Exclusive Interview with ZOL CEO, David Behr Over Telco Disconnections

So, today we finally got a chance to talk to the David Behr, the ZOL CEO. Below is the full text of the 1 on 1 interview we had with him this afternoon. He basically explains more on the dispute between his company and Telecontract we reported earlier this week. We’re hoping to have a similar talk with the Telecontract CEO if we can get hold of him. (UPDATE (04 April 2010: 1148hrs): here is an exclusive with Telco CEO, Shadreck Nkala.)

Tech Zim: I’ll just start with the current status, after the update on the website and the press news release, what’s going on?

David Behr: We still have about a hundred customers offline. We managed to move about 100 of them to another provider. We’re hoping over the weekend to get the rest of them moved. They have the base station equipment in stock. The CPEs (Customer Premise Equipment) are actually being cleared from the airport. We should have everything done hopefully by Monday, Tuesday. Some of the companies are to be migrated over the weekend. We’re taking their details down, if they are able to open over the weekend we’ll go there and do the changeover.

TZ: So as we speak, some customers are actually offline?

DB: Yes, about a hundred. They have been since the 25^th of March.

TZ: What are most doing about that?

DB: Most of them are, you know, bringing in their mail servers to ZOL, because we then, we connect it to the LAN and upload and download all their mail and they can take it back to their company. Some of them are using ZOL Spots. We have 60 of those around Zimbabwe. That’s really it. Some customers are really struggling; they’re actually offline, completely offline. This is very very sad and it’s very painful, I really feel their pain. If there’s anything humanely we could do we would do it. Short of actually submitting to extortion.

Did you see their (Telecontract’s) press ad today?

TZ: They’re offering to reconnect the clients.

DB: They are offering to reconnect the clients, but from that (the press release) you can see, they are basically making the main focus that we wouldn’t hand over customer names. It doesn’t seem to mention much that there’s a payment dispute. Which is completely unfair because that’s not what the dispute is about.

You know, you’ve read my two press releases. You can see how they’re very different. I mean the issue that we’re arguing about is not over customer information. He’s talking in terms of the Interception Act (Interception of Communications Act (Act 6/2007)), which we don’t disagree with. We agree that under the Interception Act the operator must have customer information. We need to know who our customer is. The so called KYC – Know Your Customer forms.

However we maintain that they are ZOL’s customers. ZOL has that information. If POTRAZ wants to get that information they can come to us. If the police or any law enforcement wants to come to us they can get that information. We disagree that there’s any need for the upstream to have that same information.

They (Telco) claim they don’t know who the customers are but if I give you a look at what a typical bill looks like.

Behr goes on to show us an example of a bill from Telco. It has the list of customer names, most billed for about $80 a month for the last mile fixed WiMax connection.

So it’s inconceivable for them to say they don’t know the customer is. What they want is the copy of CR14, the ID, the address and more importantly, what they want to know is who is our contact there. No, I don’t think that they need that information. They know where the client is, rather they know who the client is, and they bill us for each individual client.

Under the Interception Act, we need to know who exactly the client is but they don’t need to know the contact details of our clients.

TZ: So why do you think they want the contact details?

DB: I think they want to take over the customer. I don’t think they want ZOL to have the customers anymore. And I think they want to bill the customer directly. They don’t want to bill through ZOL, because if they bill the customer directly they get more money from the customer. Because we get a wholesale rate (from Telco). So we’re paying them a wholesale rate. They want to retail it. They basically want us out of the loop.

TZ: Because they also provide the internet service?

DB: They are competitors! As much as they are a supplier, they also a competitor.

TZ: Don’t you think that’s the problem there?

DB: I think that’s the fundamental problem. Who owns the customer? And you made that point in your article. Very good point that, ‘who owns the customer’ and ‘who bills the customer’. As you said in your article, the customer is not aware of Telco really, or Africom, or whoever; they just know ZOL. We do their support, we’ve spent money advertising and acquiring the customer.

We believe the customer belongs to ZOL. We’re buying the last mile connection from all the IAPs (Internet Access Providers) and reselling it to the customer. They’re trying to call us an agent of theirs. Which we’re not an agent. If we were an agent or a franchisee, we’d have Telco signs all over the place. We don’t. We’re an independent ISP.

So what’s interesting is that they haven’t brought up anything about the base stations, anything about the money that’s being disputed, and anything like that.

