Interconnect dirty tricks: The Empires Strike Back
Vox Telecom MD Douglas Reed surprised the local telecoms market at the recent ICASA Draft Call Termination Regulations hearings by revealing some of the ‘dirty tricks’ their company has experienced over the past few years.
Reed did not pull any punches, accusing MTN of stalling tactics and unfair requirements before signing an interconnect agreement. Reed also accused Vodacom of unfair agreements and dirty business tactics while Telkom was slated for apparently stalling on number portability and in the past actively sabotaging Vox’s voice quality.
Neotel did not escape unscathed as they were accused of claiming that they inferred that if Vox did not invest in infrastructure they would have no call termination costs.
Vodacom, MTN, Telkom and Neotel responds
The big guns in the local telecoms market have decided to hit back with reactions ranging from being mystified by Reed’s accusations to claims that Vox is actually making money on interconnect.
Shameel Joosub, MD of Vodacom SA, said that he is “mystified” by Vox’s claims since they have treated all interconnect partners on the same basis. “Vox has yet to implement the previous interconnect cut applied by all other parties as of 1 March,” said Joosub.
Joosub did not elaborate on Reed’s accusations regarding apparent attempts by Vodacom to steal Vox Telecom clients, merely saying that they, through our Gateway subsidiary, had launched an international calling service called Cheap Chat which targets Vodacom’s customer base, both prepaid and contract, with a view to increasing international call activity.
MTN SA’s Chief Corporate Service Officer Robert Madzonga claims that Vox Telecom are actually net receivers of interconnect revenue and “contrary to what Vox presented to ICASA, the impasse in negotiations has benefitted them to the tune of 75c per minute since March 2010.”
“This rate is the difference between the existing R1.25 that MTN pays to Vox and the rate of 50c which Datapro offers to Telkom (which MTN understands to be their best rate in the market),” said Madzonga.
“MTN began a process to renegotiate the MTN/Datapro agreement during the third quarter of last year where MTN requested that each party offer the other their best rate in the market. After MTN’s voluntary rate reduction in March 2010 (from R1.25 to 89c), MTN established that Vox/Datapro had in fact two rates in the market, e.g. Datapro: 50c and Vox: R1.25.”
“Subsequently, the two parties have been unable to agree upon the interpretation of ‘non-discrimination’ as provided for in the Interconnection regulation. Therefore the rates provided for in the original agreement (R1.25 payable to Datapro and vice versa) remain in effect until there is clarity with respect to the concept of non-discrimination and/or the call termination regulation is finalised.”
Telkom South Africa CEO Pinky Moholi rubbished Reed’s claims of Telkom using stalling tactics when it comes to number portability, saying that they are in fact driving the process forward and are doing more than what is required regarding number portability.
Moholi also said that the accusations that Telkom was actively deteriorating call quality on the Vox network are ridiculous as they value Vox Telecom as a client and that they do their best to keep all their clients happy.
Neotel in turn said that at no stage in its written or oral submissions did they imply that Vox or any other VoIP operator should automatically have zero call termination costs. “What was submitted was that all call termination should be cost based,” said Neotel’s Executive Head of Technology Angus Hay.
“In the case of a typical VoIP operator, the cost of the leased line at the receiving customer’s end is often already paid for by the customer, and hence Neotel submits that should not be not part of the VoIP operator’s costs when calculating local termination on a fixed line number. Obviously, in the case of long-distance calls carried by a VoIP operator, leased backbone infrastructure forms part of the cost base, but it is Neotel’s view that the market for the conveyance of long-distance calls should not be regulated, and operators should be free to charge market rates.”
We don’t lie, says Vox
“I would like to start out by saying that nothing Vox presented to ICASA is not true and that we can’t substantiate,” said Vox Telecom MD Douglas Reed.
“We prefer, and have in the past sorted these inevitable arguments out behind closed doors and it is not our style to take these fights into the public. However the regulator needs to be aware of what they should be regulating against as the closed door policy was not working for Vox. We also wanted to point out how laws designed to curb SMPs (Significant Market Powers) are used in reverse,” said Reed.
Reed said that Vodacom can be credited with being the first incumbent operator to interconnect 14 months before MTN and were the most professional and organised.
Reed however adds that Vodacom last year served notice that they were going to cancel the agreement and put forward the fact that the service offered, similar to their own Cheap Chat service, contravened the regulations and Interconnect Agreement.
“The aim was to change the Symmetrical Agreement of R1.25 both ways to an Asymmetrical rate in favour – i.e. R.1.25 to Vodacom and 50 cents to Vox. Vox obviously resisted this, the only party benefiting from that agreement was Vodacom, not Vox or our customers,” said Reed.
“Once again Vodacom to their credit honored the 89 cent drop on 1 March but Vox used the opportunity to remove and insert clauses that we required. Vox also capitulated on some issues. Bear in mind there was no real framework when the first one was signed e.g. we wanted to remove clauses that allowed Vodacom to unilaterally cancel the agreement,” said Reed.
When it came to MTN’s claims Reed explained that Vox started passing on the new rates via Telepreneur in December and to their corporate customers from 1 March.
“How Robert Madzonga thinks that Vox are making money out of the agreement is mind boggling. We also are no longer net receivers because Vox have more MTN minutes to terminate via Vox Orion than any other small operator now that it is viable at 89 cents,” said Reed.
“We find that these silo’s in the incumbents do not often look at the bigger picture and decisions are made based on an extremely narrow view. A fact that Madzonga failed to point out is that we did come to an agreement that we signed only to have MTN renege on and add further demands. In fact MTN has been the worst of the incumbents in terms of abusing their Market Power and harming Vox Telecom’s Business and inhibiting our ability to compete,” said Reed.
Regarding Telkom and number portability Reed said that Telkom have been playing ball but did delay the process for years. “During testing we are coming up with issues that should have been thought out prior to commencement,” said Reed.
“When we ported a number that was linked to an ADSL line the ADSL service was unilaterally cancelled. Other than delaying major reforms, Telkom have for the past few years been cooperative and professional. Regarding the accusation of quality degradation, that is what we have been told first hand by former Telkom employees and we have no reason to disbelieve them,” said Reed.
Reed said that Vox Telecom has ‘no beef with Neotel’ and that they merely responded to what the second national operator said in their submission. “If we misinterpreted it [Neotel’s subsmission] then we apologise,” said Reed.
Interconnect dirty tricks << who do you think is to blame?
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