Cellular Industry Issues: public hearings

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Communications and Digital Technologies

05 November 2002
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Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
5 November 2002
CELLULAR INDUSTRY ISSUES: PUBLIC HEARINGS

Chairperson: Mr N Kekana

Relevant submissions:
 

South African Cellular Telecommunications Association (see Appendix 1)
 

Challenge Productions
South African National Consumer Union (see Appendix 2)
National Independent Telecommunications Organisation (see Appendix 3)
Independent Communications Authority of South Africa
Universal Service Agency (available 14/11/02)
MTN submission
Cell C submission
Cell C presentation
Vodacom presentation

SUMMARY
The advent of cell phones has revolutionised communications in South Africa. Many problems have however arisen in the industry. For this reason the Portfolio Committee asked the different role players in the industry to make submissions.

Problems such as grey imports, tariff costs and service to consumers were heard at the hearings. In the morning submissions were heard from consumer representative organisations: South African Cellular Trade Association (SACTA), Challenge Productions, National Independent Telecommunications Organisation of South Africa (NITOSA) and the Independent Communications Authority of South Africa (ICASA).

In the afternoon, the three cellular networks (Cell C, MTN and Vodacom) presented their submissions. Cell C and MTN noted the consistent delays of approval, because of public objections, for the building of base stations to facilitate the transmission of signals. There was a call for the establishment of a national legislative framework to alleviate base station site approval constraints. Vodacom was concerned about the non-availability of the 1800Mhz spectrum as it inhibited quality of service.

Issues raised during the discussion were amongst others: black-listing versus grey-listing, dropped calls, reduced SMS rates for the deaf community, coverage, customer education, consumer surveys and bench-marking, changing service providers and phone locking.

South African Cellular Trade Association (SACTA) Submission
Mr G du Plessis, SACTA chairperson, explained that SATA is a non-profit association representing cellular equipment manufacturers and network operators. He made particular reference to protecting the public from 'grey imports'. These are mobile phones imported by non-authorised mobile phone importers. The warranty on these phones is not recognised within South Africa and the consumer is thus left with the burden of repair and maintenance costs.

Discussion
Mr M Lekgoro (ANC) inquired about the quality of handsets used and wanted to know if this was a big problem. Mr du Plessis responded that the technology of GSM was very complex and that under certain circumstances, phones might not function properly. He added that compatibility checks were done. It was his opinion that handsets purchased should give good performance.

Mr Durandt (NNP) referred to grey imports and wanted to know what government could do to protect consumers. He also remarked that these phones could be unblocked and whether there was anything which could be done to prevent this. Mr du Plessis replied that there was legislation which prevented grey imports. He added that all distributors had to be registered and that all phones had a unique number, the IMEI number. Technology was moving in the direction to prevent these numbers from being altered. It was also more difficult to obtain the software and in future, the chip would have to be removed from the phone before a new number could be entered.

Ms Morutua (ANC) wanted to know how SACTA dealt with the government and the public. Mr du Plessis replied that his organisation communicated through ICASA. SACTA communicated with the public through advertisements in newspapers, their website, brochures at salespoint and through radio programs.

Ms M Magazi (ANC) wanted to know how a consumer would be able to identify grey imports. Mr du Plessis replied that these grey imports were normally modified. These modifications would affect the performance of the phone and one would have problems with local network compatibility. One could also identify it through the fact that the price was less, the distribution, the packaging and by calling the manufacturers.

Mr N Kekana referred to other products that were SABS approved and asked if handsets also go through them and how one would know if a phone was genuine. He also wanted to know why it was taking so long to educate the public. Mr du Plessis replied that all phones had a label and that the safest way to confirm if a phone was genuine was to call the manufacturers and check the IMEI number. He added that SACTA was previously the CTIA and had different aims. It was now in the process of drawing other stakeholders in.

Mr F Maserumule (ANC) asked why SACTA was so slow to act against grey imports. Mr du Plessis replied that grey imports were around before SACTA was brought into being.

Ms Morutua wanted to know whether SACTA was a consumer body or an association in the industry and if it handled consumer issues. Mr du Plessis responded that SACTA was not a consumer body.

