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More to the Econet and Netone interconnection dispute?

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This is a Guest Post and does not necessarily reflect the thoughts and opinions of Techzim. We have a strong filtering process of what makes it to our blog and are confident that you’ll enjoy the article below.

This article is by Jabulani Chirinda, who describes himself as “A technology enthusiast, entrepreneur, Google services platinum user.” Chirinda Studied applied physics at NUST, and is currently pursuing a degree in Telecommunications with a university in Zimbabwe. He’s passionate about mobile technology, social media, digital photography and space technology. Married and have a daughter.

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Econet and NetOneOver the past couple of weeks or so the media has been awash with stories of a payment feud between mobile Zim telecommunications operators Econet Wireless and the state owned NetOne. At the centre of the dispute is interconnection fees arrears from NetOne dating way back to 2009. The details of the dispute seem to be in two versions; the Econet and NetOne version. Whatever the exact details of the dispute may be, could there be another hidden story to it?

It cannot be disputed that Econet had a right to demand its dues from a perennial defaulter. To emphatically put the message across, Econet severed the network interconnections with Netone on the 23rd of August 2012. This left NetOne in a state of panic which immediately prompted them to seek legal intervention on the same day. Connection was later restored by Friday morning. Both firms put up full page public statements in local papers stating their side of the story and somehow trying to convince the general public that they were on the right.

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The drama continued into the following week with all sorts of statements coming from both sides. Some of it perhaps ranging from hilarious to incredulous, stuff like; economic sabotage, threat to national security, gross criminal office, dishonesty, poor management… the list is endless.

What could have prompted the eruption of the 3 year dormant dispute?

In one of the public statements issued by NetOne, it sighted its “Dollar a day” promotional campaign as so much of a success that Econet Wireless was now trying to derail it. This promotion was running for several months and has since been replaced with a somewhat similar promotion called Happy Hour.

Netone is the smallest of the three GSM licensed mobile operators in Zimbabwe; its market share has been reported at around 17%. Econet is the shark in the pond with around 65% market share. Econet has achieved the lion’s share at a huge price of serious infrastructural investment running into hundreds of millions of dollars. Econet not only benefits from its massive subscriber base but also from other networks through interconnection fees. The larger the network (in subscriber numbers) the more it benefits from interconnection fees paid by other networks.

When Netone introduced its promotional campaign, it is reported to have been adding around 200,000 subscribers every week and that was some months ago. If that report is any accurate Netone may have grown to more than 3 million subscribers in a space of 9 weeks or so. If this is true, this would surely send shockwaves across to the competitors Econet and Telecel. Econet and Telecel would find themselves overwhelmed by a lot of traffic generated by NetOne subscribers and would understandably be frustrated about not getting any proceeds for the use of their equipment in servicing this external traffic.

The growth of NetOne over the last months could have prompted its competitor Econet to seek its dues more vehemently.

Disconnecting NetOne may have been a last resort but it could have been a strategic error on Econet’s part. It depicted Econet as an entity purely after the financial proceeds than social responsibilities. The failure to warn the customers well in advance did not give Econet a good public image either. Yes, Econet had every right to get its dues but it would appear it assumed a bullying position and ended up bearing the brunt of public outcry.

NetOne has indicated that its current promotion is coming to an end at the end of the September. While failure to pay debts must be admonished, NetOne must be given thumbs up for running such an innovative promotional campaign which could put it back on a recovery path and save many jobs in this fragile economy.

A lesson goes to Econet Wireless that being the market leader is no reason to relax. Innovation must continue to be nurtured and applied to the market. Customers cannot be taken for granted, they will follow the bargain whenever its there elsewhere. It’s a relief customers have been spared by the agreement between the disputing parties, hopefully our inter-network communication will not be disrupted ever again.


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20 thoughts on “More to the Econet and Netone interconnection dispute?

  1. I do not get the point of this article! It is just mambo jumbo. On a scale of 1 to 10, with 10 being the best marks, I give this article a 1 for the effort of using the keyboard! By the way, Net-One’s promotions are not cross network, so its not true that their promotions could have resulted in an increase of cross-network calls.

      1. what will happen when the promotion ends? considering that we are all dongwanaland animals (we have simcards for all networks), I bet people will track back to where total value is. My point being – Econet may not have been rattled by a short term promotion.

      2. You made a more convincing argument in one sentence than the entire article -all 693 words of it. I couldn’t get the ‘point’ after 11 paragraphs.

        That said – it’s still speculation about alleged increase in NetOne’s
        subscribers. One could argue that these newly acquired subscribers are
        existing Econet subscribers who are getting second (or third) SIM cards,
        leading to no significant cross-network calls.

      3. Sounds like someone is looking for a job at Net1 :). From a statistical point of view though, I fail to understand how the difference in number of subscribers should result in one network owing the other in interconnection fees if the cost of an internetwork call is the same between all the networks. The fewer Net1 subscribers making many calls each to Econet subscribers should on average be cancelled by the many Econet subscribers who at some point will make a call to a Net1 subscriber. Some subscribers receive more calls than they make (in total minutes) and others make more calls than they receive. Is there anything that would drive subscribers who make more calls than they receive to be concentrated on the smaller network thereby creating an imbalance in what should be a statistically random distribution?

