A. INTRODUCTION

The Portfolio Committee on Communications has invited the public and consumer organisations to make inputs on the services rendered by the three cellular network operators, Cell C (Pty) Ltd ("Cell C"), Mobile Telephone Networks (Pty) Ltd ("MTN"), and Vodacom (Pty) Ltd ("Vodacom").

It has been indicated that hearings to be held pursuant to the receipt of the submissions will address issues around quality of service, customer care, tariffs, interference and dropped calls – all areas over which the Authority, as the regulator for the communications industry has responsibility. The Authority draws its mandate from the Telecommunications Act of 1996, as amended ("the Act") and is vested, in terms of section 2 of the Act with certain responsibilities. The responsibilities that are most relevant to the proceedings being instituted by the Portfolio Committee on Communications, as stated in the Act are, the responsibility of:

Promoting the provision of a wide range of telecommunication services in the interest of the economic growth and development of the Republic;
Promoting the development of telecommunications services that are responsive to the needs of users and consumers;
Ensuring that the needs of disabled persons are taken into account in the provision of telecommunication services;
Ensuring compliance with accepted technical standards in the provision and development of telecommunication services; and
Protecting the interests of telecommunications users and consumers.

As the regulator of the communications industry, the Authority plays a critical role in enabling the achievement of competitive telecommunications markets. In performing its functions, the Authority plays a role in ensuring that in competitive markets, consumers and end-users get the best in terms of quality, choice and value for money from their service providers.

In an attempt to assist in framing the discussion around consumer issues, the Authority presents herein information with regard to its current approach to addressing each of these critical areas and its views on same.

B. QUALITY OF SERVICE

A subscriber’s satisfaction with the network can be said, broadly, to rely primarily on her/his opinion of five key considerations: network availability, coverage, capacity (accessibility), call quality, and call completion rate or continuity (dropped calls). Hence in order to assess the mobile operators’ performance with regard to quality of service, the Authority takes into consideration their performance with respect to these factors.
ICASA has primary responsibility for monitoring the performance of mobile operators. This responsibility arises from its general functions under the Act, as mentioned above, and from the obligations imposed on the operators in their respective licences. Monitoring and reporting are an important part of the telecommunications regulatory framework, and in an increasingly competitive market, performance data can assist both the regulator and consumers in making informed choices and decisions about competing providers. Monitoring and reporting should be used as key tools for ICASA to check that the industry is providing levels of service that meet reasonable community and regulatory expectations, and for identifying the need for remedial action where this is not the case.

In terms of paragraphs 6.2 and 6.4 of MTN and Vodacom’s National Cellular Telecommunications Licences, it is stated that:

"The Licensee shall at all times fully comply with the recommendations of the International Telecommunications Union and its associated organizations as they apply to the Republic of South Africa from time to time," and

"The Licensee shall design, construct, maintain and use Licensed Lines with the objective that Service shall be available within the areas specified in paragraph 3.3, 90% of their actual area of coverage at least 95% of the time and use their best endeavours to achieve a grade of service standard of at least 2%."

Further paragraph 17.3 (f) of both MTN and Vodacom’s licences calls for the "availability to customers of quality of service information relating to the Licensee’s network services." Paragraphs 17.4 and 17.5 state that the operators must keep and maintain statistics on complaints made by customers with which they deal, and that they must provide the statistics kept to ICASA at least once in each period of six months. Both MTN and Vodacom have been complying with this requirement and the last reports received from MTN and Vodacom were for the periods ending 31 March 2002 and 30 April 2002 respectively.

Similarly, in terms of its licence Cell C must comply with obligations vis as vis network availability, call completion rate and grades of service. Like MTN and Vodacom, Cell C must provide a grade of service of at least 2%, measured over a twelve month period. Further Cell C must have a call completion rate of 95 % on its network averaged over two consecutive twelve month periods. Cell C must start reporting on its performance from May 2003.

It is clear that standards have been set in the mobile operators’ licenses that they must comply with. These standards are in line with international practices, as per the requirement to adhere to International Telecommunications Union (ITU) recommendations, and are also specific in terms of what the local requirements are. Failure by any of the mobile operator to comply with their license conditions, including those dealing with customer care, can lead to the revocation of the licence.

Although the Authority receives reports which detail the operators’ performance with respect to quality of service on a six-monthly basis from MTN and Vodacom, and will receive them annually from Cell C on licence obligations, the Authority has to date not tested the information received. However, the Authority recognises that it is necessary that an audit be undertaken, and that comparative data to which consumers and end-users are entitled is made available with regard to areas such as area coverage, voice or speech quality, network performance (call retention rate), and network capacity (accessibility).

In order to properly audit the results that the Authority currently receives periodically from the mobile operators, it is imperative that the Authority has the requisite resources in terms of skills and equipment. This will entail the staffing of our telecommunications licensing and enforcement units, and the procurement of certain monitoring equipment that the Authority has identified. Only once the systems are in place, can the Authority effectively monitor quality of service and interference complaints.

In recognition of this, in its Medium Term Expenditure Framework (MTEF) Report for 2003 – 2006, ICASA has made provision for a quality of service audit on the cellular operators’ networks in the next financial year. This project once initiated will be required to run on a continuous basis for a minimum period of one year before accurate quality of service levels can be reported. The ITU in its technical standards and specifications has recommended that this be the preferred period for such quality of service tests. Once the first year's measuring has been completed network quality of service results can be determined on a year to year basis, which means that ICASA will be able to report quality of service levels on a monthly basis thereafter.

Further, some areas around major cities have been identified as "hot spots" for dropped calls. Once the monitoring system is in place spot checks will be carried out to investigate why calls drop around those areas.