Ms S Vos (NNP) referred to stolen phones which was a big problem and wanted to know if SACTA had investigated this. Mr du Plessis replied that the networks would have to answer that and that grey imports were part of organised crime.

Mr Kekana wanted to know whether grey imports posed any health risk. Mr du Plessis replied that there was no scientific proof that cell phones were a health risk. The modifications made to grey imports would affect its performance, but would not pose a health risk.

Challenge Productions submission
The submission was made by Mr D Holmes, Mr R Carlsen and Mr M Westcott. Mr Holmes began the presentation by saying that cell phones had improved the lives of deaf people. It had given them better access by using the SMS service.

Mr Carlsen continued that the advent of SMS services had meant that deaf people could now communicate easier. However the problem was that handsets were expensive as was the SMS service. He pointed out that since the deaf community had in most cases not had formal education, they had less income and therefore cost was a huge factor.

Mr Westcott asked the service providers to consider this issue. He inquired about obsolete phones and phones that were not in use because contracts had expired. He suggested that these phones be collected and be given to the deaf, particularly in rural areas. He also suggested that the service providers consider a package for an SMS service alone. He explained that deaf users were paying the same price as the rest of the public even though they were not making calls. He stated that there were approximately four million deaf people in South Africa and that this service would help to empower them.

Discussion
Mr Masermule wanted to know whether there was no other place for Challenge Productions to raise this issue. Mr Carlsen replied that they has tried to contact the service providers, but had not received any response from any of them.

Ms Newhoudt-Druchen (ANC) raised the issue of the number of characters in an SMS. She stated that presently she could only get 160 characters per message and that if a message was long she would be using an extra SMS. Mr Westcott said that there were new developments and called for lateral thinking to be used. Mr du Plessis (SACTA) added that there were changes and that some phones could now take up to 5000 characters per message.

Mr Maserumule wanted to know whether in the view of Challenge Productions, the networks had not responded because it was deaf people approaching them or because they would not make a profit from them. Mr Westcott replied that perhaps they had not approached the networks properly. People normally shied away from the issues as it required more effort. He added that companies still had an appalling record when it came to employing disabled people.

The Chairperson commented that he felt that old phones should be redistributed.

National Independent Telecommunications Organisation (NITOSA) submission
The NITOSA delegation, led by Mr V Ndlovu, gave its submission which looked at the following questions:
- What do network operators understand their obligations to mean?
- What informs the process- of structuring the community service tariff?
- What informs the process of structuring the commercial tariff.
- What is the quality of the network platform on which the community phones roam.
- What dispute resolution mechanism are there to facilitate the conflict management between the consumers and network operators
NITOSA also called on networks to explain why unitisation should not be changed from 60/60 to 60/12 when the former causes the consumer to pay more and the latter lessens that burden.

Discussion
The chairperson, Mr Kekana, wanted to know whether the new pricing structures which was suggested, was to benefit members of NITOSA or the consumers. Mr Ndlovu replied that it was to benefit the consumer.

Independent Communications Authority of South Africa submission
ICASA's submission was made by Mr M Ncetezo, a councillor on the board [see document].

Discussion
Ms Vos wanted to know whether ICASA had benchmarked tariffs internationally and whether it had enough money to do a service audit. Mr Ncetezo replied that international figures had not been obtained and that R1,2 million had been budgeted for the audit.

Mr Durandt referred to the costing structure and suggested that the airwaves be opened up more so that there could be more fair rates. He also wanted to know if ICASA was underfunded.

Mr Ncetezo replied that the industry could not be opened up yet and that government instructed ICASA on this and that it was an ongoing process. ICASA was underfunded which was a problem since the result was that they were understaffed.

Mr Lekgoro stated that ICASA was always complaining that it was underfunded. He suggested that they should raise matters at the right platforms. He remarked that there was never enough money. He also queried ICASA's statement that it had had only one complaint about cellular services. He wanted to know if this was a problem with accessibility

Mr Ncetezo replied that they had engaged the Department of Communications and had fruitful debates. He added once more that they needed more councillors. He agreed that there was a problem with accessibility. They had inherited the Sandton offices which was not very accessible for the public.

