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“Advancing technology, advancing ripoffs” (FT 28/10/2017)


Advancing technology, advancing rip-offs (edited version in FT 28/10/2017 appearing as “Technology for all”)

Consumers freely adopt advances in technology if they result in greater convenience, lower price and better quality. They do not have to be forced to do so by governments as is currently happening.

Unfortunately, two technological improvements in Fiji involving cards have not only conferred benefits to consumers, but also allowed companies to “rip-off” consumers.

I refer firstly to the mobile phone service operators; and secondly to the e-ticketing initiative by Government and bus operators, with Vodaphone strangely jumping into the ring.

The two examples are related and also explain why Vodaphone, a mobile company, is involved as a Third Party in a bus fares transaction, which Dr. Gounder rightly criticizes..

Fiji Times readers should look again at the previous FT  articles by Dr. Neelesh Gounder and Savenaca Narube who have rightly criticized the eticket scheme being pushed by Government, bus operators and Vodaphone. Both writers have suggested constructive solutions.

My article is about the “rip-off” and how it can be stopped dead in its tracks, without significantly hurting the bus operators or the consumers.

Just remember: if anyone stops you in the street and forcibly takes even a dollar from you, no one disputes that he is guilty of a “crime”; he will be prosecuted by the police; convicted by the judiciary, and punished with a fine or even imprisonment, if the theft is large enough.

But it seems that in Fiji, it is not a “crime” when the theft is committed quietly through an electronic card by smooth business operators in coats and ties, and IT experts writing software that cancels (i.e. steals) consumer cash and credit.

Remember the public phones?

Once upon a time consumers who did not have landlines had to go to public phone kiosks owned and operated by Telecom Fiji, where consumers put cash (usually coins) into slots and used the phones until the credit ran out.

Most consumers gladly paid up without complaint because rarely did the phones ever “eat up” the money without the consumer getting proper service.

Then came the enormously convenient mobile phones which Fiji consumers adopted with great alacrity as people have done all over the world, even the poorest, not just for communications purposes but also for social reasons.

The FBS household income and expenditure surveys have ample data to show the enormous amounts of money that Fiji consumers (including children) have been spending on mobile phones and charge-ups, often quite irresponsibly.

But the “ripoff”?

One aspect that has never been publicized is the amount of “pure profit” that the mobile companies (both Vodaphone and Digicel) have made since their arrival, because consumers have prepaid for phone services and the mobile companies have got away by declaring that any unused credit by a certain date, will be “cancelled” or “expire”.

Think:  the consumer has given a certain amount of cash to the mobile company in order to make phone calls over time. IF the amount of cash given is not used up fully, WHY ON EARTH  should the mobile company declare that it will be “cancelled” i.e. the mobile company will just “take” your cash.

Consumer have had no choice in the matter.  The Commerce Commission of Fiji has never taken up this issue on behalf of consumers. You can conjecture why not.

Thousands of consumers have also had the experience that their credit often “disappears” without reason or without their reaching the person on the other side, or the charges are  totally out of proportion to the time they spent actually talking.

Few consumers will ever bother to physically go to the mobile company and demand a refund because often the travel costs will be more than the value of the credit lost.

Exactly the same processes are at work with the e-ticketing for bus fares which explains also why Vodaphone has jumped on this very profitable bandwagon with great alacrity.

Mobile companies know

Narube gave some estimates of how much free “credit” Vodaphone will be receiving from consumers who buy the bus e-tickets. His estimates are too low.

Narube also gave some rough estimates of how much interest Vodaphone will be “earning” on unused credit and Narube used 1% as a guideline.  This is far too low.

More importantly, the public should ask how much would Vodaphone be saving  because it does not have to pay the market interest rate for loans from banks at commercial rates.  I suspect it would be greater than 6%.

Narube estimated how much Vodaphone will get when consumers fail to use their credit on the e-tickets in time and the credit “expires”. Again, I suspect his estimates are far too low.

The Opposition Parties could demand this information through Parliament- though I doubt if they will ever get any answers.

I will guarantee that the IT boys in the mobile companies know exactly how much of consumers prepaid credit for mobile phones has been cancelled every year and how much is used up without the consumer getting their service.

There is also the unfortunate fact that many consumers for whom regular transport to work and school is crucial, will buy extra credit to make sure that they are not turned away from buses because their credit has expired.

The solutions

Minister Khaiyum who is driving this exercise asserts, with some justification, that technological advances should be taken advantage of. He is right, but conveniently forgets that the technological advances should not allow companies to “rip-off” the customers.