Apart from the monitoring of obligations, the Authority also encourages a certain level of industry self-regulation with respect to customer care. Mobile operators are required to develop customer codes of conduct which govern the way in which they deal with issues such as the training of their customer service representatives, the staffing of their service centres, their service activation and change processes, the way in which they handle consumer complaints and queries and how they deal with billing data. Each mobile operator was required to lodge a code of practice/conduct with the Authority which deals with the above. In the case of Cell C it was required before Cell C could begin to offer services to the public. Copies of the mobile operators’ Codes of Conduct, as lodged with the Authority, are attached hereto.

Once a consumer has tried unsuccessfully to resolve a complaint directly with an operator, they may come to the Authority for it to investigate the matter.

With regard to consumer complaints, in the last year, ICASA’s Consumer Protection department has received one complaint about the quality of service of the mobile operators. While ICASA has only received one complaint, it has received several queries from consumers about the procedure to get reconnected to the same number after a call has dropped. ICASA’s Consumer Protection Department is in the process ensuring that this procedure becomes less burdensome.

C. MOBILE TARIFFS

One of the means through which the Authority seeks to provide adequate protection for customers is through effective price regulation. The Authority regulates mobile cellular tariffs in terms of the licences of the mobile operators. All three operators have similar conditions in this regard. In terms of the existing regulatory framework, an operator cannot charge any tariffs for a service until such tariffs have been lodged in writing with the Authority. The tariffs shall be approved by the Authority within seven days from the date of lodgment or otherwise the Authority will provide written reason for disapproval. The operator cannot without the approval of the regulator increase a tariff plan by an amount which is greater than the percentage year on year increase in the Consumer Price Index (CPI). The CPI for the period ending June 2002, when the last mobile provider lodged its annual increases, was 8.9%.

It is important to note that the regulation of tariffs was inherited by the Authority and is based on historical prices.

The mobile tariffs vary from package to package, but they range from R0,75 off peak to R2,80 peak. Community Service Telephone tariffs are charged at a flat rate of R0,85 per minute by all three operators. The operators’ commercial tariffs are broadly, with variations in terms of monthly rental and other factors, as follows:

Vodacom Tariffs 2001 2002
Vodacom to Telkom (Peak) R1.66 – R2.60 R1.66–R2.70
(Off-peak) R0.75 R0.87
Vodacom to Vodacom (Peak) R1.60 – R2.60 R1.66 – R2.70
(Off-peak) R0.75 R0.87
Vodacom to MTN and Cell C (Peak) R1.80 – R2.00 R2.08 – R2.70
(Off-peak) R0.75 R0.87

MTN Tariffs 2001 2002
MTN to Telkom (Peak) R1.25 – R1.75 R1.35 – R2.80
(Off-peak) R0.75 R0.90
MTN to MTN (Peak) R1.40 – R1.89 R1.50 – R2.00
(Off-peak) R0.85 R0.90
MTN to other mobile (Peak) R1.40 – R2.10 R1.50 – R2.10
(Off-peak) R0.90 R0.95

Cell C Tariffs 2001 2002
Cell C to Telkom (Peak) R1.41 – R2.60 No increase
(Off-peak) R0.75 – R0.85
Cell C to Cell C (Peak) R1.41 – R1.65 (Off-peak) R0.85
Cell C to other mobile (Peak) R1.41 – R2.00
(Off-peak) R0.90

C. Choice

While it appears from international benchmarking that South Africans generally have adequate access to a broad range of high quality, basic and advanced telecommunications services, the Authority will have to undertake a comprehensive analysis of the service and access issues that are important to South Africans in metropolitan, regional, rural and remote areas to determine whether in fact the levels of choice are adequate.

The question of choice exists on several levels. On one level, the managed liberalisation process adopted by the Government to introduce competition has led to growth in provider diversity. The issuing of a third mobile cellular communications service licence to Cell C in July 2001 provides consumers with a third choice in terms of service providers. We have yet to determine what the impact of further development of competition will have on services in the future although based on studies of other markets it is understood that it should lead to an increased level of choice, downward pressure on prices, and associated benefits with respect to quality of service standards and expectations.

Choice is also increasing in terms of services and packages. This can also be attributed to the advent of competition. Consumers can now choose between per-second billing, and per minute billing, between itemized billing, a variety of packages, pre paid and post paid, new services such as SMS, MMS and GPRS, etc. There has even been a move to introducing choice for pre-paid subscribers; this did not happen before the third mobile operator was introduced.

D. CONSUMER PARTICIPATION

The Authority has noted, from its numerous public processes, that while groups or associations representing end users, primarily business users, exist, there is definitely a dearth of consumer lobby groups or associations in the telecommunications sector. This makes it difficult for the Authority to get coordinated input from consumers on issues that affect them. It is the Authority’s hope that one of the outcomes of this process will be the increased involvement of consumers and consumer groups in the industry.

E. CONCLUSIONS

The Authority is in the process of procuring both a complaints handling system and monitoring equipment to better address consumer issues and to put itself in a position to better respond to the needs of consumers and end-users. In the absence of these resources, the Authority has relied on the existing regulatory framework – legislation and licenses – to address the many consumer issues in the market. Without the above-mentioned resources it will be impossible for the Authority to pro-actively monitor operators’ compliance and it will have to rely on the reports received from operators.

It is ICASA’s hope that the information contained herein will assist in framing the discussion that the Portfolio Committee has initiated. It is important that any analysis and consideration of the mobile operators’ performance, and in this instance their performance with respect to customers, is undertaken in the context of the existing regulatory framework.