Mr Kekana, the chairperson, stated that it was unacceptable that ICASA always raised the question of funding and used it as a reason for not performing. He questioned what was being done with the money it was given and stated that there needed to be a minimum performance level.

Mr Masermule said that raising issues of underfunding in the presentation did not help and asked if the authority had a public relations program. Mr Ncetezo replied that ICASA did have a strategy and structure but not enough staff. It planned to rollout its education program by April 2003 and was trying to recruit staff. He added they were competing with the networks for the same people which posed a problem.

Mr S J Mongkwaketse (ANC) wanted to know what percentage of penetration there was in the rural areas and suggested that ICASA also encourage black empowerment. Mr Nctezo replied that it was in their strategy to investigate the penetration of the networks. He added that ICASA was satisfied so far with the networks as far as black empowerment was concerned and that ICASA monitored ownership.

Ms Magazi referred to the fact that ICASA was using consultants. Consultants were expensive and yet ICASA said they did not have enough money. Mr Ncetezo replied that they needed consultants because many of the issues were specialised or technical.

Mr Durandt wanted to know if ICASA enforced signal reach with the service providers. He added that ICASA should look at its budgeting and ask for more if needed. Mr Ncetezo replied that it was limited in the amount it could ask for. He added that the signal reach was included in the provider's licence conditions. It was also the consumer's duty to make sure that there was coverage before a handset was bought.

CELL C submission
Speaking for CELL C, Mr T. Laham (Chairperson and CEO) gave an overview of the company's structure, saying that 60% of the company was owned by Saudi Oger (of Saudi Arabia), and the remaining 40% by a conglomerate of South African organisations. He also spoke on the company's quality of service, customer care, tariffs, and challenges faced by the company.

One of the major problems experienced, were the consistent delays of approval, because of public objections, for the building of base stations, which would greatly facilitate the transmission of signals throughout the country. These delays result in the quality of the service being degraded. Mr Laham added that the company sought the establishment of a national environmental legislative framework, to: clarify and implement the original intent of the National Environmental Management Act; clarify the issue of the public participatory process in the submission of objections with particular relevance to cellular issues; and formulate legislation to give a uniform approach to authorisations in the cellular industry. This would certainly cause as improvement in the quality of service to the consumer.

CELL C is the only South African cellular network operator licensed to use both the 1800Mhz spectrum and the 900Mhz spectrum.


MTN submission
Mr Sifiso Dabengwa (MTN Marketing Director) gave an introduction to the company's impact on the South African economy, and also on the continent. He also focused on customer services, the decreasing trend in cellular tariffs, network performance, and the way forward (including recommendations).

He reported that over the last three years, the annual increase of tariffs has been below inflation. In view of that fact, tariffs have decreased in real terms, while the range of applications has increased.

Recommendations for the way forward included the enhancement of customer awareness within the entire spectrum of telecommunications, and the stakeholders involved (ICASA, TELKOM, etc.) The company voiced the same concern as CELL C, with regard to the establishment of a national legislative framework to alleviate site approval constraints.

VODACOM submission
Mr Phutuma Nhleko (CEO) gave an overview of the company's operation in the country.

He confirmed the decreasing trend in tariffs over the past years.

Speaking on the factors inhibiting the quality of service, Mr Ntobi Tyamzashe (Chairperson) cited the non-availability of the 1800Mhz spectrum.

Discussion
Mr V. Gore (DA) wanted to know how tariffs were initially arrived at. He commented that retailers were not represented at the hearings. What sort of influence do the networks exert over retailers in terms of quality of service? He also wanted information regarding customer freedom to move from one service provider to another.

Ms C. Vos (IFP) asked if the service providers would be prepared to allow ICASA to monitor their services at no cost.

Mr R. Pieterse (ANC) commented that service should be usable and affordable. However, upon purchase of the network's services, no indications are given of the hotspots where no signal is available. It is only after having purchased the product, that the customer encounters the problem.

Mr F. Maserumule (ANC) stated that in rural areas, even where there are antennae, one still would struggle to get a signal.

