inspired a lot by a smaller startup called Mazwi. It’s not a question of ‘if’ mobile networks will get into content services. Not even a ‘when’. It’s going on right now.

Net neutrality and the precedence of the Banks vs EcoCash

In Zimbabwe, a lot of people have largely ignored the monopolistic take-it-or-leave-it game Econet has been playing on the banks; the almost impossible conditions for neutral USSD access to subscribers. That’s because the banks are easy to hate. When a bully is finally taking a beating at his own game, only a few spectators realise that instead of cheering on, they should be concerned about the new reign coming. Few realise that instead of hating the game, they’re hating the player and that, even though this banker has been beaten down, the game continues and it might just have gotten more ruthless.

Econet-ZeroIt’s not just the banks. Econet has been known to want to vet what value added service gets onto their network and doesn’t. No one but Econet has an idea what this vetting involves. Could be how moral or christian your idea is. Could be based on an idea they are thinking to do themselves. Looking to launch a VAS service that connects atheists to each other? Too bad! What about an sending health related SMSs for a monthly fee. That too, no.

But you could argue that Econet not opening up VAS is just a sign of an unorganised VAS providers market. You’d likely be right and wrong. Remember the banks have been organised in wanting neutral USSD access. Did they get it? What difference would an organised body of VAS providers make?

Monopoly hates neutrality

If Econet had 30% market share in the country, this wouldn’t be a problem. They however have more than 65%, and if the other networks continue sleeping (in the case of our dear operator owned by we the people), and focusing on boardroom politics (in the case of the other), Econet is set to get even more market share.

More market share in itself is not a bad thing. On the contrary it is good there’s an operator that takes business seriously enough. It’s a good thing and it would be very silly to even start thinking that Econet get less aggressive or invest less in expanding. Econet’s hypergrowth is a good thing for Zimbabwe.

But as they say, with great power comes great responsibility, and so far, Econet is growing so fast, they don’t seem to be paying any attention to the fact they may fast be becoming the many bullies they fought – TelOne, Government, Banks and indeed Exclusion.

What do we recommend?

As good as they are to the consumers of the internet, these zero rated websites and app specific bundles are creating an internet where providers will decide what subscribers can access. They are creating consumers that think it’s normal for certain websites to be cheaper than others. On a continent where many are accessing the internet for the first time on such a model, this is dangerous.

Leaving it to the operators to decide which app or website is cheaper to access will kill innovation. Especially as the operators are themselves now a player in creating internet and content companies.

africa-startupsAfrica has an opportunity at creating a healthy startup ecosystem where, just armed with a great idea, anyone has a shot at accessing internet subscribers without begging or paying large sums of money to a gatekeeper. Our economy needs this. it is therefore a problem that using technologies like deep packet inspection, mobile operators are right now a gatekeeper.

We recommend that at least the net neutrality conversation starts to take place on the continent. That regulators like POTRAZ must pay attention to it at least. Monopolies are only a problem when there’s inadequate regulation. Internet access in Africa is largely via mobile. This is urgent.

14 Comments

  1. Farai says:

    This long article lacks facts but instead promotes the writers fears, uncertainties and doubts. Econet is not a monopoly, ZESA is a monopoly. What is stopping anyone with his VAS from approaching NetOne and Telecel? These two combined have a market share of 5 million enough to scare Econet. Besides how can a network block access to other apps when you can use your main bundles to visit those apps. Econet saw an opportunity cause Whatsapp was popular already and they seized it. Lastly Econet is a “private” (public company I know) company not a parastatal that runs on subsidies. How come you want to dictate how to do business with them on your own terms.? I wonder if I come with a paper to show you how to do business with me you will show me the door in less than 2 seconds

    1. Mhuka Huru says:

      No one said Econet is a monopoly, but the industry has become monopolistic, due to Econet’s 65%, You can use your other bundles? the ones that are very expensive and expires quickly?

    2. Thanks for the response Farai. I hope the below answers adequately:
      – Strictly, Econet is not a monopoly. but they are a leader who, if they deny you access to their network, you essentially can’t access 65% of the market. That’s pretty big and significant and can define whether an idea succeeds or not. Again, ask the banks.
      – Telecel and NetOne combined are still just about half of Econet’s subscriber base. Besides, Telecel is practicing the same bundled app model and are therefore themselves part of the problem too
      – The reason you won’t use your main bundles to access other apps is that it is more expensive to do so.
      – Not dictating that Econet does business on my terms. Just calling for the regulator to pay more attention to anti-competitive behaviour. Being a private company has nothing to do with this.

