Consumer protection and the regulator - LIRNEasialirneasia.net › wp-content › uploads › 2014...

Consumer protection and the regulator

Rohan Samarajiva

29 January 2014

This work was carried out with the aid of a grant from the International Development Research Centre, Canada.

Professor Stephen Littlechild on consumer protection

• “Competition is indisputably the most effective - perhaps the only effective – means of protecting consumers against monopoly power. Regulation is essentially the means of preventing the worst excesses of monopoly; it is not a substitute for competition. It is a means of ‘holding the fort until competition comes.’”

2

1983 Report to UK Government, Para 4.11

Consumer protection in a monopoly setting

• In a monopoly environment, the government has major responsibilities with regard to consumer protection

• When there are no exit options (alternatives), voice is all that is left (other than doing without)

– Voice can be direct: consumer speaks/complains to supplier

– Voice can be directed to 3rd party (consumer protection agency/telecom regulator) who has power over supplier

– Voice can lead to anti-supplier agitation, even to demands for expropriation

Consumer protection under competition

• Caveat emptor (Let the buyer beware) is the starting position

– Assumes homogenous products costless exit options

– Assumes perfect knowledge • Obviously unrealistic; For all markets, but especially for markets in

infrastructure services

• Government actions in absence of assumptions – Regulate suppliers proportionate to variance from perfect

market, i.e., higher the HHI, stricter the regulation

– Reduce information asymmetries 4

Low-quality equilibrium trap

• Hirschman’s Exit, voice and loyalty analysis shows that low-quality equilibrium could result, if no significant quality differences among suppliers – Number leaving = number joining no net loss in market

share/revenue effective market signal to supplier

• Therefore, simply reducing information asymmetries may not be enough in imperfectly competitive ICT infrastructure markets

• But we still must reduce information asymmetries and also obtain diagnostic information on where regulatory interventions are needed

5

MICRO-ENTREPRENEURS, ELECTRICITY AND MOBILE: A STUDY OF CUSTOMER RELATIONSHIP MANAGEMENT

6

Objective

• To understand how customer relationships with utilities and government can be improved, with emphasis on use of ubiquitous mobile platforms

– Cross learnings from how micro entrepreneur relations are managed across sectors

• Why focus on micro entrepreneurs?

– Livelihoods depend on services

– Jobs are created by micro entrepreneurs

– Economic growth depends on micro entrepreneurs becoming small , medium and large businesses

7

Micro-entrepreneurs at BOP • Micro-entrepreneurs are defined as those employing 0 -

9 employees (where employees can be paid part or full time workers inclusive of family members)

• BOP is defined here as those belonging to socio-economic classification (SEC) C, D and E.

• Representative survey of 3,180 urban, BOP micro entrepreneurs

Dhaka, Bangladesh – 915

Delhi & Patna, India – 1279

Colombo, Sri Lanka – 986

• A qualitative study with 88 participants conducted as in-

depth interviews, ethnographies and focus groups.

WHAT OUR RESEARCH SAYS ABOUT ELECTRICITY CUSTOMER RELATIONSHIPS IN SOUTH ASIA

9

Many have an electricity connection which they use for business purpose

except in IN

10

91%

37%

84%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Bangladesh India Sri Lanka

Use of electricity for business ( % BOP MEs)

Battery/ generators mainly used in IN

11

100%

66%

100%

22%

8%

4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Main supplier of electricity (%BOP MEs who use electricity for business)

Solar

Diesel generator

Battery

Electricity company

Those who don’t have electricity don’t see a need for it

12

84% 90%

77%

4%

6%

12%

7% 4% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Main reason for not having electricity for business (%BOP MEs who not have electricity for business)

Others

Its too expensive for me

No source of electricity in my area

I cannot get a connection as I do nothave required documentation

I have no need for it

Energy efficient bulbs principal means of saving costs in BD and LK

13

19% 19% 21%

75%

34%

61%

5%

42%

16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Most important step in conserving energy (% BOP MEs who use electricity for

business with supply from electricity co.)

Other

Run appliances at off peak rate hours

Turn off unnecessary appliances/lights

Switched to energy efficient light bulbs

Have not done anything

Blackouts and voltage fluctuations most common problems

14

97%

67%

10%

4%

18%

72%

51%

10% 6% 7%

84%

28%

4% 3% 2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Blackouts Voltage fluctuations Meter malfunction Delayed bill Inaccurate bill

Problems faced with electricity supply (% BOP MEs who use electricity for business

from electricity co.)