There ensued extensive debate over the issue of dropped calls. Mr M. Phadagi (ANC) suggested that in the case of dropped calls, the service provider should check the number of seconds which the caller had run up, (which should give an indication of a dropped call), and should the person phone again immediately, the provider should regard the calls as one uninterrupted call. The Chairperson here intervened to note that Vodacom has a feature that, in the case of a dropped call, the customer should dial 119.

Mr A. Maziya (ANC) raised the following concerns and questions: people using the customer service numbers to complain about accounts, dropped calls, poor network, etc. have suffered much in terms of billing, as they are put through a lengthy waiting process. Secondly, how were tariffs arrived at for street corner phones? Service providers can help to combat the appeal which stolen phones have, by blocking stolen phones from being used.

The Chairperson requested an explanation of the terms 'blacklisted' and 'greylisted'.

Ms W. Newhoudt-Druchen (ANC) raised concern over the practice where the consumer can buy a cell phone without having to provide an identification number or address, lends itself to criminal practices, where potential criminals have freedom to operate with little possibility of being caught.

She enquired, as a deaf person, if special packages were available for the deaf, where they need only pay for SMS messages. In order to upgrade from a certain number of characters to more characters, could she do that with her present cellular phone, or should she purchase a new one? Service providers offer special bonuses from time to time, if the consumer calls a particular number. The deaf do not have access to this. What is their recourse?

Ms I. Mutsila (ANC) commented that, in spite of Vodacom's assertion that the customer is always protected, their own statistics show that for every 12 000 subscribers, there is only one customer service agent. She also asked how much was being spent on customer education.

Ms M. Magazi (ANC) inquired about the usage of cellular phones as a health hazard. International occurrence has shown the development of tumours as a result of extended exposure to radiation emitted from cellular phones.

Ms N. Mtsweni (ANC) was of the opinion that prepaid customers, generally from the lower income group, really only wanted access to voicemail. She questioned the MTN claim of more than 85% customer satisfaction since people in rural areas have lots of complaints regarding the service. She wanted to know where in the nine provinces of South Africa had that survey been made?

A member (ANC) asked what percentage of company finances went into interconnection fees. According to the Act, the interconnection regime must be transparent. He wanted a breakdown of the amount consumers were being charged per second. How much money was being used on customer education, so that they are able to make the best use of what was on offer?

In attempting to explain how tariffs were initially agreed upon, Mr Dabengwa (MTN) stated that at the beginning, business plans had obviously been put forward, and one could only assume that the tariffs were seen to be acceptable at the time. Over the years, operators have been submitting tariffs to ICASA. Over time, more and more people have been able to afford the service. He added that amounts invested into the industry by operators were actually higher than the profits that were being made.

The operator was doing as much as it could to ensure retailers treat customers well. However, there is admittedly limited control here. The operators train their staff, while the retailers train theirs.

On the matter of customers changing service providers, Mr Dabengwa explained that in the case of contract agreements, the contract covers a period of time, and by virtue of the handset being handed over for free, the service provider can at the end of the period retrieve the handset.

It was a very sad fact that the cellular network service was associated with crime. Mr Dabengwa stressed that operators were more than willing to assist security agencies on a 24-hour basis.

The provision of service to the deaf community will be much more aggressively addressed henceforth. Mr Dabengwa said that the contribution coming from the deaf spectrum of society, had served as an eye-opener. He conceded that the SMS packages on offer had not been prepared with the deaf community in mind. However, they could now change that.

Regarding the coverage of rural areas, the reality was that for some time to come, there would not be identical quality of service provided throughout the country. There was a huge area to cover. Providers would always be limited in terms of providing a quality service 365 days of the year, especially in terms of the dependence of the operators on third parties (TELKOM, ICASA). However, the comments made were taken into consideration, and the operator would continually attempt to improve their service.

As regards the survey, the area of service measurement does not necessarily cover all areas of supply, but rather a minimum of 80% of the customer base. The operator would, however, endeavour to expand the base, maybe on a quarterly or half-yearly basis.

