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Opinions of Wednesday, 18 May 2005

Columnist: teleportconsult@verizon .com

Internet Ghana Vrs GT: The Battle Of The Shark And Fish Part II


1. Purpose of Petition

i. InternetGhana writes to petition the National Communication Authority (NCA) in the matter of Ghana Telecom?s continuing uncompetitive practices and predatory pricing, in effect ITS ?Free Broadband 4U Service? that has resulted in the severe erosion of InternetGhana client base and the accumulation of debt.

ii. This petition has become necessary in order to protect the ADSL market place from the persistent and continuing uncompetitive practice being perpetuated by Ghana Telecom (GT), abuse of their incumbency, its sincererity at encouraging competition and an affront to the contract between the two parties.

2. Relief being sort by InternetGhana

InternetGhana in petitioning the NCA, is seeking relief?s in the following general areas.

i. The implementation of the promised separation of GT ISP from GT core business as promised to GISPA and as announced publicly by the NCA in 2004. This segregation was to be completed in January 2005.

ii. GT ISP?s Broadband 4U services should be HALTED IMMEDIATELY until such time that GT has been able to put in place, implemented and show commitment to billing and collection payment from its subscribers, at the service rates that GT have published. GT?s continuing provision of a defacto ?Free Service? for its DSL subscribers is totally unfair, uncompetitive and targeted to murder the competition, i.e. InternetGhana?s competing ADSL Service.

iii. The procedures for DSL clients update and client release as detailed in the contract and as agreed at different fora with GT Business Marketing & Sales (BMS) should be rigidly followed and monitored for compliance.

iv. GT should pay compensation for the poaching of InternetGhana clients in total disregard of the contract procedures and provisions. Back to Top

3. Detail of uncompetitive actions and procedures

i. GT is implementing deliberate direct and indirect Poaching of InternetGhana clients.

a. To effect ADSL connection to our clients, InternetGhana supplies GT with application forms of all clients. The derived list of InternetGhana clients is made available to GT?s Marketing Dept, who then call clients of InternetGhana directly, offering them GT Broadband 4U Services. This is despite the application forms constitute a contract for shared access to these clients for a default 1 year. This is also inspite of the fact that InternetGhana pays $40.00 per client to have access to the client?s cable to provision service, and by contract is obliged to pay a further $8.00 per client per month, every month. This form of direct poaching of InternetGhana clients is totally unfair, a breach of contract, uncompetitive and should be stopped by the NCA.

b. Service disruption and diversion of InternetGhana ADSL client circuits by GT

Even when legitimate clients of InternetGhana have service; often InternetGhana?s connection to the client is disrupted by GT technicians at the test room. This creates a quality of service problem for InternetGhana, which is then exploited by GT to offer to the client their services.

Without the consent and advice of InternetGhana, the client?s connection to the InternetGhana Service is then rerouted to the GT Broadband 4U Service. Meanwhile, InternetGhana continues to pay $8.00 per client per month for all such clients, unilaterally taken of InternetGhana?s network.

Despite these complaints have been addressed on several occasions to the BMS Unit of GT, and several agreements on the matter reached, the practice continues. This has resulted in clients who owe InternetGhana for service provided leaving behind huge debts that today stand at over ?4 billion cedis.

InternetGhana has no methods of collecting this debt as clients are generally being provided free Broadband 4U Service. Additionally, InternetGhana continues to pay to GT the contracted sum of 8.00 per client per month for access t the client?s cable.

ii. GT is implementing uncompetitive and favoured service delivery to GT Broadband 4U to the detriment of InternetGhana?s competing service. While GT clients are being connected within 24 hours, InternetGhana clients, in some cases can take over a week for the same connection to be effected.

iii. Thereby delaying InternetGhana?s ability to serve our client. The separation of GT ISP is crucial, so that delivery of access to clients to both entities can be fair and without favour. This will ensure that NCA can monitor statistics of service delivery and apply sanctions where applicable.

iv. With the help of the BMS at GT, there has been major improvement in circuit delivery that arranged some 30 ? 45 days to just over 7 days currently. However, compared to the GT Broadband 4U Service of 24 hours, there remains significant room for improvement.

v. GT in spite of having announced in the market place as far back in September 2004 of its DSL services, GT at this point is connecting clients and providing service on a free basis. Today, GT?s clients do not need to pay its advertised Setup Fee, and/or a Monthly Recurring Fee.