Most complain only about delayed bills and faulty meters

15

14% 14%

32%

26% 28%

20%

13%

48%

37%

67%

29% 24%

55%

18%

73%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Blackouts Voltage fluctuations Meter malfunction Delayed bill Inaccurate bill

Those who complained about the problems (%BOP MEs who use electricity for

business who faced these problems)


Most see no use of complaining

16

79%

64%

80%

9%

7%

4%

6%

10%

7%

3%

13%

6%

1% 6% 1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Reasons for not complaining to the service provider (% BOP MEs who use

electricity for business and who faced problems but didnt complain)

Others

I am scared to complain

I do not interact or pay to the serviceprovider but interact or pay to mylandlord/third party

I do not know the process to complain

I do not know how to contact them

Its of no use/ not worth complaining

Most complaints directed to DisCos

17

71%

59%

83%

3% 23%

13%

10%

12%

1%

10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Whom the ME complained to for the main problem faced (%BOP MEs

who use electricity for business who complained about a problem)

Others

I will rectify the problem myself

I will not go to anyone

Government / regulator

Local electrician

Landlord or other person in whose namethe connection is registered

Hotline / Customer care centre

Office of the Electricity Company / depot

Mode of complaining: Phone dominates in LK

18

36%

49%

85%

48% 27%

10% 12% 18%

2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


How the ME complained for the main problem faced (%BOP MEs who use electricity for business who complained about a problem

Others

Via online chat / website

Letter

Email

Informal talk

Walk-in to the authorized agent/providers office

Through phone

High levels of dissatisfaction over how complaints handled in IN and BD

19

51%

66%

25%

0%

10%

20%

30%

40%

50%

60%

70%


Dissatisfaction with action taken by the provider for problem complained (%BOP MEs who use electricity for business who complained about a problem)

No advance notice re power cuts in IN

20

51%

3%

42%

0%

10%

20%

30%

40%

50%

60%


Gets advance notice about power cuts (%BOP MEs who use electricity for business)

Experience with service provider

Bangladesh Sri Lanka

Yes No DK/CS Yes No DK/CS Info. on procedures and documents to get new connection was readily available

34% 35% 32% 34% 28% 38%

Time needed to wait to get a new connection is satisfactory 25% 40% 35% 26% 34% 40%

Info. on procedures to reconnect was readily available 26% 40% 34% 26% 32% 42%

The amount of time taken to reconnect was satisfactory 23% 46% 31% 23% 35% 42%

Info. on how to contact the service provider is /was readily available

36% 35% 30% 30% 34% 36%

Easy to find the locations where payment can be made 47% 24% 29% 47% 25% 28%

Info. on the procedure for changing ownership of a connection was readily available

17% 43% 40% 16% 34% 50%

Time needed to spend to change the ownership of the connection satisfactory

12% 49% 39% 14% 32% 54%

I was treated politely by their office / call canter personnel. 50% 16% 34% 35% 28% 36%

The waiting time to reach a concerned officer was appropriate. 34% 34% 32% 23% 36% 41%

21

PROBLEMS AND POSSIBLE SOLUTIONS

22

Problem: Unable to contact service provider

My electricity bill has risen lately. Since

I am the only earning member of my

family, things are difficult for me. I

switch off my refrigerator when I am

not using it, but I would like to know

more about how else I can reduce my

electricity bill

Name: Fatima Rilaya

Age: 46 years

Location: Colombo

Education: Grade 4

Occupation: Food business

Number of Employees:0

I require electricity for my business since I

run my business from home.

Name: Santosh Kumar

Age: 24 years

Location: Patna

Education: Grade 9



My business is very important for my

livelihood. But when such disruptions

happen my business suffers.

Once there was a major electricity

shortage in this area. We called the

office, but no one picked up, We had

no choice but to go to the office

ourselves to register our complaint.

Problem: Lack of information about new connection

I had initially approached a middle man

for my electricity connection. However

even after paying money I had to wait

for over six months for my connection.

Eventually I had to approach someone

else to help me get my electricity

connection.