MTN subscribes to blacklisting of stolen phones. Previously, the identity of the phone was soft-coded, making it impossible for criminals to overwrite the identity. With the advent of hard-coding, that should no longer be possible, provided that would-be criminals do not find a way to get around that.

Most of the consumer education is done through normal marketing and advertising. Mr Dabengwa conceded that the network could not claim that it reaches all its subscribers. However, the day's proceedings made the necessity for a relook at consumer education very clear. He informed the House that from a marketing viewpoint, up to 5% of the budget per year was spent on educating consumers.

Speaking for Vodacom, a representative said they had issued a challenge to other networks to start blocking stolen phones. When the other networks did not respond, they stopped the practice. On the mobility of customers, they were willing to allow that, and were waiting for other providers to take up the challenge.

With regard to the interconnection breakdown, he said this was in the public domain. He added the networks are not allowed to increase their tariffs beyond the CPI, without ICASA's approval.

Speaking on the same issue, tariffs were implemented initially on the basis of the business model, and what was submitted. MTN's tariffs were the lowest, and there were market forces at play, along with what was submitted.

A Vodacom representative stated that the LMS upgrade of characters would require the acquisition of a new phone. In the case of dropped calls, the 119 service gives the customer the first minute free of charge.

MTN's response to the dropped call question, is that the customer should call Customer Services. It was hard for a network to detect if a call was indeed a dropped call, or what caused it.

With regarding to servicing the deaf community, the messenger service is offered at 20c per message. If the Universal Services Agency is able to declare deaf people as needy persons, they can be subsidised.

Mr Laham confirmed that his network didn't have 100% control over retailers' quality of service to customers. Addressing the members of the deaf community, he said the network could consider meeting with them, to come to a solution.

Regarding spending of finances, he said the bulk of the network's income was spent on staff remuneration, and on marketing and educating the consumers.

On the relationship between cellular phone usage and cancers, radio frequency emissions are far below danger levels, and incapable of causing cancers or tumours.

The challenge of unlocking phones to facilitate swapping of service providers, as well as to blacklist stolen phones was put to the networks. Their response:

For a fee, MTN does do phone unlocking. Here, commercial considerations are taken into account, as when a contract has been entered into, and the network has handed over a handset to the customer. MTN also does blacklisting of stolen cellular phones.

With regard to swapping of service providers, Mr Laham stated that CELL C was in favour of facilitating number changes, possibly at a fee. They had already indicated to Vodacom that they were willing to participate in this service. On the matter of stolen phones, he indicated that the network had in the past provided law enforcement with names and details of customers. He also reported that CELL C blacklists stolen cellular phones.

Vodacom reported that they had already approached the other networks regarding phone unlocking, but they were unresponsive at the time. They were open to pursuing the matter again. Vodacom does not blacklist stolen phones but subscribes to 'greylisting', as they claim blacklisting will not stop people from stealing phones. They say that while the phone is still on the network, it is still traceable. It is also possible to determine if a phone is greylisted, after having purchased the item.

A representative from the Universal Services Agency stated that the Agency is currently in the process of issuing a tender to define categories of needy people. Deaf people could be included, and this could mean that they could have access to funds which would subsidise their phone usage.

With regard to NICOSA's submission against tariff changes to ICASA, Ms J. Espin complained that ICASA had as yet not responded with a decision. Should the waiting period be drawn out much longer, costs will have increased, and this affects networks across all communities.

A TELKOM representative stated, in response to a perception created that TELKOM might not be cooperating with service providers, that the corporation is working hard to meet their needs. He added that they held regular monthly meetings.

A Transtel representative informed the House they had noted the issues that were raised, and they looked forward to providing a communication service of quality.

In closing, a Cell C representative remarked, concerning prepaid customers, that they spanned the entire socio-economic spectrum. They were therefore treated on the same level as contract customers. The prepaid offer is a payment option, and sometimes that service is better than the one offered to contract customers.

Mr Dabengwa stated that MTN was dependent on TELKOM's pace of movement. For the network, the hearings had been very insightful. There is always what is perfect and desirable in service delivery, and they strive to achieve that. However, there is also a high tension in doing things that are commercially justifiable. One needed to keep in mind that cost effectiveness, and the need to see a profit margin, is also important to a functioning business.

