Consumer protection and the regulator -...

Consumer protection and the regulator

Rohan Samarajiva & Helani Galpaya Communication Regulatory Authority of Namibia

11 December 2013

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

APPROACHES TO BROADBAND QUALITY OF SERVICE EXPERIENCE

6

Quality testing can be done by different parties – regulator is well positioned

7

Diagnostics conducted by

Pros Cons

Service Providers (ISPs/operators)

• Easy to implement

• Results based on equipment placed in the most optimized points of the network • Not representative of the ‘actual’ speeds

Users • Represents actual user experiences

• Assumes user’s PC is virus-free, with no parallel process running etc. • Dependant on user’s willingness to participate • Large files impact user’s data limits

National Regulatory Authorities (NRAs)

• In a position to request operator involvement when necessary

• Known test locations will prompt operators to optimize networks in selected areas

Hardware offers accuracy, but may be expensive

- Equipment directly connects to the line between the router and the PC

Accurate

- Expensive

- SamKnows is being used by the FCC (US), Ofcom (UK), IDA (Singapore),

European Commission etc.

Software may be more cost effective

- Levels of accuracy can vary

- Cost effective

- E.g: TRCSL (Sri Lanka | Implemented),

ICTA (Mauritius), BICMA (Bhutan | Ongoing),

CAM (Maldives | Ongoing), PIRRC

(Fiji | Ongoing), LIRNEasia - since 2008

What to measure? Think beyond download speed

+++ Highly relevant; ++ Very relevant; + Relevant; - Irrelevant

Service Download (kbps)

Upload (kbps)

Latency (Round Trip Time, RTT) (ms)

Jitter (ms)

Packet Loss (%)

Browsing (Text) ++ - ++ - -

Browsing (Media) +++ - ++ + +

Downloading +++ - - - -

Transactions - - ++ + -

Streaming media +++ - ++ ++ ++

VOIP + + +++ +++ +++

Games + + +++ ++ ++

- RTT has implications on client-server interactive systems

- Jitter adds to the ‘noise’ of the transmission

- Packet Loss affects streaming media Source: Gonsalves, T.A & Bharadwaj, A. (2009) 10

Various attributes impact measurement; Trade-offs involved in any practical solution Attributes Ideal case Minimum requirement

Location Statistically representative Random locations

Service provider All Largest service provider

Broadband Plan All Select plans based on advertised speeds. For example: • Up to 1 Mbps • 2 Mbps – 4 Mbps • 5 Mbps – 10 Mbps • Above 10 Mbps

File size Accurate results are obtained by using a large file that maximises use of the channel capacity. Example of file sizes: • 10 MB for connections up to 10 Mbps • 35 MB for connections above 10 Mbps

Domains Local, National and International

International

Test times Multiple times of the day, multiple days of the week (including weekends) to account for off peak / peak variations

LIRNEasia tried different approaches

• First, crowdsourcing – Blogger and telecenter operator meet-ups+ training;

– Small community; High transaction cost abandoned after 1 or 2 rounds

– But worked in Africa: different incentives?

• Then (and now) test it ourselves – researchers spread across Asia (cover their cost)

– Successful; but limited to where we can find a tester

• Given free to regulators. Got them to adopt – ICTA (Mauritius), BICMA (Bhutan), CAM (Maldives),

Fiji and Pacific Islands

InternetInternet

User

1st Entry point to US

Yahoo.com

ISP

National Server

3 Domains…

Servers

of the

User’s

ISP

Server of

another

operator, in

the country

First entry point to

the cloud

(US/UK/China/…..).

Outside country

WHERE the data is hosted

makes a difference.

We focused on 3 domains

Software based, new testing methodology

• Developed methodology and software in partnership with Indian Institute of Technology (IIT), Madras

• Testing in multiple domains

- ISP, National and International (yahoo)

• Multiple broadband packages or links

– 256kbps – 2Mbps

• Multiple times a day

– 6 times a day; ranging from peak to off peak

• Multiple Locations (cities)

Actual performance differs from advertised. In surprising ways

0

100

200

300

400

500

600

700

800

900

1000

08:00 11:00 15:00 18:00 20:00 23:00

BSNL (512 kbps) Bangalore, IN BSNL (256 kbps) Chennai, IN

SLT (2 Mbps) Colombo, LK 3BB (5 Mbps) Bangkok, TH

3BB (5 Mbps) Chiang Mai , TH

0

250

500

750

1000

0800 1100 1500 1800 2000 2300Time

Druknet Leased line (512 kbps) ThimphuTashi InfoComm Leased line (256 kbps) ThimphuDruknet (prepaid) ADSL (256 kbps) ThimphuDruknet (prepaid) ADSL (256 kbps) ParoBhutan Telecom 3G (550kbps to 1Mbps) Thimphu

Bhutan: Delivered (actual) as % of

advertised, from international server

India, Sri Lanka, Thailand: Delivered

(actual) as % of advertised, from local

server

Rati

o,

ac

tua

l to

ad

ve

rtis

ed

(%)

Rati

o,

ac

tua

l to

ad

ve

rtis

ed

(%)