Name: Harun Ur Rashid

Age: 37 years

Location: Dhaka

Education: Grade 9

Occupation: Welding business


My business is dependent upon

electricity.

Solution: Dedicated call center for receiving complaints/inquiries

Service providers should maintain dedicated call centers. Consumer calls made to the electricity office

should be recorded so that the Supervisors can keep track of interactions. After the query has been

resolved, the consumer can rate the Service Provider via SMS.

D

ME can rate the

Service Providers

response to the

query via SMS

Solution: Remove discretion from complaints receiving process

Remove discretion from the complaints receiving process by ensuring that all complaints are accepted,

logged and issued a reference number. The data can later be analysed for optimising processes

BILL

%

REPORT

Monthly/ quarterly reports

Business analytics for

process optimization

Solution: Make timelines for obtaining new connection more transparent

The service provider does a pre evaluation of available infrastructure in order to help understand backend

requirements for processing new connections. An approximate time range is established within which a

new connection has to be processed.

SMS

Approximate time

for new connection

SMS updates of the

status of the new

connection

Problem- Unannounced power outages

There are many instances when

uninformed power cuts are made. As a

result my business suffers. I have to

wait for a long time for the lineman to

come and fix it. Additionally I also have

to bribe him.

Name: Ashutosh Ghosh

Age: 40 years

Location: Dhaka

Education: Grade 9



My business is dependent upon electricity

as I am a sweets shop owner. When

electricity is cut, my business suffers

greatly as my sweets get spoilt.

Solution: The ME need to be made aware of the blackouts and power cuts through public

announcements, newspapers, SMS and many other methods.

Solution: Information- Planned Blackouts

SMS

Problem- insufficient info on effective consumption of electricity

My electricity bill has risen lately. Since

I am the only earning member of my

family, things are difficult for me. I

switch off my refrigerator when I am

not using it, but I would like to know

more about how else I can reduce my

electricity bill.

Name: Fatima Rilaya

Age: 46 years

Location: Colombo

Education: Grade 4



I require electricity for my business since I

run my business from home. Any increase

in my costs will adversely affect my

business.

Solution: More information through bills

Bills have approximate number of units consumed for various appliances so that the ME can have a

better understanding of their consumption.

1 fan for 10

hours = 10

units

Problem: Insufficient info on effective consumption of electricity

Solution: Color Meters

Provision of smart meters to enable 1) remote or near-wireless reading of the meter (wherein the meter

reader walks down the road with the reading machine to record consumption)

2) colour indications for consumption over a certain threshold

3) weekly SMS on consumption by MEs.

Colour changes based

on consumption

beyond the threshold

SMS

Your weekly electricity amount

is ___

Problem: Insufficient info on effective consumption of electricity

Solution: Greater awareness of consumption

Provision of an infographic on the meter highlighting their consumption as compared to their

neighbourhood to create awareness. The infographic will be in the local language.

Solution : Your Bill Your Phone

The ME can SMS his meter reading to a designated number after which he receives his consumption and

amount due as SMS. This gives the ME the extra time to arrange for funds as it is received before the

physical copy of the bill.

SMS MR 036388 to

*****

SMS

Your total

consumption

is 10 Units

and your bill

amount due

is USD 5

Problem- understanding bill

Solution- Bill in local language

Solution: Provision of the electricity bill in the local language in addition to English. The amount on the

bill should be highlighted.

715

Problem- Incorrect meter reading entered into machine in Patna cannot be

re-corrected instantly

Solution: The machine carried by the Meter Reader, prompts the meter reader to re-enter the bill amount

after entering it the first time. It will then ask for a confirmation for print.

Please Enter the Meter

Reading

****

!! Please Re-enter the

Meter Reading

****

Please press yes to

confirm the printing

YES NO

Solution: Delink electricity from property rights by initiating a change in law. This will ensure that having

an electricity meter does not automatically entail property rights over time. This will remove the need to

submit property papers in order to get an electricity connection.

Relaxing existing document

requirements to enable MEs

with temporary structures to

acquire an electricity

connection

Prepaid meters can be

provided to these MEs in

order to reduce the financial

liability of the service

provider

Policy: Delink Electricity Provision From The Purity of Tenure

Solution: Use of Prepaid Meters

Solution: Incorporate the use of smart prepaid meters. The consumer can top up at a local vendor for a

reload thus reducing costs for the electricity board due to non involvement of the meter reader and bill

prints.