A Vodacom representative remarked that they were implementing tariffs approved by ICASA. A previous package where the customer might have lost units accumulated after a certain amount of time, has been changed, to more adequately benefit the customer. If the customer was not satisfied, he had the option of changing the package.

ICASA extended a word of thanks, adding that much had been said about what the body had not done, whereas much could also be said for what the body actually had done, especially within their experienced constraints.

In closing, the Chairperson thanked everyone for the participation. He assured them the Portfolio Committee was aware that they were working hard to provide a good quality service, and that it was not simply about profit-making. However, there is always room for improvement.

He added that customer satisfaction needed to be accurately measured by means of a yearly consumer survey and benchmarking by ICASA. He pledged the Committee's commitment to helping ICASA beef up its personnel. It was true that ICASA was by no means able to compete with the Private Sector.

Finally, he said the hearings had not been just a matter of public relations, but a necessary one to ensure consumers are well cared for.

Appendix 1:
PRESENTATION BY THE SOUTH AFRICAN TELECOMMUNICATIONS ASSOCIATION

We would like to take this opportunity to thank Parliament for affording SACTA this opportunity to make a brief oral presentation at these hearings. We would like to introduce SACTA to yourselves and briefly outline SACTA's activities and objectives.

SACTA is an independent non-profit association representing the cellular communications equipment manufacturers and network operators within South Africa. The current members are Alcatel, Cell C, Sony-Ericsson, Motorola, MTN, Nokia, Panasonic, Philips, Samsung, Siemens and Vodacom.

SACTA aims to provide a source of credible information, guidance, co-operation and communication for the local and global telecommunications industry, the public, regulators and Government on all matters relating to cellular telecommunications. Our objectives further include the promotion of telecommunication services, technologies, skills and infrastructure in South Africa.

SACTA members meet on a monthly basis to discuss relevant issues relevant to the industry and to the consumer. There are various committees within SACTA, for example the technology committee, which addresses topics such as type approval and labelling. SACTA responds to all Government Notices or draft regulations published by ICASA as well as any other issues that may have impact within the industry. This joint collaboration ensures that SACTA submissions accurately portray the various interests and issues within the mobile industry.

SACTA works closely within the association on non-competitive issues such as the grey import of mobile phones, health and safety and radiofrequency energy issues, environmental matters, mobile fraud and other such issues that may arise from time to time. Looking at some of these issues more closely:

Grey imports is the terminology that is used by cellular phone importers and networks, to describe the situation where mobile phones that are brought to South Africa through sources other than the authorised mobile phone importers. The result being that consumers are not aware that the warranty on these phones is not recognised within South Africa. The consumer is thus left with the burden of repair and maintenance costs. SACTA would like to prevent this happening in the future and strives to do so through education of the consumers within South Africa.

SACTA is also represented on committees such as the SABS/ICASA TC80 Committee and TC73 Committee, as well as their working groups. These committees and their working groups deal with issues relating to standards, electromagnetic compatibility and EMF issues

SACTA is also involved in the education of the consumer. We recently designed and circulated a brochure addressing the current issues relating to mobile fraud, grey phone imports, and health and safety issues in an effort to ensure that the public remain informed. We are also in the process of designing another brochure addressing the issue of the use of mobile phones while driving, this with the intent to ensure compliance with Government regulations on the topic and by offering advice and guidelines to ensure pubic safety.

Lastly, SACTA has also established a website

Appendix 2:
SUBMISSION BY THE SOUTH AFRICAN NATIONAL CONSUMER UNION
 


Honourable Chairperson, honourable Members

Firstly I wish to thank this Committee for the invitation extended to the South African National Consumer Union to participate in today's proceedings. It confirms the ideal of a transparent and participating government.

We live - whether we like it or not - in the information age and to have access to information communication technology, is of the utmost importance. It follows that as consumers, we are in favour of cellular networks.

