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Exclusive Interview with Telecontract CEO, Shadreck Nkala Over ZOL Disconnections

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Telecontract / Telco

Telecontract / TelcoTwo days ago we posted an exclusive interview we had with the ZOL CEO David Behr over the broadband disconnections we posted here on Monday. David Behr revealed some interesting aspects to the story.

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Later the same day, we had another exclusive with the other side, Telco CEO Shadreck Nkala. Below is the transcription of the Interview. Like ZOL, he also reveals some issues that have not been apparent before this interview. Tell us what you think in the comments section below.

Shadreck Nkala: It is very unfortunate. People abuse the facilities that they get provided.

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Tech Zim: You feel abused?

SN: Yes, we’re feeling very seriously abused.

TZ: How were you abused?

SN: We were abused because a lot of customers were installed in the system without proper authorisation, without following right procedures and also without names, without addresses, without a lot of things which we’re trying to correct.

TZ: Ok. So in short, you provide ZOL a platform?

SN: We provide ZOL a platform to connect their clients, the clients which they recruit.

TZ: And they’re supposed to identify each client?

SN: They’re supposed to identify each client, his name, his address, and if it’s an individual we’re also supposed to have an ID. ZOL is supposed to supply that or the client himself. So in this particular case, all those information is missing and we have consequently then removed these clients from the network after ZOL failed to provide the information within the stipulated deadline.

TZ: Your stipulated deadline or POTRAZ?

SN: Our stipulated deadline. Well POTRAZ had also given their deadline but it was our deadline, which we said we needed to rectify that problem by that deadline, which clearly they (ZOL) showed no intention of complying.

TZ: What was the deadline?

SN: The 27th of the month.

TZ: A day after you disconnected them?

SN: I don’t remember when the disconnection was but it must have been somewhere around there. But that was after 7 days they were given to regularize the information. That is one group of clients who were disconnected. The other group was disconnected directly for non-payment. ZOL’s inability to pay for them.

TZ: Both groups are ZOL connected?

SN: Yes.

TZ: So the other group, ZOL failed to identify and submit information.

SN: And the other group ZOL had not paid. Like you saw in their press statement, they go into all sorts of arguments about buying a base station and worse, that we did not pay for that, but that base station, those base stations were bought on a BTO in 2007.

TZ: What’s a BTO?

SN: Buy Transfer and Operate. Which we were jointly supposed to operate them. One was supposed be deployed at TSL, Workington. Another one was supposed to be deployed at Joina centre. A third one was supposed to be deployed at Pockets Hill.

The Pockets Hill one went faulty, so that base station was then returned to the supplier in Israel in 2007. And that was the last we saw of the base station until recently. ZOL tells us that it came back last year in August but Genesis (where it’s now sitting) tell us that it came back in 2008, and we don’t know where it was all these years. It only emerged to us in November with 90 clients.

TZ: 90 clients that were already connected?

SN: 90 clients that were already connected. Already operating on the base station, whose existence we didn’t know since 2007.

TZ: And your suspicion is that it was repaired and brought in…

SN: …and brought in and installed somewhere and Telco not informed. Consequently obviously that’s another matter we’re still investigating when exactly it was installed because it means they really installed it illegally and defrauded us serious monies.

TZ: Because when it resurfaced it had 90 clients?

SN: It had 90 clients. That is really one of the conflicts that is there, which is now a legal issue which we’re dealing with the lawyers.

TZ: And I notice, ZOL use it actually as one of the main issues, but you chose to avoid it and not talk about it at all. You have quite valid reasons?

SN: Yes the lawyers are dealing with that one.

TZ: You prefer not to…

SN: Yes the lawyers are dealing with that one. We didn’t think that for the customers that is important. We’re saying to the customer, which we had said to ZOL. In fact POTRAZ had appealed to us, “please consider the interests of the customer. The customers have paid your agent. Your agent, if he doesn’t remit the money, it should be a problem between you and the agent.” So we said ok. In the first place we reconnected them of that strength.

But with time we said “there’s this unsolved issue which ZOL has to declare who these people are and in terms of the law we’re required to be strict on that one.” So while we’re sympathetic with clients in this situation we’ve been caught in this particular situation, but there are legal obligations for us to not supply service to any person you don’t know.