To enable easy top ups,

super markets, small shops

and agents (who presently

sell mobile vouchers) are

used to provide access to

reloads

The ME then reloads as per

his requirement.

SMS

Your transaction has been

successful

MICRO ENTREPRENEURS AND MOBILES

39

Most used ICT for business related activities

5%

89%

4% 2% 2% 0%

52%

0% 0% 0%

22%

79%

4% 2% 2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Landline (including CDMA) Mobile phone Computers/laptop Internet via computer Internet via mobile

Do you use the following for your business purposes- Yes (% of BOP MEs)


Mobiles most used for contacting suppliers & customers

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

To contact orcoordinate with

suppliers

To contact orcoordinate with

customers

To contact orcoordinate with with

employees

To access a wider setof people/

businesses ofrelevance to my

business

To act or contactothers in anemergency

To get informationrelevant to my

business

No particular reason

Most important reason for using a mobile for business (% BOP MEs who use mobiles for business) [SC]


Most MEs do not interact with telecom service provider

8%

30%

10%

65%

38%

50%

9% 17% 20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Last time the ME interacted with the telecom service provider

(% BOP MEs who use mobiles for business) [SC]

Can't remember

Never

More than a few months ago

Few months ago

0-4 weeks

Those who do: How?

56%

92%

69%

38%

7%

28%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


How MEs normally contact the telecom service provider (%BOP MEs who have interacted with service provider) [SC]

Others

SMS

Walk-in to the authorized agent /operator's stores

Through the call center

Those who do: Level of satisfaction

86%

74%

46% 51%

36%

65% 68%

71%

27%

91%

83%

44%

51%

72% 77%

61% 55%

31%

93% 89%

69% 70% 74%

80% 80%

41%

16%

I was treatedpolitely

Informationrelevant was

available easily

Information onhow to contact

the serviceprovider was

readily available

Information onprocedures tofile complaintswas available

Waiting time wassatisfactory

Time taken toresolve the

problem wassatisfactory

I am satisfied bythe action takenby the operator

Automatedresponses are

clear

Call center agentredirected me to

use (IVR,Internet, USSD

etc) withoutanswering the

query

Experience with service provider – YES (%BOP MEs who have interacted with service

provider)


Call drops & coverage: The most significant problems

0%

5%

10%

15%

20%

25%

30%

35%

40%

Call drops Coverage problems Billing related Activation of VASservice withoutknowledge of

customer

Unsubscribing fromsome services

SIM not working Unable to call othernetworks

Mobile related problems (% BOP MEs who use a mobile) [MA]


Those problems affect ME livelihoods

35%

30%

41%


MEs for whom network dis-connectivity / call drops affect their business (%BOP MEs who use mobiles for business)


PROBLEMS AND POSSIBLE SOLUTIONS

47

Problem- Call Drops

Name: Mohammad Asim Mamdhoom Age: 56 years Location: Colombo Education: Grade 9 Occupation: Rental company dealing with furniture, cutlery, glassware Number of Employees: Four (Family members) I have been running my business for the 15 years and I need good telecom service for my business. I need to be constant touch with my customers to follow up with them about their requirements and my payments.

“There are times when there is no network coverage because of which I lose out on my business. I wish there was a way to resolve this instantly.”

Solution to problem- Call Drops

SMS 1-

AREA_No Coverage to

****

SMS 2- Thank you for

your feedback.

Solution: Crowd Sourced Call Drop Map

Enable customers to log in problems pertaining to coverage through USSD/ SMS. This information will be saved in the form of a database enabling the operator to optimize phased introduction of new towers to improve network connectivity.

Call drops when calling customer care center

“Every time I call up the telecom customer care, I need to go through

the IVR to speak to the customer care executive. A lot of times, the call drops and I need to repeat the entire process and narrate my problem to a

new executive.”

Name: Biasdev Sharma Age: 54 years Location: Delhi Education: Grade 9 Occupation: Tea and savories shop owner Number of Employees: None I have been running my business for the 15 years and I started this business as I had no other option since I am not very educated.