      1. Optimus Prime says:

        “Ask the banks”? I will. Because Econet has NOT denied them USSD access. It has simply put up a commercial charge for access to a service it invested in.
        Instead, banks have walked in to a store, seen a pair of nice silk briefs, and demanded to be allowed to pay a price of their choice. Big difference.

        1. By charging banks a higher fee for mobile money traffic, Econet has effectively denied them access. It’s like banks walking into a store and being told, “ahh, because you also sell the same stuff in your own shop, you pay more for these silk briefs than other customers!”

          1. Sekuru Kaguvi says:

            L.S.M, charging a premium on a product is’nt shutting anyone out. This in my view boils down to supply and demand. Pure raw economics, though I am no authority on the matter, what Econet has done equals what Rolls Royce does, or Apple or any other market leader looking to make the most on a product that in high demand. Set a price tag that controls the demand lest you kill the goose that lays the golden egg.

          2. Farai says:

            All this reminds me of the Netflix and Comsat issue. By charging more to Netflix to have better service, the cost of providing the service to end users can go up. Very soon Econet will be doing the same or is especially with the banks. The problem is that Econet has become Zimbabwe’s major telcoms provider. I maybe blowing my trumpet here but so many businesses and people depend on it for reason or the other. It has put itself to be a ZimAsset and it is using that get what it wants at whatever cost.

    3. mad says:

      Farai u speak the truth, unoda kutengerwa coke

      65% because we love their services, and
      Potraz is biased regulator, it favors mobile operators A and B its a fact. If one have his/her VAS go to Telecel and NetOne 5million is a huge number.

      Banks complain about econet beacuse they want a cheaper service from a competitor, in business a competitor should pay more to use your service.

      One thing u want to run away , IN BUSINESS WE PAY, buy you bundle and do want i do i use them for viber and wechat;. Econet is justified you cant go to them and give them your terms and conditions, we dont operate like that. If you are not happy with them go to Telecel and Netone. If you say econet data is expensive go to Telecel and Netone, Why buy a 3 litre fuel car if you dont have money for fuel? buy ka vits or ka march

      About econet launching a EcoHealth, is you read about whats happening in the north and west africa you will find out that mHealth services are been introduced by other operators, So i see no reason for Econet not doing it so. Havidi kusara kunge Telone, when the world was busy introducing fibre network, Telone was busy digging down copper cables and installing call boxes instead of introducing mobile services

  2. Mhuka Huru says:

    I never though about it from that angle, but makes a lot of sense, and sets dangerous precedence, it even becomes more dangerous when the gatekeeper is Econet, a company well known to thwart efforts by aspiring entreprenuers/start-ups. The promising industry might not grow at the expected rate after all! #Scarry

  3. Anonymous says:

    i think the element of anti net neutrality we dont want is when a company pays a isp to get preferential treatment or as you put it to be zero rated. if facebook or twitter where paying econet or telecel not to charge they clients that would be bad. but if a operator seeks to offer the zero rated benefit as a means to incetivize the use of data then its all good. its murky waters hey

  4. Peter says:

    Keep up the effort Econet , i am 100% for you innovation and giving us more product offerings. Personally i dont worry about monopoly of Econet since its premised on good business practices of wooing more customers to their network by bringing superior services. Monopoly i would worry about is when a company excludes all other companies from getting into the industry eg what was happening with ZESA

  5. tinonetic says:

    If the service is commercial, definitely there should be concerns. But non-commercial services like Wikipedia that are non-profit should be excluded, I think.

    Not forgetting to mention the same issue on your other article about Internet.org and Zambia http://www.techzim.co.zw/2014/07/facebook-announces-free-data-access-zambia-internet-org/

    Neutrality concerns:
    http://qz.com/215064/when-net-neutrality-backfires-chile-just-killed-free-access-to-wikipedia-and-facebook/
    http://qz.com/243086/facebook-is-creating-a-parallel-internet-in-emerging-markets/

  6. Jack says:

    You don’t innovate by starting your project with the statement,” if Econet could give me…..”. They are not zero rating sites out of new found benevolence. They are desperately trying to hold onto market share which they can try and exploit. Facebook, Google, Microsoft and Apple didn’t start off as leaders. They changed the game up. There is no free lunch. If you think it’s free, be afraid because you just can’t see how you are paying.

  7. broke young man says:

    i ussualy read techzim news via binu…for free

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