In the past and presently . despite problems - the taxi industry contributed a great deal to increase the mobility of people and similarly cellular networks fulfill a dire need of people to communicate. A cell phone is not a status symbol but a vital necessity to communicate, especially as public telephones are often not in working order.

There are, however, a number of problems that need to be addressed and for the sake of brevity they are only listed and will be enlarged upon if required.

1. Tariffs Every individual, or household, has only a certain amount of disposable income. The more money spent on cellular phones, the smaller the amount available to spend on other sectors of the economy, which may adversely affect many sectors of the economy.

2. Consumers are often confused by the number of contracts or "packets" on offer. We accept that in a free market service, providers are at liberty to offer whatever, in their opinion, the market will accept. However, the right to choose is a fundamental consumer right and it presupposes that consumers have sufficient information available to make an informed choice. The wide range of offers may serve to confuse, rather than to inform consumers

3. If a number is engaged, no charge should be levied because no communication took place.
Consumers complain about phones that become faulty within the guaranteed period. Phones must then be repaired, loan phones may not be available . yet consumers are required to keep on paying in terms of the contractual arrangement without even being in possession of a phone.

6. Service providers have an 'out of box' policy, in terms of which a phone can only be exchanged within seven days after purchase. Afterwards the phone must be repaired. One provider has a policy in terms of which a phone will be exchanged if it becomes faulty three times during the guarantee period - but in order to get the exchange done, requires a lot of effort.

6. Further complaints vary from faulty accounts, which are not rectified despite promises to contracts, which are not timeously cancelled. Consumers seem to get a number of promises that problems will be rectified, which is not done and despite frequent enquiries they do not receive any feed-back.

7. On the whole, it appears as if the main source of problems are persons employed by Client Service Centers, who give undertakings and promises to consumers to which they cannot, or will not comply with.

Appendix 3:
National Independent Telecommunications Organisation of South Africa


The wind beneath the wings of information society

INTRODUCTION.
The advent of cellular telephone in South Africa has had many positive effects on lives of many people and communities. Instant telephone connections, entrepreneurial development, narrowing of the digital divide and the introduction of prepayment for services examples of some of the aspects of which the positive changes stand out. These aspects, however, do not give the cellular network operators a totally clean record. Certain questions still need to be asked, asked not to trivialise the remarkable contribution cellular network operators have made but to highlight to them what the aspirations of the consumers are. It is in this spirit that NITOSA hereby seeks to ask the cellular operators the following five questions.

Question 1: What do network operators understand their obligations to mean?

Vodacom, MTN, Cell C have the obligations to deploy 22 000, 7 500, 52 000 telephone lines respectively, in the under-serviced areas of the country for the use of historically disadvantaged people. This telephone service has to be provided at a subsidised rate. These targets were arrived at on the basis that the subsidy would be a percentage of the operators projected earnings. At least two of the three network operators namely Vodacom and MTN, by their own admission, have tripled their projected returns, on the basis of which their obligations were calculated but the obligations did not change. Why then are the network operators always advancing the argument that discharging these obligations costs them too much money when it was, in any case, the initial agreement that a percentage of their returns would go towards subsidising these calls and this in turn proved to be a lot more than everybody expected?

Question 2: What informs the process of structuring the community service tariff?

We have already mentioned that right at the onset the intention of the stakeholders was that the network operators would subsidise the community service calls. Recently, however, the network operators sought to make the whole community service project a profitable venture when they asked ICASA to approve a community service tariff of R1.00 a minute despite the fact that their argument was that their breakeven point is at 94 cents per minute on these calls. When ICASA correctly rejected the R1.00 tariff and approved 85 cents per minute the network operators decided to change unitisation from 60/30 to 60/60. This seems as an attempt to unduly increase the revenue they collect within the confines of the approved tariff.

NITOSA Executive Committee and members believe that 60/60 unitisation needs to be reconsidered since it has a potential of overcharging some of the telephone users. Let us take for example, a person who makes one minute and five seconds call. This person would pay R1.70 for that call (.85c x 2) under the 60/60 unitisation. On Saturday, a consumer that is on a commercial package pays 94 cents for a 65 seconds call, 76 cents less than one would pay using community phones. This is contrary to the spirit of providing affordable community service. It also throws out completely the good faith that the consumers associate with the community service phones. With 60/60 unitisation consumers will no longer say ours is the service that neither misleads nor rip off the users.

