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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%
Bangladesh India Sri Lanka
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%
Bangladesh India Sri Lanka
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%
Bangladesh India Sri Lanka
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.)
Bangladesh India Sri Lanka
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)
Bangladesh India Sri Lanka
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%
Bangladesh India Sri Lanka
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%
Bangladesh India Sri Lanka
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%
Bangladesh India Sri Lanka
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
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%
Bangladesh India Sri Lanka
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%
Bangladesh India Sri Lanka
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
Occupation: Food business
Number of Employees:0
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
Number of Employees:2
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
Occupation: Food business
Number of Employees:4
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
Occupation: Food business
Number of Employees:0
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)
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]
Bangladesh India Sri Lanka
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%
Bangladesh India Sri Lanka
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%
Bangladesh India Sri Lanka
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)
Bangladesh India Sri Lanka
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]
Bangladesh India Sri Lanka
Those problems affect ME livelihoods
35%
30%
41%
Bangladesh India Sri Lanka
MEs for whom network dis-connectivity / call drops affect their business (%BOP MEs who use mobiles for business)
Bangladesh India Sri Lanka
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%
Bangladesh India Sri Lanka
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%
Bangladesh India Sri Lanka
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
top related