Dr. Gounder and Narube both gave very sensible solutions that the authorities and the bus companies could try (such as allowing both e-tickets and cash), instead of the  compulsory e-ticketing; and allow exact amounts of cash to be paid as bus fares into safe deposits on the bus so that drivers cannot steal.

I additionally suggest here that the strangely silent Consumer Council of Fiji and the Reserve Bank of Fiji get together and put in a joint submission demanding that:

(a) Any credit bought for bus-fares through the e-tickets must not be allowed to “expire” by any particular date. That way, for consumers, the e-ticket will be “as good as cash” and they can store their ticket in their pockets, or under the mattress if they wish, for as long as they want and use it whenever.

(b) Given that the technology is already able to do so, Vodaphone should be required to pay the ticket owner interest at say 2% per year (paid monthly), in exactly the same way that banks pay interest on a monthly basis to savings and time deposit holders. That interest will still be less than what Vodaphone is borrowing at.

(c) Should Vodaphone refuse to do this, then tender the service out to the banks who can not only all run the recharge machines just like they do their ATMs, they can also lend the funds out to their borrowers,  and pay the ticket holder a reasonable interest on unused credit, just as they do on savings deposits.

Postscript on Consumer Council of Fiji (and CEO Premila Kumar)

In my article above, I used the term “strangely”  to describe the silence of the Consumer Council and the usually vociferous Premila Kumar.  Once upon a time, Premila Kumar was in the news daily (television, radio and papers) fighting aggressively for consumer rights.

But those who have studied her activities closely will know that very soon, like the Commerce Commission of Fiji under Dr. Mahendra Reddy, the Consumer Council’s battles relatively ignored some very powerful business interests such as Vodaphone which was a company smiled upon by the Bainimarama Government in many different ways, much to the chagrin of not only consumers, but also its only competitor, Digicel.

Which is why  the Article by Consumer Council of Fiji (probably written by Premila Kumar) in today’s Fiji Times  28/10/2017, page 20) is extremely revealing for the following reasons:

(a) The CCF article tackles only the article by Savenaca Narube, Leader of political party Unity Fiji. Why not comment also on the articles by Professor Biman Prasad and Dr. Neelesh Gounder?  Too close to  home?

(b) The CCF claimed “From his article it is very clear that Mr Narube is ill informed and his analysis lacks depth”.   Even if I would not have used the same analogies that Narube used (e.g. Vodaphone as a bank) his article was not “ill-informed” or lacking in depth. it is surely unacceptable that Premila Kumar allowed this article to go out under her organization’s name, contemptuously criticizing a soundly reasoned article by a former Governor of the Reserve Bank and Permanent Secretary of Finance, whose knowledge of economics and finance is probably a “little bit” more than that of Premila Kumar and her staff, by any stretch of the imagination (whatever may be their other “strengths” in “social decibels”. )

(c) The CCF article is clearly written primarily to criticize Narube, while defending the Bainimarama Government’s decision to force e-ticketing on bus users. Scattered throughout the article are statements which one would have expected to come from the relevant government ministry concerned (i.e. Khaiyum) or the Ministry of Information (i.e. Qorvis). Including the promise at the end of the article:  “Next week: why government had to intervene when self-regulation did not work”. Really?  The Consumer Council of Fiji and Premila Kumar are going to explain why “government had to intervene”?  Will they also be explaining all the places where government is not intervening where it should, or where it is intervening when it should not be?

(d) Had the article been focused on defending consumer rights, it would have at least supported several or even one of Narube’s recommendations.

(e) But those who know Premila Kumar and her political sympathies would not find the attitude of the Consumer Council of Fiji on Government’s e-ticket policies “strange” at all. She has been one of the closet supporters of the Bainimarama Government from the 2006 coup onward.  Any critical analysis would note that Premila Kumar and the CCF decline to take on the many corporate bodies who were the largest financial contributors to the FFP campaign and will be again, for the 2018 Elections. Indeed, many political observers were surprised that Premila Kumar did not herself stand for elections in 2014, especially after an open phone ballot had revealed that she was the most popular person in Fiji a couple of years before 2014, a result changed by last minute “voting” to make Bainimarama apparently the most popular. Premila of course would have had the same media “persona” (many times over) that Rosy Akbar has had for the last three years, and would probably have suffered the same fate had she “displeased” the two dictators in the Bainimarama Government.

Aaaahh, the 2018 Elections are coming. Watch the space.



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