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Full text of NetOne’s notice on interconnection dispute with Econet

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Econet and NetOneEarlier, we reported that NetOne released a notice today basically saying that in addition to making an application to the High Court to have Econet restore the interconnection (which they have done), NetOne is also taking the matter to the police so Econet board and management can be held liable for the “crime”. The NetOne notice also explains their side of the interconnection dispute that resulted in yesterday’s situation.

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Below is the full text of the notice that we received from NetOne

 

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24-08-2012

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.


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14 thoughts on “Full text of NetOne’s notice on interconnection dispute with Econet

  1. Meanwhile we encourage our subscribers to enjoy the ‘Dollar a Day promotion’ … classic

  2. “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”…wow can someone explain how this can become a national security issue?

  3. Netone’s response clearly illustrate the need for the state-owned mobile network to be privatized by way of a listing on the Ziombabwe Stock Exchange and for the government to get out of business – competing against private businesses – and stick to governing.

    You can’t have the government setting the rules for businesses, competing against the businesses, and then when its businesses fail to compete, they approach the minister responsible (government) to favour them in order to succeed against competition from private Zimbabweans, epecially Native BLACK AFRICAN Zimbabweans.

    Netone’s press statement is rich with admissions of gross incompetence, negligence, and mismanagement withing Netone itself that it is shocking no one has been fired from Netone as i write.

    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.

    Why didn’t Netone move everyone to the pre-paid platform when its competitor (ECONET) was doing the same and it was advantageous and more sensible to put everyone on the pre-paid platform in light of the hyperinflation? This is clearly a failure by the government-owned businesses to compete and shows incompetence, serious incompetence, gross mismanagement of the parastatal. Zimbabwe probably lost millions of US dollars, if not billions over the 10 year period Netone was using the outdated billing system.

    Netone management must understand that a state-owned company is setup to benefit the citizens of the country, and does not have to do so at a loss, or do nothing. Parastatals must operate as commercial entities, and not be run down to the ground like ZISCO so foreign companies like MTN and Essar can buy state-owned companies on the cheap.

    The huge debt Netone has is of its own making. Had Netone moved to pre-paid billing, it would not have accumulated the huge debt it now has. It would be competing with Econet on equal terms, yet Netone chose not to and for wht genious reason we do not know. Because of this, Netone management allowed state assets to lose value and earn lower than optimum returns.

    What kind of a company that even wants to be world class, keeps the same billing system for 10 years? Technologies and capacities change and increase every year.

    Instead of out-doing, out-smarting, and becoming better and more efficient than its competitors, Netone sat on its laurels and continued to run inefficiently, and now it is running to the Minister (Government, its owner) to force Econet to cancel a debt Netone accumulated of its own making. Netone even suggests SENDER KEEPS ALL so it can benefit itself at the expense of Telecel and Econet. No one stands to benefit from that than Netone. We never heard Telecel complaining about interconnection and Telecel is still connected to Econet. It is disingenious for the government to protect incompetent businesses at the expense of the successes of indigenous private enterprise.

    This sets a dangerous precendent for entrepreneurship in Zimbabwe as it (1) discourages many from setting up significant businesses in Zimbabwe, (2) promotes brain drain to countries with more fair systems (think American Dream, UK and South Africa) and (3) strongly discourages Zimbabweans in the diaspora from returning and giving their all to economic revival and development of Zimbabwe, so long as the state competes against them.

    In the state-owned Sunday Mail (Zimbabwe) Kangai himself said Netone was owed US$30 million by senators and parliamentarians among others. Netone must recover that money and pay Econet its $20 million. And move everyone from the post-paid plan to the pre-paid plan. Problem solved an no gvt intervention needed.

  4. oh man this seriously a grave error of a response if we should call it that, in no way do they offer any explanation as to why they were disconnected, but they attack Econet…huh like seriously??????

    1. Not to mention speaking for Telone as is Netone and Telone share management staff. They never even mention Telecel.

  5. These are some of the most lame excuses I’ve heard from a corporate the size of Net-One. How do you continue giving post paid when you know very well your client has no money. I know plenty businesses that used to do credit before hyper inflation but they acted decisively in line with the situation and did the proper thing any sane business would do… stop extending credit to the broke. Net-one puts it like Econet acted unfairly but actually they the ones that wronged other providers and their own clients by letting subscribers spend what they could not afford then threateningly publishing their names in the papers for failing to pay. Incompetence Incompetence Incompetence and Incompetence

  6. Desperation exemplified:
    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.

  7. The fact remains that Econet committed a criminal offence under the telecomms laws , this crime can land whoever responsible up to two years in jail.Their job is not to impede telecommunication rather they should have waited for the appeal before the minister and also potraz directive with regards to the rates fot interconnection .Defending econet on this platform will not change anything coz many of you will be left baffled.This is one battle which econet surely lost legally and i see them being fined heavily by potraz.Some of us here are well known for blatantly defending econet and attacking netone on this platform even if it does something wrong.I don’t support such nonsense coz i lost business last thursday becoz of econet.People should weigj their facts before posting comments here coz econet also infringed on the rights of their subscribers by their actions.Some people have been brainwashed by econet so much so that they have become blind not to see their rights being trampled upon.If netone says they had no agreement with econet coz the last one lapsed in 2007 let them prove it in court otherwise why would they refuse to pay .Let’s not speculate and say netone is the wrong party.I hope they lock up all econet goons behind such an illegal act which deprived pple their right to communicate.The telecomms act provides for one to approach an arbitrator in terms of interconnect disagreements which route econet did not take but rather unilaterally switched off connection.Lastly let’s not politicise anything as has become the norm by some people here lest we be caught on the wrong side of the law, infact i did warn pple to watch their time coz it is for their own sake.You won’t be surprised if netone doesn’t pay a single cent after this whole saga.

  8. NetOne is not even ashamed to publsih such rubbish.This is a clear display of gross incompetence by Mr Kangai and his team. Escalating issues to the Minister responsible and Potraz because you know very well that they will fight in your corner. You did not move to prepaid becaus eyou wanted to appease the politicians and now they cant pay the huge bills…still Econets’s fault?

    1. What has Econet benefited clients since its inception? Except to milk them of their dollars with exhobitant charges? Remember before Telecel, their cell lines were costing well over USD150? No wonder they fill the pinch. they want to grow big by overcharging for their services.

  9. Classic Statement:
    Instead of out-doing, out-smarting, and becoming better and more efficient than its competitors, Netone sat on its laurels and continued to run inefficiently, and now it is running to the Minister (Government, its owner) to force Econet to cancel a debt Netone accumulated of its own making. @55eda97a25a3b60bf00a370fa6836a8f:disqus

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