So we’ve insisted now that for these clients, first of all we don’t want ZOL to collect money on our behalf anymore by holding the money they have done over the last two months. From April, we don’t want ZOL touching our money. We want those clients to come forward and pay us. Today we had about 8 that have come forward and they have been reconnected to ZOL.

We’re not wanting to be vindictive but we need that to be regularized so we’ve connected. We’ve allowed them to connect to ZOL but they must pay us directly now our money and not pay through ZOL.

TZ: Because ZOL in the past, according to you has…

SN: Used to collect money but now we don’t think they are a reliable partner to be able to collect money on our behalf. We want the clients to come forward and pay to us.

TZ: Now this, the need for customers to come forward and identify themselves or for ZOL to identify the customers to you. Someone would want to know, why now? You’ve been a partner with ZOL for a long time.

SN: But we’ve been a partner with ZOL for long time, quite a lot of it they’ve done it irregularly. They have abused the system that they had been given by putting people without declaring the information. Maybe what was a failure was our system to track the identity of the extra number of people. It was a weakness in our system as well which allowed them to exploit this.

TZ: To keep on adding customers without…

SN: To keep on adding customers without our knowledge. Because if we had known we would not have allowed them to put codes on the base station. Because our technical people say they gave them rights to add clients, so that’s how the system was abused.

TZ: Without going through Telco?

SN: Without going through Telco. They would log into the system, create an account. And they go to the customer and deploy equipment which will allow the customer to come through Telco to ZOL.

TZ: So that’s really the issue. It’s not about stealing clients from ZOL?

SN: No no, it’s not about stealing clients from ZOL. I don’t think so. The moment they are saying that they are afraid that if we know the customers we will steal them, I don’t think so. I don’t think they are genuine in that. We’re not stealing clients from ZOL, we value the clients, I mean the reseller bringing clients to us, to our network and connecting through our network. We value that so we don’t know why we would now be stealing them.

Even now like I said, the 8 that came forward today, we’ve connected them. We could have said “no, we insist you now take service from Telco”. But we’ve not. They still connect through ZOL. We’ve connected. They have come and paid our part and we’ve switched them on to ZOL.

TZ: That was one of the things I was confused about, that why would Telco want the extra administrative burden of dealing with…

SN: Exactly, with individual clients, it was advantageous to us when they collected for us, like Yo! Africa. The next one who is big as ZOL is Yo! Africa in our network. They’ve got the same number of clients with the same account which they’re paying around $40,000 a month for that collection of clients. Their payment is excellent. They pay within time. It would not make sense for Telco to take over the collection and do the administration, when they (Yo) are doing it well, and they are collecting and bringing money on time. And even if they have a query, they pay what they believe is the correct bill and they query later.

The worse part is for the service provider to hold back all the money and say “I’m querying the account and if you don’t explain to me I’m not paying you till you have resolved the query”. Meanwhile the customers have paid him. Those are some of the issues the other customers who have been suspended for that.

And they (ZOL) are saying “there are some base stations that came and we introduced the clients”. If they introduced that base station without telling us, we didn’t know about it!

TZ: But you have clients on that base station?

SN: The clients are all ZOL’s clients. We don’t have clients on that base station. They are all ZOL’s clients. But under the BTO, we were to reserve ZOL space to market that base station for 18 months. After 18 months we allow other service providers to also use the base station.

So this particular one was still only ZOL clients.

TZ: You mention the other service providers; Yo! Africa, maybe Africa Online and Mweb as well. You don’t suspect them of abusing the system?

SN: No, no. Actually also we have changed because that abuse by ZOL has made us make sure that all… Some of them like Mweb have said to us “Look guys, we have heard complains that maybe you might take our clients.” We said “we don’t take your clients, if you want us to include it in the contract, we will include it in the contract. We want to encourage you to market and bring customers on our infrastructure”.

So taking them is self-defeating for us because we want… it means we have an added marketing arm of the service provider who has got his own resources, who runs around town, with his own people, recruiting and bringing them to you. While we do the backend management of him only… coming to you with 50, 60 clients marketing and bringing them into your network.

