Econet Risks Eggs On Their Face For Fighting Telecel

With the recent announcement by the telecoms regulator, The Postal and Telecommunications Regulatory Authority of Zimbabwe ( Potraz),that they have renewed the Telecel Zimbabwe licence, Econet Wireless Zimbabwe will be left with a lot of image work to do more than Telecel.

From this day onward we are likely headed for another showdown as 13million subscribers were forced to stop communicating freely due to some business principles which could be solved in one better way or the other.

Before I even delve into the interesting possibilities presented by such a scenario, it would be only prudent to also unmask the story behind the public story as it actually stands.

Econet Wireless Zimbabwe, the biggest network by subscriber base, at 8.5 million customers sparked the war as their fiery contender Telecel Zimbabwe with over 2.5million subscriber complained that calls from Telecel to Econet had sharply declined due to throttling tactics practiced by Econet against their traffic.

The same accusation was confirmed by Econet three days after efforts to try and solve this amicably proved fruitless. Telecel was left with no option as call success rates from their network to Econet had drastically reduced.

Telecel complained to Potraz stating that “We have recorded a major decline from 90% success rates to an all time low of 40% just in one week and we highly suspect foul play from Econet”

Instead of Econet fixing the throttling issue with Telecel Zimbabwe, they went straight for a blow back and invoked a legal section under telecommunication Act which makes it illegal for a legally licensed operator to be connecting with an “illegally licenced “ operator.

Econet said “Clause 5.2.2 of our licence requires us to interconnect only with licensed operators. This paragraph derives from Section 61 of the Act, which allows a licensed operator to interconnect with another licensed operator. Section 2 of the Act defines a licensee as a holder of a valid licence issued in terms of Section 37 of the Act.”

So as it stands these are clearly two different problems cited by both operators and there is no one way to fix these two different issues.

The technical issue which Telecel was suffering from Econet could only be solved in a legal way according to Econet while at the same time the real issue with telecel was not a relicensing issue but an indigenisation compliance before licencing and the directors from Orascom, the Telecel parent company a few weeks back were in the country to discuss the matter with the government.

While this issue may have been clear between Telecel and the Government, Econet Wireless was probably stung by the fact that they had already paid $85 million to renew their 20 year operational licence and Telecel Zimbabwe was just not under pressure.
Econet may have tried not to put this as their major reason but in their official press release they let their emotions out when they clearly stated “With no such burden upon it, Telecel has been free to deliberately engage in trading practices that have distorted the playing field”
Judging on the magnitude of their explanation and excuses , it was obvious that this is the main reason that really forced Econet to disconnect Telecel although they may not have wanted to use that as the excuse, legally it would be impossible to institute.

Of Interest is another very sensitive reason which Econet raised and I feel that they were legally misadvised to use that as an excuse.

Econet went on to say Telecel Zimbabwe is not a holder of a valid licence issued in terms of Section 37 of the 1996 Act to add on to that they stated :

“Assuming the licence issued to Telecel was valid and was not validly terminated, such licence expired on 2 June 2013.”

Is this not be hypocrisy that Econet which then knew all along two years before they even got their own licence in 1998 only realised last week that the company they have been connected to was illegally licenced.

Did Econet Wireless Zimbabwe suddenly become conscious of the law after Telecel launched mega and across network promotion?

If they have respect of the same law, is it not prudent for Econet Wireless to first seek for punishment for violating the same Act they greatly uphold which they have knowingly been violating since 1998.

In their own words “Econet Wireless does not have any legal or moral obligation to interconnect with an unlicensed operator. In fact, we have a duty to disconnect such an operator” ironically I ask, why were they connected in the first place.

On the moral obligation, yes Econet has a mandate to make sure that the 8.5 million subscribers they have attained should be freely “inspired to” communicate to whomsoever they wish without any hindrance and this they fell short of.

It seemed Econet could easily forgo the principle that the major reason why they are successful is because they had kept millions of subscribers inspired and given the right to freely communicate with little to no technical hindrances and I wonder why it was just so easy a decision for them to stop 8.5 million people from speaking to the other 2.5 million.

Clouded by the promotion and traffic fiasco, Econet easily played into Telecel’s hands PR wise and now in the public eyes, Econet is just but a big bully.

While its so easy to swim along the emotional side of this saga, it would be fair to also look carefully inside the technical hub of the same issue.

I spoke to an Econet engineer who disclosed that the throttling tactic was the only feasible way to control the mass traffic which was now being driven by Telecel inside their network.

Technically Econet has its own expected traffic and tolerance range but sources confirmed that the Telecel promotion was going to cripple Econet`s system causing unprecedented congestion citing that millions were jumping to the Telecel network putting the Econet system under siege.

“The only reason we throttled the traffic is because we too have a carrying capacity of more than 8 million subscribers and as it stands we have been suddenly subjected under instant pressure to contain the traffic from a network that is not even utilising much of its own 2.5million capacity” said an anonymous “source from Econet

Technically Econet will be right to do so as every player has its own carrying capacity and these also have both a hardware and software limitation and investments to it.

Since Telecel has now been relicensed, it becomes tricky to see how Econet will respond to this one since it is now both a technical and a legal problem to them.

Another interesting factor which Econet raised was of market distortions. Econet is very much worried about all these promos by Telecel and probably Netone too considering that they are not really doing much to match up.

Analysts support Econet `s claim that these promotions are only distorting the market as it is unsustainable for Econet to be as aggressive as other players are since it has the millions to lose out to and we really wonder then how these players are making it then.

Mobile operators have been fighting with regulators on reducing the prices for a local call amid claims that 23cents per minute is the best price considering operational costs yet these promos are rather saying otherwise.

Telecel too has put itself to task as millions wait to see if they will continue with their aggressive promotions after their recent relicensing or it was just a fire fighting tactic.

In the mean time we wait and see what happens to interconnection between Telecel and Econet since the “real reason” causing communication break off has now been rectified.

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