Under POTRAZ they (Telco) have been running for 10 years or so; they have never had this information. Why must they get the information in the month of March suddenly? They have discussed it before but we always said, ‘hey, you don’t need it’. Suddenly, we don’t give you information now you cut off customers! Where did that come from? Where is the sudden urgency?

Behr showed us a letter that was sent to all ISPs by Telco requesting them to hand over information about their clients. He went on:

This is my argument; initially they told us “we’re giving ISPs up to the last day of March to hand over the existing client details”. Why did they cut me off on the 25^th? They didn’t cut off any other ISP on the 25^th, they only cut me off!

TZ: And why is that?

DB: Because that (client details) is not the main issue. The issue is about the payment. It’s not that I didn’t hand over customer details, which anyway I have to ask my customer before I hand over. The main issue is they cut me off because they say I didn’t pay $17,000. And I said, ‘I didn’t pay you because I paid your invoice owed for that base station’. We bought the base station. We installed the base station. They need to pay us for the base station.

TZ: So the base station belongs the them?

DB: It belongs to me until they pay me for it. But they want to own the base station. They’re renting the base station back to me. So they want me to pay for the base station and then pay rental on it, when it belongs to me.

David showed us some forms known as ‘Know Your Customer’ forms and a contract which Telco gave them to fill in details of their clients. ZOL and its clients were given 7 days to comply.

Read the first point. The contract is valid for 36 months. There’s no single client that’s willing to sign up for 3 years in this market where so many things are changing. I think what Telco was trying to do was they were trying to hold on to their position.

TZ: You think with all these changes…

DB: They know that Econet is coming, Africom is going big with Seacom. I think Telco is desperate because they have fallen behind and they want customers to sign a 3 year contract to lock them in. And the there wasn’t a single client that would sign a 3 year contract. I wouldn’t sign a 3 year contract. You wouldn’t sign a 3 year contract at this point. Can you imagine signing a 3 year contract with Econet for voice? Maybe MTN or Vodacom is coming in 6 months! Why would you sign a 3 year contract?

Not only that, they wouldn’t agree on the price. They said the price would depend on the Telco price list and is subject to changes by Telco. So you’re signing a 3 year contract which you have no control over the price. Then, because my client wouldn’t sign this in 7 days, they cut me off.

TZ: Did you try to get your clients to sign?

DB: I spoke to a few clients yes. And all of them said ‘you must be joking.’ Now you got to keep in my mind that some of these clients are embassies and government departments; they don’t move in 7 days. What, you want me to ask the ambassador of the embassy? It’s the Nigerian embassy and the Ghanaian embassy. Must I ask him for a copy of his ID?

TZ: Ok. But still it doesn’t change the fact that you found yourself in this tight spot

DB: A very tight spot.

TZ: Do you think there’s something wrong with the system – who owns the customer? Do you think there’ something that’s not working here? Quite honestly from your press statement it looks like POTRAZ (the telecoms regulator) is not doing much to help you. And nobody else is…

DB: Here’s the problem with POTRAZ. It’s that POTRAZ last week where in Vic falls for the whole week. They were hosting the Southern African regulators AGM. So their focus was there, it was not on what was going on here. I think Telco took advantage of that situation and they used that week to cut us off! When there was no one at POTRAZ that could do anything.

POTRAZ have been very proactive in trying to get it solved. We had a meeting there on Monday where we came with Telco. A verbal agreement that we pay them the $17,000 that they say we owe them and they would give us the base station. We were then going to take the base station and give it to another IAP to serve our customers. The next morning we went back to sign the agreement and Telco says no, our board says not to sign the agreement.

Is there something wrong? I think there needs to be an overhaul. There needs to be a review so it’s very clear going forward. You know there’s a number of ISP and a number of IAPs. It needs to be clear what the role of the IAP is and what they role of the ISP is. In terms of customer ownerships, of the relation of the ISP and IAP and the relationship between the ISP and POTRAZ.  All of this needs to be clearly defined and reviewed. The act itself talks of ISPs. There’s provision for ISPs to exist.

TZ: But they don’t license you (the ISPs) right?