TZ: This is why it doesn’t make sense for you to…

SN: It doesn’t make sense for us to cut the reseller. It doesn’t make business sense. But until only when he refuses to pay you, then it becomes problematic there. And these other service providers are doing it very well. Yo! Africa I must say they are absolutely professional. They pay on time, they never delayed payment.

TZ: And the other ones, Mweb…

SN: And Mweb as well, Africa Online as well. They pay on time. Even ZOL used to pay very well 6 months before. This is a new development that’s 3, 4 months. And we think it has been because they are now hiding this (base station). Because when we discovered the base station, we billed them for all and backdated it. And that’s what made them mad. And that’s why they want to run. Because we said “Look, you brought this base station a long time ago, you didn’t declare it. Now it has 90 to 100 clients. We think you have been operating it from Genesis for such and such a time. We’re billing you backwards. That’s where there’s the source of the problem.”

TZ: Does that explain the two hundred and forty something?

SN: Exactly, that’s what explains the big amount of money, which we were saying to them “You’ve been defrauding us, you have not been declaring proper revenue for this base station over the last 6, 9 months.” That’s when then they went ballistic. So they want to run away from Telco as much as possible because they don’t want to account for that period.

TZ: We managed to get a copy of the contract that you gave to ZOL. It stipulated about 36 months for their clients…

SN: Well let me explain that. ZOL is trying to exploit that. It could have been also a mistake because what we had done: we didn’t want them to sign the contract. We wanted them to sign the KYC (Know Your Customer) form. For these clients that were disconnected it was the KYC form. That 36 months there, which they’re saying we’re demanding clients to pay for 12 months, for 3 years upfront, it’s not true. Even within that contract, take that contract, the customer has the right to disconnect.

Nobody can be forced to stay for that much of time. And I think it will be self-defeating to enforce clients to stay for that long. Even within that customers give notice, there’s a notice period that they ask to give and they can move to any other service provider.

Nobody in this economy now would want to be tied in for 36 months.

Even us, we have change now. For instance even our satellite providers, who are providing us international bandwidth, we’re refusing to sign anything more than 12 months. We’re saying “look, because there’s fibre coming from the sea. It’s coming from Mutare. It’s coming from now Powertel, it’s coming from Botswana. Soon there’ll be somebody coming from Beitbridge with undersea fibre cable. It doesn’t make sense to lock yourself up. We might get cheaper bandwidth, the prices are going to start coming down. There’s no doubt the prices are going to start coming down.”

TZ: In that direction. What have you done yourselves to.. Because one would argue that Econet has radios through Ecoweb and are currently developing a fibre network which has been your core business for a while. Africom has their established fibre network, metro networks. And Powertel has one as well. They are all moving in the direction of bringing in their own capacity through the undersea cables…

SN: We had a similar project to Beitbridge, which we were working with Railways. We had signed a right of way with the Railways, but it ran into a little bit of financing problems because it was based on South African banks who have now started now questioning because of BIPA (Bilateral Investor Protection Agreement) that Zimbabwe had not signed. Because we had a South African partner assisting on that particular project. We’re still pursuing it. We have an agreement with the Railways to pursue the Beitbridge way.

We’re not thinking of Mutare, we’re still thinking of the beitbridge way.

TZ: Along with Econet?

SN: Yes, along with Econet. But we were of the view, which we’re still trying to push through the ministry that these are national projects, we should go into a partnership as a consortium of service providers, instead of one service provider.

Yes we note Econet has decided to go it on its own but we still believe that that’s a national backbone which really should be dealt by all operators not just one operator. Under POTRAZ and under ZISPA (Zimbabwe Service Providers Association) or even the Ministry of ICT to try to see, to encourage operators to come together and form up a consortium. And even also, for instance EASSy in Mutare, they have offered us that we come as a consortium of Zimbabwean operators, join EASSy cable so that we get preferential rates and they will deliver the bandwidth in Mutare but provided we come and join the EASSy cable consortium. Which we’re working towards but this has to be looked in at a national level and not as a single operator level?

TZ: To come back a bit, the customers obviously feel the pinch. I think this has been a week now. ZOL is saying something from one end you’re saying something from the other end. At the end of the day the customer is still not connected and your name has been found to be involved in withdrawing this service? Don’t you feel that does some damage to your brand?