GT?s clients do not even fill a single Application Form to register for the service. Call GT ISP for service, you are supplied with the kit and connected within 24 hours, no forms, no payment, nothing!!

InternetGhana feels that this is a total manipulation of the DSL market place and aim directly at ?murdering? or ?killing off? the InternetGhana?s competing DSL Service. The NCA must act NOW, to prevent and stop the free service of GT Broadband 4U.

vi. GT Broadband 4U, when they have a client to serve has direct and immediate access to client cable network and as a result is able to effectualize that connection to the client within 24 hours.

InternetGhana has to go through a long winding of procedure in order to effect same. That procedure includes but not limited to the filling of unnecessary long detailed forms that take a life time to conclude.

InternetGhana has raised these issues with the BU of GT on several scheduled and unscheduled review meetings. InternetGhana believes that the excellent intension of the BU is frustrated by a lack of a clear managerial commitment to fair play on the ground and as a result InternetGhana continues to experience significant delay and frustrations in ability to serve our clients.

vii. GT?s free Broadband 4U Service for its ADSL product is a serious disincentive to investment in the industry, and InternetGhana petition the NCA to halt GT services and up and until such time as GT can bill its clients and demonstrate effective willingness to collect revenue. Back to Top

4. Legal and Contract

With reference to the various sections of the contract that governs the access to the local loop unbundling agreements signed between both parties, GT continues to show gross disregard for the details, procedures and avenues of redress stipulates in the contract. Whiles the contract clearly states that when InternetGhana apply for a local GT Circuit, that application is valid for a year, we find in a market place that GT arbitrarily disconnect our clients without due information and respect to the contract of procedures.

It is significant to note that in each of the cases where local loop application has been made by virtue of the contract by InternetGhana, we have paid due for both Set up at $40.00 and commitment for the recurring monthly bill of $8.00 per client per month, every month, and GT?s arbitrary disconnecting our circuit without due advise, has led in several cases where InternetGhana unknowingly continues to pay for service that in actual fact GT has taken over and has poached.

InternetGhana feels that it is important and at this juncture for GT to follow the procedure of the contract which clearly states that in section 16.3.1 quote:

?Operator?s subscriber enters agreement with other Operator? ?The Operator?s subscriber has entered into an agreement with another Operator, regarding delivery of telecommunication services on the actual CAL or PCAL. GT shall prior to a termination have receipt of a confirmation from that other Operator that is in possession of proxy or in termination notice from the subscriber. The forwarding of this confirmation must be done at the same time as the new Operator dispatches the order?.

InternetGhana insist at this point that all such client that have been subsequently taken off our service without due regard to contract and notice to InternetGhana, all clauses that relates to the issues of compensation that InternetGhana is due, should be duly apply by Ghana Telecom.

Additionally, InternetGhana is entitled to an will Invoice GT for lost revenue for all such clients that GT has poached over the period.