  2. Are you trying to say what NetOne started cannot be done by Econet?

    Didn’t Econet first limit the access of TelOne for non-payment? What’s so special about NetOne? If NetOne is paid on behalf of Econet by its subscribers what makes it delay paying the other player who was involved in the service delivery. It is jealous and greed which makes one not to pay a small fraction of every call to the other party who is supposed to be paid. These companies are green with envy because they are supposed to pay Econet a lot of money every month but with Econet’s infrastructural investments they deserve it. Give to Caesar what belongs to Caesar and negotiate later!

  3. This article does not say much. It is a different point of view but not well thought out to be released as an article. dues should be paid when they are due no excuses on that. I was appalled when Netone tried to defend themselves

  4. When Netone introduced its promotional campaign, it is reported to have been adding around 200,000 subscribers every week
    and that was some months ago. If that report is any accurate Netone may
    have grown to more than 3 million subscribers in a space of 9 weeks or
    so

    Netone did not add 200 000 subscribers “every” week, and is NOT doing so.The article you cite says added “last week”, and nor “every” week.Elsewhere, in the original Sunday Mail article cited in the Techzim article, the Netone MD said Netone was “in the process” of addressing network congestion. There has been no big news about Netone making major investments in infrastructure and the fact that they struggle with network congestion from just 200 000 make me dispute that they even added 500 000 subscribers to date. We shall see when Potraz stats are out.

    You have to understand that Netone got paid by its subscribers for calls they made to Econet and therefore, Netone should have passed on the interconnection fees to Econet, but it didn’t. If Netone was paying up, it would never have been disconnected. As a result, even as ZIMRA knows the situation, Econet is paying VAT on interconnection fees it has not received from Netone. Econet is a 6,5 million plus subscriber mobile netwok and would hardly get jealous over 200 000 users per month

    If Econet was jealous of Netone subscriber growth and wanted to ruin Netone, it could easily start a “Dollar a day” promotion too until Netone is left with nothing, and yet it has not done so.

    All the subscribers Netone claims to have got, which you talk about, it can lose them in a matter of days.

    That’s what happens when you run such cheap sales promotions that do not create long term customers with a customer lifetime value above zero. Their dumb promotion does not create significant long-term customer numbers. Their dollar a day promotion was started in july with adifferent name, was extended to august, then now extended to September. Have you ever asked yourself why that is?

    It’s because the subscriber numbers growth is just temporary, unsustainable, and Netone knows it that once they stop the promotion, people would have got enough freebies and go back to Econet, Telecel, Telone, and even public phones. Netone has nothing else to offer except the freebies.

    1. I agree with your lack of economic logic of Econet acting out of jealous, because it has the wherewithal to do the same with possibly greater effect on the competition. The article also failed to explain how repudiation of what one owes does any good for one’s business image. If one repudiates what they owe, what do you do. Econet pointed out that TelOne owes, but behaves like the a debtor (talk nicely, make a payment plan). Lets be truthful.

  5. This article was not worth publishing considering its a regurgitation of press releases and other newspaper articles. Point of correction: If i hire you as a manager and your primary focus is social responsibility (read: let debtors default for more than 3yrs), then you are fired. People get into business to make money and profits period!

  6. hapana chawanyora apart from what we all know already. no critic no insight no new information nothing. I blame techzim for they should call for articles and at least review them before publishing. that way we get quality articles. I for one come here for the comments which are rich in content by people who know what they are saying. Open up and that way it will also solve your 3 article a week dilemma that I fail to understand.

  7. I think Netone should work towards improving quality of service other than basing on promotions only. Even if subscribers consider Netone because of promotions, in the long run they will run away if the quality of service is still poor. I’m sure some of these subscribers have been using Netone long back but later dumped it. Let Netone pay what it owes to Econet full stop.

  8. munyori wangonyorawo hake just because anga anenguva yekutambisa… i bet as soon as the dollar a day promotion ends those “200 000” a week subcribers wii disappear fro m the network….trust me i can bet a $1 that will happen

  9. While the article makes reference to other articles, it does by all means bring in an argument to the motives behind these corporate. I like the writer’s style of doing a research and bringing his facts together, that is what we expect from our bloggers. Again the writer has made it plain clear that Netone should pay its dues, I therefore do not see the reason for just attacking the writer. Sometimes we need to move away from brand loyalty, econet no doubt is a very strong brand and it delivers but competition do occasionally challenge it here and there which is healthy. In this case lets give netone credit when its due. Given the current economic recession netone may continue offering a modified version of its promotion because its still a viable business strategy making subscribers pay a dollar a day or so.

    Lets embrace competition from our service providers because it good for us too. Being just hard core loyalist has its well known dangers. Let us not fall in those traps!!

  10. This article lacks analysis. Its shallow and just recycles what we already know. Its not worth publishing. A good thing would have been to get views from other people

  11. God Help the Zimbabwe Tech industry. How can the author of this article be a “A technology enthusiast, entrepreneur, Google services platinum user.”. The guy cannot even reproduce statements from an article which he provides a link to. and just how he comes to the conclusion to come up with the statement “A lesson goes to Econet Wireless that being the market leader is no reason to relax.” is as buffling as the point of the article itself.

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