finweek

Locked into loopholes

It happens to everyone. That trusty phone you’ve had for years finally starts showing its age. What used to happen with a swish now feels clunky – time to get a new device. 

I’m not the type to do the whole one- or two-year contract thing; I’ve cottoned on by now that you end up paying a lot more than the cost of the phone. After all, that’s how debt works. 

So one weekday, I headed for Rosebank Mall to scout around for a new phone. I went to MTN, Vodacom and Cell C and a number of retailers who have deals with these three network providers to on-sell phones. 

These on-sold phones come with a SIM card attached to the network provider they have the deal with.

I wasn’t looking for anything fancy, just an entry-level smartphone that can make calls, handle email and some minimal browsing. I found phones that would do all those things, but everywhere I went I was told that the phones were tied to the network provider and I wouldn’t be able to use another SIM card in the phone. 

Or I was told that if I did place another network operator’s SIM card in the phone, I would effectively void the warranty on that phone. I even had one salesperson tell me that a dual-SIM phone was locked to a network, defeating the whole point of having a dual SIM. 

I was outraged. After all, this is my money that I am spending purchasing a device; a device that is essential to my line of work. How can a network operator tell a consumer that a device is only for their network?

Isn’t this making a mockery of the number-porting system in South Africa? The one that has been put in place to allow consumers to jump to the network operator offering them the best deal? The system that was intended to promote competition? 

What the mobile operators say

Cell C chose not to respond to my questions. 

MTN SA’s chief consumer officer, Larry Annetts, told me that MTN does not SIM-lock any phones. Communications manager Bridget Bhengu said the manufacturer holds the warranties of all MTN phones, and insisted that the phones would be serviced as per the warranty regardless of the SIM the consumer is using in the device. 

Vodacom’s response was that there are currently no regulations that prevent SIM-locking devices; however, it said that regulator Icasa had indicated in previous hearings that it would discontinue SIM-locking as it was not a widely adopted practice. 

“From a Vodacom perspective, it is not standard practice to SIM/network-lock devices,” the mobile giant said. Vodacom also said that any warranties on phones would remain valid if the consumer ported to another network operator. 

I was confused. What I was hearing from retail staff in the stores was completely different to what I was hearing from the mobile operators’ head offices. When I put this to the mobile operators, they couldn’t explain it. The thought that retail staff is giving out inaccurate information to consumers is rather disturbing. 

The regulatory loophole

It turns out that while Icasa implemented number portability back in 2006, the regulations that were meant to prevent SIM-locking of devices were rather included in the handset subsidy regulations, being drafted at the same time. 

These handset regulations were subject to a number of legal challenges and eventually Icasa withdrew them in 2011, meaning there is currently no legislation or regulations in SA preventing mobile operators from SIM-locking phones. 

In the Government Gazette that announced Icasa’s decision to drop the regulations, it said that it had tried to rework the regulations after the legal challenge, but realised the prospect of success was low. Icasa is currently busy with an inquiry into the Number Portability Regulations, which was announced in August last year. 

The purpose of the inquiry, according to Icasa, is to determine the strengths and weaknesses of the current number-portability framework. It wants to find the regulatory gaps and implement regulatory interventions where necessary. 

SA is in the top 10 in the world in terms of number portability, with the US, Israel, Australia, Canada, Ghana, Chile, Singapore and Ireland ahead of it. 

Between November 2006 and February 2017, 6.3m mobile numbers were successfully ported in SA, an average of 46?753 numbers a month. Between April 2010 and February 2017, 898?293 geographic landline numbers were successfully ported, an average of 11 090 a month. 

Number-portability hearings

Public hearings for the Number Portability Inquiry were held at Icasa in mid-February and though I was there for most of the day’s proceedings, I didn’t hear the issue of SIM-locking mentioned once. 

However, in terms of the success of the number-portability regime, the hearings did offer up some interesting perspectives. Cell C argued that SA was first in Africa to introduce number portability, but was now lagging behind, with countries like Ghana way ahead of it in terms of the amount of time it takes to port. It called for the average port time to be decreased. 

A port can happen in a matter of hours, but there are horror stories of people who waited weeks.

Neotel agreed, arguing there were a few issues that need “attention”. Neotel’s major concern is that once a number has ported to their network, there are often delays from the other networks in changing their routing database. 

This was a matter that many of the operators complained about, arguing there was no incentive for the networks to act quickly on this, even though it can have disastrous effects on the consumer at the other end. Some operators recalled cases where a customer who had ported found nobody was calling them, because the calls were still being routed incorrectly. For a business, the consequences of customers not being able to contact them for days are huge. 

Neotel suggested that it may not require regulations to address the matter, maybe just “clearer guidelines”. 

Ohren Telecoms argued that when there is a problem with a port, the escalation and resolution of the problem by the donor operator is mostly “lacking”. It raised issues around communication, pointing out that emails and telephone calls often went unanswered when a resolution was needed. 

Ohren also argued that operators often have out-of-date contact information for the people tasked with resolving porting issues. “Donor violations happen with impunity, there is no way to enforce,” argued Ohren Telecoms. 

MTN argued that there was a major problem with “unauthorised” and “illegal” porting. It argued for the introduction of a SMS notification that is sent to a consumer, asking them to confirm the port request as an extra safeguard. 

“There is nothing worse than a frustrated customer or consumer that finds out he has been ported without his consent,” MTN’s Jeff Blake told the hearing. “Your SIM-card is tied to your life, how can it be taken away from you?” 

Where does this leave the consumer?

It’s clear that for the majority of people, number portability seems to be working well, but try telling that to someone who has had their phone tied up in a porting issue for weeks. 

It’s also clear there are still obstacles that need to be addressed to make life easier and simpler for the consumer. 

After attending the number-portability hearings in February, I put questions to Icasa regarding its plans to prevent SIM-locking of mobile phones.

Weeks later I am still waiting for an answer, which doesn’t give me much hope as a consumer that this regulatory loophole is going to be addressed anytime soon. 

World Wide Worx founder Arthur Goldstuck says that SIM-locking a phone could only be justified if the phone was heavily subsidised by the mobile operator. “If the consumer bought the phone at its full retail price, SIM-locking is anti-competitive and anti-consumer,” he says. 

Until Icasa prevents SIM-locking through regulations, consumers like myself are going to have to be vigilant in asking the right questions when purchasing a new phone – which is made even harder given that it seems difficult to know who to believe. 

This article originally appeared in the 16 March edition of finweek. Buy and download the magazine here.

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