Source: LIRNEasia, 2009

South Asian users get low value for money compared to N American counterparts

Do

wn

load

sp

eed

per

Do

llar

(kb

ps p

er

US

D)

0

10

20

30

40

50

60

70

80

90

100

0800 1100 1500 1800 2000 2300

Package per month in

USD

Sirius (256 kbps) Dhaka, BD 15

SKYbd (256 kbps) Dhaka, BD 15

BSNL (256 kbps) Bangalore, IN 16

Airtel, (256 kbps) Delhi, IN 16

SLT (2 Mbps) Colombo, LK 48

Dialog (2 Mbps) Colombo, LK 44

Bell (6 Mbps) Ottawa, CA 60

Rogers (10 Mbps) Ottawa, CA 45

Verizon (3 Mbps) Buffalo, US 30

Comcast (6 Mbps) Denver, US 60

All high values for kbps/USD from N America

Indian users get lower speeds when downloading international content

0

1000

2000

3000

4000

5000

800 1100 1500 1800 2000 2300

Do

wn

load

sp

eed

(kb

ps)

Time

India - Download from ISP server

Airtel (512 kbps) Bangalore, IN BSNL (512 kbps) Bangalore, IN

Airtel (512 kbps) Chennai, IN BSNL (256 kbps) Chennai, IN

Airtel ( 2 Mbps) Mumbai, IN MTNL (512 kbps) Mumbai, IN

Airtel (512 kbps) New Delhi, IN MTNL (2 Mbps) New Delhi, IN

0

1000

2000

3000

4000

5000

800 1100 1500 1800 2000 2300

Do

wn

load

sp

eed

(kb

ps)

Time

India - Download from International server





…as do Sri Lankan users

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

800 1100 1500 1800 2000 2300

Do

wn

load

sp

ee

d (

kbp

s)

Time

Sri Lanka - Download from ISP server

SLT (2 Mbps) Colombo, LK

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

800 1100 1500 1800 2000 2300

Do

wn

load

sp

ee

d (

kbp

s)

Time

Sri Lanka - Download from International server


Round trip time deteriorates (increases) also when going international from India ..

0

100

200

300

400

500

600

700

800

0800 1100 1500 1800 2000 2300

RT

T (m

s)

Time

India - RTT when pinged to ISP server





0

200

400

600

800

0800 1100 1500 1800 2000 2300

RTT

(m

s)

Time

India - RTT when pinged to International server





….and from Sri Lanka

0

100

200

300

400

500

600

700

800

0800 1100 1500 1800 2000 2300

RT

T (m

s)

Time

Sri Lanka - RTT when pinged to ISP server


0

100

200

300

400

500

600

700

800

0800 1100 1500 1800 2000 2300

RT

T (m

s)

Time

Sri Lanka - RTT when pinged to International server


Country examples of Regulator-lead Implementations of Broadband Performance

Measures

• Malta – Following a consultation process in January 2012 the Malta Communications Authority

(MCA) issued the final decision notice on measuring broadband performance.

– ISPs to follow a passive measurement technique, a method that uses live traffic streams to monitor the network without placing additional traffic loads.

– The broadband characteristics include data transmission speed (upload and download), network availability of the core network and the access network, latency and packet loss, among others.

– ISPs are required to report the performance every quarter for each broadband plan offered.

• The Pacific Islands – A recent initiative lead by the Pacific ICT Regulatory Resource Center (PiRRC) encouraged

regulators to actively measure and the performance of their broadband networks.

– Fiji, Samoa and Papua New Guinea are using the AT Tester (a tool developed by IIT-Madras and LIRNEasia) hosted by the PiRRC.

– Vanuatu is in the process of running the diagnostics using the same tool with the guidance of the PiRRC.

Singapore and Hong Kong contrast in regulatory intervention

• Singapore – The Infocommunication Development Authority of Singapore (IDA) sets stringent

standards to ensure consumer requirements are met although operators requested otherwise.

– The decision to set standards was based on the fact that, at the time, the market was still developing.

– IDA published performance indicators (network availability > 99%, Latency < 50ms and < 300ms for local and international segments respectively, among others) with a non-compliance penalty.

– Since April 2012 there have been campaigns to recruit 900 volunteers to partake in a 12-month study conducted by SamKnows.

• Hong Kong – The Office of the Communications Authority (OFCA) says the market is so competitive

that interventions are not needed

– Setting performance measures is unrealistic because there are so many factors to consider

– The level of competition ensures that service providers offer the best to consumers

LEARNINGS FROM RESEARCH ON CUSTOMER (MICRO-ENTERPRISES AT BOP) RELATIONSHIP MANAGEMENT 23

Demand-side CRM study • Micro-entrepreneurs defined as those employing 0 -9

employees (may be paid part- or full-time workers including family members)

• BOP = Socio-economic classification (SEC) C, D and E.

• Representative survey of 3,180 urban, BOP micro entrepreneurs (ME)

Dhaka – 915

Delhi and Patna -- 1,279

Colombo – 986

• Qualitative study with 88 participants: in-depth interviews, ethnographies and focus groups

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)

Bangladesh India Sri Lanka

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)


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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