Solution to problem of call drops when calling customer care center

Real time digitization of problem under

customer profile

SP calls back High Value

Customers (A different SP

could call back)

ME calls back

Customer call is prioritized in the

queue.

Solution: While addressing a customers call, the Customer Care Executive digitizes the issue in real time. In case of a call drop and the customer calls back within a stipulated span of time, the customer is prioritized in the queue. Customer will not need to repeat the problem as it is in the database.

Problem- Activation of unwanted VAS and long text messages

Name: Ramesh Kumar Age: 28 years Location: Patna Education: Grade 9 Occupation: Bike Mechanic Number of Employees: One (Family member) I have been running my business for the past seven years and I tend to get irritated with the messages I get from my telecom company.

“The telecom company sends a lot of long messages that I am unable to

understand. There are times when they send a VAS activation message, I tend

to press the button to activate it since I don’t understand what it says. I have stopped opening my messages due to

this.”

Solution to problem of activation of unwanted VAS

Kindly press8 if you wish to confirm

activation of service, press 9 if you

wish to deactivate the service.

8 9

Solution 1: On activation of VAS, the ME receives a confirmation call through IVR, or SMS requesting them to confirm their activation. This way the ME can realize if the VAS was activated by mistake and press the required digit to avoid it.

Solution 2: Reconfirmation request sent through SMS or IVR about VAS activated on phone at a given

frequency (every 3-4 months). If VAS is not confirmed, it will get automatically deactivated.

Solution to problem of activation of unwanted VAS

Solution: Create more awareness about SMS based deactivation of VAS, thus enabling MEs to initiate the process on his

own. MEs who are not comfortable using SMS can take the help of friends/family/ local telecommunications vendor to

initiate the process on their behalf.

Your reference number is

####. This service will

be deactivated within 24

hours

SMS 1- VAS_CT_DEA

to ###

Solution to problem of long text messages sent by telcos

Date: 25-07-2013

Recharge Successful for a

Talktime of Rs. 60 Service Tax: Rs

6.60

Balance: Rs 60.36

Solution: Redesign the messages that are sent to customers. The length of the SMS can be reduced in addition to emphasizing on key information for the customer.

Problem- Lack of a phone backup if SIM gets lost

“I lose my SIM frequently due to which I keep losing my contacts.

Obtaining a SIM replacement is also a very tedious process, I am asked

for old documents which I am unable to produce. I wish there could be a

phone back up service.”

Name: Lokman Hossain Rabbi Age: 30 years Location: Dhaka Education: Grade 5 Occupation: Mechanic Number of Employees: Four I have been running my business for the past 18 years. I learnt this work and then started my own business.

Solution to problem of lack of a phone backup if SIM gets lost

ME gets his lost contacts on getting a replacement SIM

Solution: Provision of a phone backup service for customers. The customer can back up his data on the operators system. In case the ME loses the SIM, they can visit the telecom outlet t and get a new SIM along with back up of their contacts

Postpaid Lite for MEs- other services for MEs

SMS - Your last call cost was Rs. 2 and your current total

charge is Rs. 20

Option of mobile top ups if above the

credit limit

ME Identification

Postpaid package linked to other

relevant services (e.g. loans)

Provision of ME centric postpaid scheme with lower credit limit , no physical bills and relevant VAS applications To avoid bill shock, MEs are able to subscribe to a SMS for call charges on a pull or push basis (every day/week or after every Rs100 spent)

Information on the type of business will be recorded at the time of getting a new connection. The postpaid connection will also be linked to a broad package of services such as business loans / accounts. Super agents selected amongst the local telecom vendors to assist with relevant ME services.

Postpaid Lite can also help establish a ME’s credit history

In India, 2 out of 3 MEs with problems complain to provider; in other countries 1 out of 3

28%

63%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


MEs who complained about problems (% MEs who have mobile related

problems)

Why not complain?

71%

49%

83%

27%

51%

15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Reasons for not complaining to the service provider (% BOP MEs who faced problems but didn’t complain)

Others

I am scared of them

I do not know how to contact them

Its of no use/ did not think it was worthcomplaining

Automated Complaint Registration

Your reference number is ####.

VAS will be deactivated within 24

hours.

Solution: Automate VAS complaint registration by the use of machine at the telecom operators outlet. This will enable the

ME to deactivate the service without having to queue up/ call up customer care for the same

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