InternetGhana therefore based on figures that we have hereby give NCA notice that, InternetGhana is demanding an amount of ?9 billion cedis due payable in compensation to InternetGhana. The NCA should hold GT liable to pay the due compensation within 30 days. Back to Top

5. Resultant Effect on InternetGhana

The Resultant Effect of these uncompetitive actions of GT in the ADSL market place and its free Broadband 4U service that its operates, in an attempt to ?murder? InternetGhana, has resulted in the fact that:

i. InternetGhana clients count has dropped form over 700 users in June 2004 to less than 300 users in March 2005.

ii. To date, as result of clients who have been taken over by GT and to whom GT continues to provision free Broadband 4U service, has left InternetGhana with unpaid service fees.

iii. It is important to note that the total debt profile created by GT?s practice exceeds ?4 billion cedis at end of February 2005. InternetGhana intentions that the ?4 billion be due payable by GT as losses by virtue of its actions and uncompetitive practice. Back to Top

6. Redress sort by InternetGhana

It is InternetGhana prayer to NCA that the following redress is effectualize immediately: -

i. NCA requirement to GT for separation of its GT ISP services from its core was scheduled to have been complete January 2005. The conclusion of this segregation would have resulted in: ?

a. GT ISP will have limited access to GT cable network, thereby eliminating the wanton disruption of InternetGhana services.

b. GT ISP would have to take up the same procedure of application for connection of DSL services. This will result in fairness in: -

i. time to deliver service to both InternetGhana and Ghana Telecom being monitorable.

ii. the 1 year period for client access being controlled at a central point i.e. the GT BMS.

iii. Proof of payment by GT Broadband 4U for connection fee at $40.00 per client, monitorable by the NCA.

iv. Proof of payment by GT Broadband 4U of monthly access fee at $8.00 per client per month, monitorable by the NCA.

v. Proof of payment by GT Broadband 4U for Bandwidth at the same rate as other GISPA members, monitorable by NCA.

vi. Proof of financing of the GT ISP to eliminate cross-subsidy of the service, which is the only way GT Broadband 4U Service is free.

c. It is important that the NCA put in place stringent monitoring procedures to ensure that the relative delivery parameters for both GT ISP and InternetGhana are equitable and the same. This will ensure that the uncompetitive delivery of service by GT ISP in 24 hours as against one week of InternetGhana will be curtailed.

ii. GT should respect and the NCA enforce the contract between the two parties to ensure that GT stop the wanton and arbitrary disruption of the circuit of InternetGhana DSL subscribers.

iii. InternetGhana believes that the contract between the two parties require general amendment to address the several shortcomings of the contract in light of the uncompetitive practices, unfavorable procedures and also to address the matter of more stringent compensation for GT?s non compliance.

iv. New contract Procedure should be negotiated and agreed under NCA supervision and control to ensure that the migration of client between the competing parties is well documented and procedures are the same to ensure equity in the market place.

v. That, NCA should ensure enforcement of the contract regarding non compliance and compensation. GT should be made to pay contracted compensation to InternetGhana for such contractual breaches. InternetGhana calculated total contracted compensation stands at ?13 billions cedis. We believe that GT should be made to pay this compensation in the next 30 days.

vi. NCA continues attention and focus on the uncompetitive practices taking place in the DSL market should be monitored with Quarterly Review Meetings with both competing parties, and the submission of performance reports.

vii. GT?s free Broadband $U service is a serious breach of commercial competitive principles, totally unacceptable and aimed deliberately or undeliberatley at eliminating ?by murder? InternetGhana?s presence in the industry

The net effect of their free service policy is evident in InternetGhana?s business decline.

viii. InternetGhana petition the NCA, as the industry regulator to order GT to halt and shutdown its ISP operations up until such time that it begins to: -

a. Bill its clients for new services

b. Bill its old client retrospectively for service utilized to date including setup fees, ADSL modem price etc.

c. Show commitment to collect revenue due it for ADSL services.

d. Stop the cross-subsidy of the GT ISP and ADSL services with an already expensive and exorbitant phone services

7. Concluding Commentary

In light of this overwhelming position of GT in the market place, it is important that NCA and the Government of Ghana define the role of smaller competing ISP?s. What role they expect these ISP including InternetGhana to play in the Industry and the market place in the future, so as to educate, govern and enlighten our future investment plans in the industry and Ghana in general. Back to Top