Georgian cell market swindles
25 November, 2010
Georgian cell market swindles

Geocell, one of the key cell market players of Georgia, is fined by GEL 90 thousand for violation of consumer rights.  The punished company agrees to pay the penalty although it finds the sanction unfair and plans to file a lawsuit against the cell market regulatory body.
Georgian National Communication Commission (GNCC) fined Geocell on November 19, 2010 for breaking the regulation on Service Provision to Electronic Communication Sector and Protection of Consumer Rights. Starting 2007 the law in question obliges

all cell market operators to round off the cell call duration by a second precision. However, Geocell practiced the call round-off by a 5-second precision for Lai-Lai product consumers that violated their rights.
Magti GSM, another key cell market player of Georgia, discovered the illegal practice of its competitor and submitted a complaint on Geocell in this past August.   GNCC double-checked the information and proved the fact of violation of consumers’ rights. The regulatory body obliged Geocell on September 3, 2010 to stop violation of consumers’ rights and establish 1-second-based-round-off system so that consumers could pay exactly for the time they actually used.
As GNCC explained to Georgian Journal, if Lai-Lai subscriber talks for 11 seconds for instance, the call duration is rounded-off to 15 seconds and a subscriber pays for 15 seconds that leads to extra charging.
However, Geocell did not stop the unfair round-off system. And GNCC fined the disobedient company by GEL 90 thousand on November 19, 2010. If Geocell still resists stopping unfair charging, it may face GEL 250 thousand for repeated violation. 
As Sandro Sadaghashvili, Legal Expert of Geocell, informed GJ, they are going to obey and pay the fine but they feel innocent as far as they never hid that they used 5-second rounding system for Lai-Lai cell-calls. And that the law on protection of consumers’ rights lays ground to it.
“The fact that we were charging Lai-Lai cell-calls by 5-second precision was no secret; it was put on our official web-site in description of Lai-Lai tariff system starting 2007. The thing is that the law lays ground to double interpretation. It does not include clear stipulation that calls should be rounded by 1-second precision. It just says that the round-off must be implemented based on second-precision but does not elaborate by how many seconds. We obey to the GNCC punishment and will pay the penalty but do not rule out to file a complaint against this penalty decision at court,” Sadaghashvili elaborated.
According to Khatia Kurashvili, a spokesperson of GNCC, GNCC did not monitor the execution of demand on round-off system because they never supposed that companies could divert the rule that was quite clearly stipulating that the round-off should be based on one-second precision.
Sadaghashvili assures that the detailed information on round-off system was put in annual financial reports of Geocell submitted at GNCC each year and the regulatory body could easily discover it. “However GNCC discovered this fact only after Magti submitted a claim this past August,” he said.
Magti also got a warning in September along with Geocell for violation consumers’ rights. Starting August of 23, 2010 Magti introduced a new allegedly preferential tariff-system largely advertized as a “staggering sale in cell tariffs”. In its TV ad-rolls Magti has been touting that its new  tariff on calls within Magti network was 5 tetri per minute and the tariff fixed for outgoing calls [with other cell operators] stood at 18 tetri per minute. The older tariff was 28.8 tetri per minute on all calls. However after accurate calculation GNCC came to conclusion that call tariffs rather increased than decreased to Magti subscribers thanks to sophisticated scheme charging subscribers by 10 tetri instantly as the call started. Magti charged calls by the “staggeringly low” tariffs only after a second however the ad-rolls did not include a word on this instant charge by 10 tetri. As a result Magti subscribers thought that they were paying 4.8 tetri per 1- second call for instance, while in fact they were paying 10.83 tetri as GNCC calculated.  
“All in all the “great sale on cell calls” advertised by Magti covers 51.6% of calls implemented within its network and 19.05% of outgoing calls,” Kurashvili explains. “And after introduction new tariff system calls to Magti subscribers became more expensive to 48.4% of calls through internal network and to 80.95% of outgoing calls.”
Geocell and Magti having been operating at Georgian market for about 13 years make 43% and -46% of Georgian cell market respectively. The remainder 11% is made by Beeline, a part of the Russian-based VimpelCom Group, which entered Georgian market in 2005. Based on this statistics it comes out that rights of about 90% of Georgian cell subscribers were violated.  Therefore on September 3, 2010 [when GNCC warned Geocell to stop unfair round-off] GNCC obliged Magti to stop advertising of “great sale” and provide consumers’ with due information otherwise it faced a penalty of GEL 90 thousand.  However Magti obeyed the GNCC decision thus escaped the fine the Geocell faces to pay now.

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