DB: We don’t have… They have no asked us to be licensed. They have not asked us to register. Recently they have indicated they’d like us to do some kind of registration process but we’re still waiting for that to get legislated. I’m not a lawyer. But the act talks about it but it appears there has never been any implementation. And so I think there’s a bit of confusion over the roles of the different players.

TZ: And you are not an IAP?

DB: No.

TZ: So how do you find yourself installing VSATs?

DB: Through an IAP. We’re selling IAP services?

TZ: And in this case, Ecoweb?

DB: No. I’m not telling. I don’t want it public at this moment. In a couple of weeks we’ll let it out. But I don’t want it public at the moment exactly which IAP because I don’t need the heat on them while they’re getting their stuff also sorted out.  Maybe I can tell you that I’m very satisfied that it’s legal. We’re going quite big on VSAT because it obviously is a very reliable service.

The nice thing about VSAT is if you have a generator or an inverter, you’re not relying on Zimbabwean infrastructure: electricity, backbone, backhauling. So that’s the advantage of VSAT that it gives you direct connection. Not relying on other people.

TZ: I thought you were, because the last time I talked to POTRAZ, you needed to hub the VSAT in Zimbabwe. Not anymore?

DB: I’m not licensed. I don’t know the rules and regulations. Our VSATs are not being ‘hubbed’ in Harare, in Zimbabwe. I think that’s also an area of grayness and review.

TZ: There’s reference of personal threats against you. What kind of threats are these.

DB: I’ve had 2 different threats from 2 different sources. There have been questions asked about my citizenship. Which I’m 100% Zimbabwean. I was born and bred here. There have been threats made that I’m going to be reported to the president’s office for bypassing the interception bill or for using frequencies illegally.

I’ve had statements that they believe ZOL is using their frequencies on base stations they don’t know about. Which we’re not doing. ZOL has imported into this country 3 base stations. All 3 base stations are on Telco frequencies and they are operated by Telco. 2 are at Joina, 1 is at TSL, there’s no argument about that.

TZ: So why Africom? There are no other IAPs or you’re getting a special deal from Africom.

DB: We’re getting a good deal for bringing them 200 clients, absolutely. Like any IAP would give. We’ve been in a partnership with Africom for several years now, doing WiMax as well. So we know them quite well. We have a good relationship with them. I think more importantly they are the only viable player right now with WiMax last mile. As you know, Ecoweb has not turned theirs on yet. It’s not ready to go active. They (Ecoweb) don’t have CPEs in the country. We did talk to them obviously.

If any IAP had been able to say ‘we can serve your 200 customers tomorrow’, we would put them in the show running. As it turns out Africom is the only IAP who had any ability to have it done quickly.

TZ: Ecoweb doesn’t have WiMax?

DB: Well they have an old WiMax. They had no CPE stock. They had no plans to upgrade their network. They’re putting all their resources into the new one, the mobile one. So Africom is really the only viable candidate right now to go to.

TZ: So even though they (Africom) didn’t have the capacity to take on all 200…

DB: But they had stuff on route. They had already ordered extra capacity. We went to them after we got our letter from Telco saying ‘cancel all services’. They (Africom) said, ‘actually we got staff coming’.

TZ: And clients. On the clients’ side. People are not asking why there was not some kind of backup connectivity they could fall back on, because obviously this relationship looks very fragile, even the relationship now with Africom looks very fragile coz they could wake up and say ‘look, all our charges go up to…

DB: Well no you see, charges have to be approved by POTRAZ. And this is the other problem. Now POTRAZ did not approve the Telco price increases. I told you in my article that our normal bills are $30,000 to $35,000. They went crazy. POTRAZ didn’t approve those price increases. So that’s the other argument we’re having with Telco for it to revert to tariffs, in fact POTRAZ has ordered them to revert to tariffs and they haven’t done so.

So we believe that it’s only fragile so long as an IAP is willing to break POTRAZ regulations.

TZ: So, into the future, how are you going to ensure this doesn’t happen again?

DB: I think we’re going to deal with reputable IAPs that are run professionally and are willing to listen to POTRAZ and we have strong agreements with them. Incidentally, we have an agreement with Telecontract which they made us sign. This was done in 2007. One of the things laid out clearly is that any disputes must go to arbitration, so this is why we call the disconnection ‘unlawful’. It’s unlawful because it breaches the contract they got us to sign. They must abide by the contract that they got us to sign.

So going forward we hope to have an IAP that’s honest!