The issue of trends is also pertinent in this matter. From October 2001 a trend in terms of which cellular phone tariff packages were converted to per second billing emerged. This was done to assist the consumer to get the true value for their money. For community service to be the only sector that takes a backward step would be extremely detrimental to the business of serving the community. If this is allowed to happen community service tariff would be the only one in the family of tariffs that promotes charging users for the talk time they did not use. We need not tell you how badly that would defeat the objectives not only of ICASA but also of the Telecommunications act. We believe that the use of 60/60 unitisation is an improper implementation of the approved tariff of 85 cents per minute. The 60/60 unitisation can be avoided by considering the following unitisation:

0.85 cents = 60 seconds / 1 minute

0.17 cents = 12 seconds

0.17 cents = 12 seconds

0.17 cents = 12 seconds

0.17 cents = 12 seconds

0.17 cents = 12 seconds

1.70 cents = 120 seconds

This model which is our recommendation removes the problem of ½ cent that would prevail in a 60/30 unitisation. The seconds breakdown count back to a minute whilst it allows a customer to pay as close to the actual talk time used as possible. We believe that the network operators are capable of handling this proposed 60/12 unitisation.

With the above recommended 60/12 unitisation a person that makes one minute and five seconds call will pay R1.02 for that call. This is 68 cents less than one would pay under a 60/60 unitisation plan (R1.70). We consequently, trust and pray that this will be seen in the same light as we see it. We consequently, call upon the network operators to tell us here and now why the unitisation should not be changed from 60/60 to 60/12 when the former causes the consumer to pay more and the latter lessens that burden.

We further recommend that the rate regime be established for community service in order to remove the uncertainty with regards to the frequency with which and the manner in which the community service tariff will rise in future

Question 3: What informs the process of structuring the commercial tariff?

It seems to us that the fact that the cellular tariffs are set with ICASA's approval causes the network operators to try other ways of getting the most out of the consumer. One policy of the network operators persuades us to hold this view. This policy is the one that says if a customer is on a talk package that customer can accumulate his or her minutes only five times. What this means is that when a customer is on a package in terms of which he or she receives one thousand minutes per month he or she may accumulate those minutes only for five months. From the sixth month onwards he or she forfeits 1000 minutes each month for which one is still expected to pay. Given the fact that on a high ranking contract one pays an average of R1, 400.00 for a thousand minutes a consumer can forfeit that kind of money each month under this policy. When a person has ten of these contracts that person can lose R14, 000 each month. In this day and age, when people use these contracts to set up communication business, some of which turn out to be as successful as expected, what is it that the network companies are doing to refrain from receiving money for airtime that they know damn well that the paying party did not or will not receive?

Question 4: What is the quality of the network platform on which the community phones roam?

It has happened on a number of occasions that the community service phones stop working whilst other cellular phones work perfectly fine. It happens even now that community phones experience network problems whilst other phones work well. Is this indicative of the inferiority of the platform on which these phones operate or is just evidence of the fact that not much attention is paid to how they function.

Question 5: What dispute resolution mechanisms are there to facilitate the conflict management between the consumers and network operators?

Although the Telecommunications Act provides for ICASA's intervention in disputes between network operators and consumers this mechanism does not always benefit the aggrieved people that are consumers and agents of the network operators. What additional mechanisms are there to cater for those disputes that may not be entertained by ICASA?

CONCLUSION.

It is our hope and belief that these questions will be answered in the manner that seeks to build the community service sector of the telecommunications industry and the industry as a whole. Where answers do not go far enough to satisfactorily address the consumer's concern it is our expectation that the Portfolio Committee, Department of Communications, ICASA, USA and any other interested party will take the necessary steps to ensure the environment conducive to providing the excellent community service is created.
www.sacta.co.za wherein information can be obtained relating to various issues which have impact upon the industry and the consumer. Contact details for our SACTA office can also be obtained on the website.

 

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