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

When Econet terminated interconnection services with NetOne for a day on 23 August 2012, NetOne responded with a public notice published in the local newspapers on Friday, 24 August 2012. We posted the full text of the notice here. A day later, NetOne release another notice, the one below. It’s in many parts similar to the 24 August one, with just a few new accusations levelled against Econet. 

PUBLIC NOTICE

NOTICE TO OUR VALUED CUSTOMERS:

UNLAWFUL TERMINATION OF INTERCONNECTION SERVICES BY ECONET WIRELESS TO NETONE CELLULAR (PVT) LTD SUBSCRIBERS

Background

Historically, the Post and Telecommunications Corporation (PTC) provided both Postal and Telecommunications services on one hand and Regulatory functions on the other. As such, there was no need for national telecommunications interconnection as there was only one telecommunications operator in Zimbabwe that is the PTC. Between 1994 and 1998, there was a protracted legal battle between Retrofit (Private) Limited (now ECONET) on one hand and the Government of Zimbabwe and PTC on the other, which culminated in the Supreme Court ruling that the PTC’s monopoly was unconstitutional as it did not provide customers with choice in the provision of telecommunication services. 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 Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) and the splitting of PTC into three successor companies wholly owned by the government of Zimbabwe but incorporated in terms of the Companies Act, Chapter 24:03 namely Zimpost, NetOne and TelOne to provide postal and telecommunication services. The liberalisation of the of the telecommunications sector also ushered in the licensing of privately owned telecommunications operators such as Telecel and ECONET who were licensed to provide mobile telecommunication services.

Liberalisation of the Telecommunications Industry

The coming in of new telecommunications players required that their networks be interconnected with the existing operators to provide access and seamless communication between customers of different networks which is the primary objective of interconnection. Initially, all the three mobile networks were interconnected through the Public Switched Telephony Network (PSTN) owned by PTC and now 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 effectively communicate with each other. The licenses issued by POTRAZ, besides providing for mandatory interconnection obligations also requires 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 in the country 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 Number 3 of 2011, which directed that negotiations on interconnection agreements be 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 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 real 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, but still 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 largely arising from the 2008 actions by Econet, which saw all their customers being forced to be on prepaid subscription. Therefore, the obligation for interconnection charges worked at US$0.07 cents 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 multi-currency regime due to acute shortage of foreign currency in the country. 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 entails 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 US$0.07 cents per minute. This was meant to benefit ALL CUSTOMERS INCLUDING ECONET’S. This meant that a call across the networks would cost US$0.16 cents instead of US$0.23 cents per minute and that would have 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. Whilst ECONET has now restored interconnection services between the two operators our urgent court application remains pending before the High Court and it has been set down for hearing.

This is not the first time that ECONET has unilaterally and unlawfully terminated interconnection services between the two operators. Sometime in May 2011, during the Zimbabwe International Trade Fair (ZITF) held in Bulawayo, Econet unlawfully terminated the same interconnection services between the parties. They have done it again during the peak business at Harare Agriculture Show, which is another important national event and one wonders whether this is a mere coincidence.

A large number of post paid customers on NetOne incurred huge bills following the introduction of the multi-currency regime but went on to get subscription on ECONET. By giving service to some of these defaulting customers, ECONET violated the business understanding that was established under the Telecommunications Operators Association of Zimbabwe (TOAZ) which required that for any new customer to be connected on a network they should be vetted and proved not to be owing another network operator. This made it difficult for the affected networks outstanding service fees from the defaulting customers.

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 (I) (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.

NetOne thanks all of our amazing customers nationwide for remaining One with us as we have interconnected.