Feature Article of Wednesday, 23 May 2012
Columnist: Dowuona, Samuel Nii Narku
“To say that the telecoms regulator should not verify the number of minutes of incoming international calls declared on paper by the telecom operators is just like saying Customs should not do a physical and or electronic check to verify if goods imported into this country tally with what importers declare on paper.”
That was what the Director of Regulatory Administration at the National Communication Authority (NCA), Joshua Peprah recently said about the court ruling that prevents the NCA from installing international gateway monitoring equipment on the switches of telecom operators to measure, in real time, the exact number of minutes of international calls coming into this country.
The NCA, and for that matter government, has always argued that monitoring the international gateway is important for two reasons; to check SIM box fraud and also to secure revenue for the state.
SIM Box fraud is the practice where some rascals abroad and in Ghana work together to channel calls through the internet and pass them through some electronic boxes in Ghana. The electronic boxes are called SIM Boxes because the fraudsters have inserted several local SIM cards in them, and they route the international calls through those SIMs before terminating the call on the phone of the one the call was meant for. That way the international call appears as a local call, and the fraudsters get the international rate, but the telcos get the local rate, and thus government tax on that money becomes tax on local rate instead of on foreign call rate.
The government insists that the monitoring equipment will check this fraud (even though it is still not clear how) and secure revenue for both the state and the telcos. Even though government has said that the revenue aspect was not the main focus, it seems, from some of the steps the NCA has been taking lately, that government’s main focus is the revenue and not necessarily to fight SIM Box fraud.
Meanwhile, the telcos have argued that they have systems in place to fight SIM box fraud and do not need government’s monitoring system to do that. Indeed, the records show that SIM box fraud has gone down a great deal even without NCA’s monitoring equipment in place. The NCA itself admitted that in 2010 when this whole monitoring argument started, there were over 78,000 suspected SIM box operations in the country, but now the number has reduced to a bit over 600.
Because the courts stopped NCA from installing the monitoring equipment, government set incoming international call rate at 19 cents per minutes and legislated that 6 cents from that amount should go to the NCA on the behalf of government (Electronic Communications Amendment Act, Act 786, 2010). That law has proven to be good for the state because the NCA raised more than US$64million from the 6 cents off the 19 cent last year alone. Prior to that, Minister of Communication had reported that the country lost about US$5.8 million a month in taxes to SIM box fraud.
But the question is, if indeed the NCA means to monitor international gateways of the telcos purposely for revenue for the state, what is so bad about that? Like Mr. Peprah said, it is just like importers declaring their goods on bill of laden, and yet Customs and probably even other agencies at the ports doing electronic and physical checks to verify the records for themselves. In principle, no telco is against Customs doing a physical check on anything they import in to the country, so why are they so apprehensive of the international gateway monitoring – what do they have to hide – what is the fear – what is their main concern.
TELCOS ARGUMENT The telcos have advanced two main arguments – one, that they have invested millions of dollars to build their network to provide a certain level of quality of services, and to also check fraud on their systems, so additional equipment from the NCA would mean international traffic would go through more equipment than what the networks have installed, and that could affect the call quality, for which the telco could be fined by the self same NCA. On that same score they argue that if the calls go through the NCA’s equipment it could lead to an interference of customers’ privacy and customers could sue the telco (not the NCA) if their privacy is interfered with.
Indeed, the court ruling against international gateway monitoring was because some Ghanaians actually took the NCA, Attorney-General and five telcos to court to stop the installation of the equipment because they feared it would interfere with their privacy. The court upheld their case and they won. Now the telcos have been conveniently referring to the ruling anytime this argument comes up. So the only way the NCA could go ahead with that is to go to Appeals and get the court’s decision overturned.
The second argument is that the telcos believe they have better ways of checking fraud on their systems so they do not need extra equipment from the NCA to do that. Most of the telcos have employed no less a vendor than Ericsson for that and other services. Moreover, on the revenue side, the telcos do give the NCA monthly call data records (CDR), which show the number of minutes of incoming international calls, to enable the NCA to determine how much money is due the state thereof. The NCA does a verification of the records before issuing invoices for payment.
FIXED INTERNATIONAL CALL TARIFF The telcos and some pundits also argue that fixing of incoming international call rate at 19 cents is encouraging SIM box fraud, and also not consistent with the practice in a country like Nigeria and in Europe for instance. The telcos picked and chose examples that suit their argument. In Nigeria local and international call rate are almost the same, and there is no monitoring.
But the NCA has practically laughed off that argument saying in nearby countries like Togo and Cote d’Ivoire, incoming international call rates ranged between 54 cents and 63 cents. Secondly, in Nigeria, there is a regulatory fee of five per cent of telcos’ profits, but in Ghana the regulatory fee is only one per cent, so Nigeria can afford to let go of revenue it can get from international calls, but Ghana cannot and will not.
The NCA also said the argument that European regulators do not monitor international gateways so Ghana should not, is also ridiculous because the economic situations of Ghana and Europe are different, so the policies cannot be the same; whereas Ghana needs money for schools in villages, