2007-05-28

SA's phone rates - cartel hell?

To the average South African, the cellphone industry looks like a maelstrom of competition and innovation. After decades of having the post office run our telephone network, this is perhaps not surprising. Many are however aware that we are paying very high rates for cellphone calls and believe that these rates need stricter regulation. This posting argues that we might actually need less regulation, or regulation of a different nature. First, how do we tell that we are being overcharged for calls? By looking at what we are being offered cheaply or for free. Who pays for those R2,00 SIM cards in the shop and the shiny phones that are "free" on a contract? You and I do, through the excessive call charges we pay. How many SIM cards and cellphones can you use? Not many. How many minutes could you use? Lots. That is why the networks like the SIM cards and cellphones to be free/cheap.

In SA (and many other countries) the main revenue lies in the so-called interconnect charges that providers pay each other. So, if I call an MTN nunber from my Vodacom phone then Vodacom will pay a per-minute charge to MTN. If somebody calls me from MTN, then Vodacom receives the per-minute fee from MTN. Note that Vodacom actually really makes money if somebody calls me and that would explain a bit about those almost-free SIM cards. How much are these interconnect rates? The Mail&Guardian reports them to currently be R1,25 per minute - as opposed to about R0,20 in India, a country which started GSM mobile telephony considerably later than SA. Incidentally, when cellphones were introduced to SA in 1993, the interconnect rates were just R0,20 per minute. Can anyone point to another mature technology which has actually seen costs rise?

If there is competition, does it matter if high call rates subsidise phones and SIM cards? If there were competition, not really - of course. However, the interconnect charge is filed with ICASA (the telecoms regulator in SA) by the networks and this becomes, in effect, a state-controlled price. The barrier to entry in the industry is infinite since the government is not licensing new providers. One is inevitably reminded of Adam Smith in The Wealth of Nations (1776):
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
Many countries (including SA) contrive to regulate mobile interconnection charges based on cost. A comprehensive report by Genesis Analytics for the SA Foundation has concluded that the mobile interconnect charge was substantially higher than cost in SA. Regulation of fees based on average cost to companies of providing a service is however something that should outrage the public. Can the baker sell his week-old loaf of bread at the price it cost him to produce? Can we guarantee to the poorest peasant that her efforts will not be wasted and that she will be able to recoup her cost from the sales of her produce? Of course not. Why do we then accord these luxuries to giant companies with plush office parks and sponsored sports teams?

As this blog entry is being written, further cartel-forming is afoot in SA. The interconnect rates (also called termination rates) are being set for fixed-line providers, among them SA's Neotel - the first official competitor to the much-unloved monopoly Telkom. These charges are going to be very important for the development of competition in the SA market. It is very difficult to see how anyone could justify interconnect rates higher than about R0,09 per minute - the price for which it is possible to call the US using a VOIP operator from SA - but prepare to be surprised...

Having discarded further price regulation as a remedy, I propose some lateral thinking about the SA market. In the USA - which uses a system where a mobile phone user basically pays for both incoming and outgoing calls - the average cellphone use among African-Americans (the demographic group with the highest usage) was already well over 1000 (sic) minutes per month, costing them on average under R500, in 2005. This so-called Receiving Party Pays (RPP) system in use in the US has many advantages over the Calling Party Pays (CPP) system used in SA and most countries in Europa and in Africa. For a start, the purchaser of the service (a mobile phone plus connection) pays all of the cost related to running his or her wireless connection and is therefore more directly aware of the cost thereof. It also encourages competition between mobile and fixed-line operators as consumers receive ordinary geographically-based telephone numbers that are indistinguishable to the caller (and hence the RPP system) from normal fixed-line numbers. It is true that a CPP system encourages penetration, at least initially, and that many poor people might be averse to an RPP system on the basis of cost. There is no reason, however, why an RPP system could not be introduced in SA - in parallel to the current system. This could take the form of paying a fixed monthly rate for a number (say on the Pretoria dialling code 012) and to receive calls, for which callers would pay the normal fixed-line rate. Note that one version of this system is already in operation - in the guise of the Telkom home telephone service. There is however no reason to restrict this service to one kind of technology and if one wanted to provide such a service on a wireless basis (as Neotel will probably do), or using VOIP - why not?

The SA Competitions Commission should probably study the Carterfone case of 1968 in which the US Federal Communications Commission opened the connection of any device to the telephone network that did no harm to the infrastructure. Without the Carterfone decisions we might have waited many years longer for the introduction of the fax or the telephone answering machine. I am, incidentally, writing this entry from Perth where I am visiting the Communication Economics & Electronic Research Centre (CEEM) at Curtin University. I am using a Vodafone prepaid SIM card plus one recharge which cost under R240 in total and for this I got 10 minutes of international calls and about 150 minutes of calls within Australia. It seems pretty inexpensive by South African standards.

The Swiss company Cablecom has just announced free calls to all fixed-line phones in Switzerland for consumers subscribing to their telephone service at around R120 per month. My immediate recommendation to Neotel (or perhaps, CellC) is to shake up the SA retail market by offering free on-network calls between their own subscribers in the evenings or, at least, at night and on weekends. Like Skype.

2007-04-29

Own your e-mail address!

The title of this posting is not an offer - it is a very clear instruction. For ten years I have been using an e-mail address in the .za top-level domain (TLD) which is now (after numerous takeovers) owned by South Africa's largest ISP, MWeb. It has all been a mistake. MWeb has apparently not been properly maintaining the DNS records for the domain name which I am using and as a result many servers are now marking e-mail from me as spam. I am also paying about $20 per month in ISP fees just to keep this specific e-mail address. Two months of e-mails to MWeb have resulted in minimal action in this regard. It has however been clear to me for some time now that a reasonable person should want complete control over their e-mail address(es). The following requirements have suggested themselves.
  • Ownership of the domain name. This implies full control over DNS settings related to the domain name. It also implies the ability to create an unlimited number of e-mail addresses for various purposes, under the same domain name. Estimated cost: $12/year.
  • A domain name in a predictable, competitive and well-managed administrative environment. This requirement excludes Camoroon (.cm), Tuvalu (.tv) and - alas! - SA (.za). Basically only international (.com, .org, .net, .info) and US (.us) TLD spaces are under serious consideration.
  • An appropriate domain name. Anything that sounded cool as a student might be very inappropriate for a 50 year old professor. Bugsbunny.com is out and anything with one's surname (all my reasonable ones have been taken) is in. However, it could be that one does not necessarily want to reveal one's surname through an e-mail address and even though my domain name with surname and initials (similar to jfkennedy.com) is available I am hesitant to take it for this reason. The following item is also of concern with the initials+surname model.
  • The domain name should be easy to recall and easy to convey verbally, including over the telephone. A domain name consisting of numbers only could be very good by this criterion - numbers are very hard to confuse in most languages. The main problem is finding an appropriate number that can be easily recalled - first of all, by me. 1917.com would be good from this point of view but - given that one is presumably trying to establish a life-time address - perhaps too narrowly ideological. It is also no longer available.
If the .name TLD were better known it would be a good choice, of course, but unfortunately it is still a bit obscure. To summarise: I am trying to establish an e-mail address (or, rather, a long term domain name for a number of e-mail addresses e.g. darling@1652.com, professor@1652.com) subject to the requirements above. Any comments would be much appreciated.

2007-04-15

Ubuntu Linux 7.04 on Dell D820 laptop

On Friday I got quite a boring looking but nice Dell Latitude D820 laptop (Intel Core Duo processor and 2GB of RAM) with WinXP pre-installed. The most important task was getting a working Linux installation on the machine and a first attempt, with Ubuntu 6.10 ("Edgy Eft") from DVD, nicely repartitioned the hard drive and installed in under 20 minutes but somehow failed to do much with the built-in wireless device. It occurred to me to try the pre-release version of Ubuntu 7.04 ("Feisty Fawn"). I was a bit surprised not to see Gnome Partition Editor in the menu of the live disk - it seems that Feisty prefers to suggest some repartitioning during the installation wizard. So, I deleted the previous Linux partitions using fdisk first and proceeded with the installation which went very well. After that, using the wired ethernet connection, I followed the advice of the appropriate Ubuntu forum and issued the commands
sudo apt-get install bcm43xx-fwcutter
sudo apt-get install network-manager-gnome

at which point (perhaps after a modprobe but rebooting should also do) my WiFi just started working. There are two important things to note: (1) Ubuntu apparently likes it better when you boot with the hardware switch (on the left-hand side of the lapgtop) for WiFi in the on position; (2) running the DHCP client on two devices is apparently not what Feisty wants, so deactivate the wired connection when you want to use the wireless one. At this point I started updating the system and here hit a serious but short-lived hitch: after upgrading the kernel to 2.6.20-14 my system would no longer boot into Feisty. Of course, I just booted to the old kernel and in fact the problem was solved the next day by the release and installation of kernel version 2.6.20-15 which I am using to write this post. With Automatix2 I installed some naughty things like GoogleEarth and xDVDshrink effortlessly and right away!

2007-04-07

Free calls to Malawi and to Zambia

It seems that LowRateVoip is offering 200 minutes per week of free calls to Malawi (landlines only) and Zambia (landlines and cellphones) for users of their MS-Windows client. Using the same client, calls to SA cellphones are also advertised at under R1/minute which is very reasonable. Any current users of LowRateVoip, please comment on this post!

2007-04-06

Naspers as tweede reserwebank van Sjina

Tegnologiewaarnemers hou al geruime tyd die aandeelhouding van Naspers in Tencent QQ dop. QQ is die mees gewilde kitsboodskap-stelsel in Asië (Engels: instant messaging). Die Wall Street Journal berig verlede week dat QQ se virtuele geldeenheid, die Q-munt waarmee oorspronklik net dienste in virtuele objekte in die QQ-wêreld gekoop kon word, nou in die regte wêreld gebruik word. Q-munte kan teen 'n wisselkoers van een-vir-een met Sjinese yuan gekoop word by QQ of op die vrye mark teen 'n wisselkoers wat tussen 0,5 en 1,0 yuan per Q-munt wissel. Sedert die Sjinese owerhede hul kommer uitgespreek het oor die gebruik van Q-munte in die regte wêreld en die moontlike ontstaan van 'n parallelle geldstelsel in Sjina, het die wisselkoers van die Q-munt gestyg. Regerings moet besef dat aangesien bestaande amptelike geld sigself nie besonder goed leen tot anonieme kontanttipe-transaksies op die Internet nie, 'n mens skaars verbaas kan wees indien alternatiewe betaalmiddels ontwikkel word. Dit is nie soveel anders as die gebruik van sigarette as betaalmiddel (eintlik: ruilmiddel) in die plek van kontant in die na-oorlogse Duitsland nie.