SN: Well the damage would happen but I think the situation here we’d been left with no option. We had to consider all options. We tried to reason with ZOL. We tried to discuss and we believe they are very unreasonable, particularly when holding our money that has got POTRAZ fees.

We had to borrow money to go and pay ZIMRA and POTRAZ fees while they are holding our money. While they’re also holding all information about the clients. So we feel we’d been pushed to the level where this matter has to be solved.

Unfortunately now we have to appeal directly to the clients to come forward and pay us. Because what would have happened, if we had left ZOL going to collect money from the clients, and continue to collect money, they don’t pay us so what would we have achieved?

Now we are ensuring the clients will not pay. They’ll not pay until there’s an arrangement. They won’t pay ZOL unless ZOL provides them a solution

TZ: But again, there’s a huge movement because ZOL is talking of migrating all customers to another IAP. So there’s…

SN: We don’t mind them migrating to other IAPs because other IAPs are also our colleagues. We have an association, what is called Internet Access Providers, and which we want fair competition that is based on ethical performance.

And we’ve discussed this matter and we think the mistakes that Telco made Africom won’t make because we’ve talked to Africom. We explained to them the situation: “We know that these people are coming to you, please avoid..” in fact as it is today (Thursday, 01 April 2010) they have contacted me on some issues after I briefed them this and that “yes thank you for letting us know that information, we have found some weaknesses we’re closing.”

So for the industry, we think that as Internet Access Providers who are licensed, we pay a lot of money to government. And we don’t think it will be fair for an unlicensed operator to play us games.

TZ: To switch from one guy to the other guy?

SN: If he (ZOL) brings customers to those people (Africom), now Africom knows the problem. They are not going to allow it, the same mistake that Telco did. That I’m quite sure. Powertel are aware, they’re not going to allow them to take advantage.

The market at the moment has more demand than all of us can supply, but it’s important that when we supply, let’s not be shortchanged by people who are sort of mercenary type of operation.

In fact in my view ZOL, they have been a very good service provider but in the last few years they have operated like mercenaries.

TZ: How so, that’s a very strong word actually?

SN: It is strong in the sense that if you become like a prostitute that you have no loyalty to somebody. We think we have done a lot to build ZOL to what it is, and they have betrayed that trust by doing some of the things that they have been doing.

They have been abusing our network. Some, (things) we may not be able to prove but they have definitely abused our network, very seriously, which some of it could be bordering on criminality.

So I think we’re not probably going to pursue some of those things because we’re going to sap our energy on useless things but we feel very abused.

TZ: And as (IAPs) you say…

SN: We’re working together with Powertel. We’re working together with Africom. We’re working together with TelOne on the Internet part. We’re also sharing this information with them. There’s a determination by POTRAZ which through the ZOL file, Telco/ZOL, we’re sharing now with the other providers exactly what POTRAZ would like to see. Yes they (POTRAZ) are sad about the disconnection of clients but they have made a determination on ‘who owns the client’.

ZOL doesn’t like it. They have written a very angry letter to POTRAZ saying “why are you saying the clients are not ours?” But that’s POTRAZ’s interpretation of the law as it is.

So we’re sharing that information with all; TelOne, Africom, Powertel, on what is the determination on ZOL vs Telco in relation to operations, of ownership of clients.

TZ: So that all IAPs understand the relationship between an IAP and an ISP?

SN: If an IAP decides to do it, that is really his (the IAP) own business, but I’m quite confident all of them will benefit from the regularization of ensuring that we have a fair competition but based on proper ethical behavior.

TZ: The last ZOL press statement, they talk about personal threats against the ZOL CEO….

You look very shocked?

SN: I’m shocked. I’m shocked. From where?

TZ: Well it’s in the press statement so obviously ZOL is linking this to the problems they have been having with you over the past week. But the mention is that the ZOL CEO has had personal threats against him which are meant to intimidate ZOL. What’s your comment on that?

SN: I’m not aware. From whom?

TZ: Well, it doesn’t mention.

SN: No. Telco is not aware. At least Telco doesn’t threaten people. We don’t threaten. I’m shocked because we don’t threaten people. It says the CEO


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