Archive | Telecommunications RSS feed for this section

Cancel your cell account? Don’t make me laugh

29 Sep

First published on MyBroadband | 29 September, 2010

One of the dangers of being a parent is being exposed to innumerable children’s TV shows and movies. In Beauty and the Beast there is a line, which I like to ponder on every now and then, where the villain – Gaston – says to his sidekick: “LeFou, I’m afraid I’ve been thinking,” to which Lefou replies: “A dangerous pastime.”

Well, I have been thinking and that is a dangerous pastime.

Mostly I have been thinking about how I am going to lay my grubby hands on a phone to replace my current one, which is over two years old. I can either wait until December for an upgrade, till March to take out a new contract, buy a new phone out of pocket or cancel my contract and start over again.

I am by nature a curious person so I decided to find out what it would cost me to cancel my contract. This is a little exercise that I go through once every two years to confirm to myself that nothing has changed in the cellular service provider industry.

With six months to go I would have to cough up R5 301 to cancel my current contract. The nice man at the contact centre was nice enough to explain how this figure is broken down: R3 051 in rentals up until the end of the contract date and R2 250 for the phone. This is with Altech Autopage Cellular (which has had my account for the past 4 years).

Luckily, I was sitting down at the time. It appears that the strategy is that to charge the customer the full outstanding amount plus almost the full subsidy that was part of the deal 18 months ago.

The problem is that this was all supposed to change ages ago. Icasa issued regulations that were supposed to ban these exploitative behaviours, but then Vodacom threatened to take them to court because the regulations were, admittedly, deeply flawed. Then at the end of last year Icasa issued a draft code of conduct to make sure that service providers behaved themselves. Clearly nothing has happened to get this code of conduct implemented either.

So, even though the service providers have known that the way they do business is not just flawed but wrong (even if it is a good way to squeeze money out of subscribers), for more than two years they have made no effort to change their ways.

They have continued to force people to continue to pay for contracts that they don’t want and don’t need. On top of this, they have made it impossible to cancel a contract (without paying up the remaining money owed in advance). They also charge onerous cancellation fees, in the name of recouping the subsidy that they gave you at the beginning of the contract.

There are any number of gratuitous x-rated descriptions of what these business practises entail but considering that this is a family site I will leave those up to your imagination.

The part of this that makes me really angry is that there are two very simple steps that any service provider could take to show that they are truly customer focussed. One: Allow the customer to cancel a contract at any point in the duration of the contract. Two: Allow them to pay back the subsidy that was used to give them a ‘free’ phone.

These two actions would enable the service providers to keep customers happy, while ensuring that they are not out of pocket from a subsidy point of view.

I would guess that the network operators (who shell out the subsidies and control the contract terms) are completely complicit in this little extortion scheme so this is probably not something that one service provider could do on their own. Still, I don’t see the MDs of any service providers (except maybe Virgin Mobile and they don’t really count) standing up and shouting for consumer rights. They are quite happy to sit back and screw the customer for every cent they can get.

In the end it comes down to one simple fact. Customer service in the cellular industry means keeping the cattle calm and peaceful while they are lead to the slaughterhouse. This is never going to change until Icasa gets off its ass and gets some meaningful regulations implemented.

Until then, keep the mooing down to a minimum because the bosses are trying to sleep on their bed of R200 notes.

Time to sell Telkom

27 Jul

First published on MyBroadband | 21 July, 2010

Telkom, as many of us have already figured out, is in a bit of a pickle.

Not only has it lost most of its senior management over the past month, but it has also written its investment in its Nigerian operations, Multilinks down to zero and is continuing to bleed fixed line subscribers at home.

The thing is that despite all of the trouble that the company is in, it is still a critical part of the South African telecommunications landscape. If Telkom were to cease operations tomorrow the entire country would be thrown into disarray. But what could possibly be done to get the behemoth that is Telkom, back on the tracks again.

There are a few options that could be on the table for whoever takes over at Telkom.

First would be to get rid of the albatross that is Multilinks. While I am sure that Jeffery Hedberg, who is running Telkom at the moment, has a good idea of the challenges facing Multilinks, the fact is that it is up against the wall in Nigeria. It is a CDMA operator in a strongly GSM market, the overall market is intensely competitive and likely to get more so and the average revenue per user in Nigeria is not exactly on par with South Africa or other – more developed markets. So find someone who will pay fair value for it and off load it fast. That would free up money and management time to focus on SA, where the real money still is.

The next problem is one that is more intractable than simply flogging off some unwanted assets. It hits to the heart of the problem – the shareholding.

The management at Telkom need to persuade their largest shareholders, the SA government, which owns around 40% of Telkom to sell its stake. I am of the opinion that having a single shareholder – that is not another telecoms operator – owning such a large stake in the company is simply not a good state of affairs. And additionally should anyone want to put in a bid for Telkom it would be practically impossible to pull off without government agreeing to it.

So maybe it would be better to simply cut the chains tying Telkom to the SA government and bring in an operator that would be able to turn Telkom into the world class operator that it has the potential to be.

There is, of course, the last flirtation with foreign ownership where SBC and Telekom Malaysia took every advantage to screw the SA telecoms users to make as much money as possible. Hopefully with a the regulatory environment very different and Telkom firmly on the back foot things will work out differently this time round.

Maybe it’s even time for a smart investor to take possession of Telkom and sell off the various assets to the rest of the industry and see what happens.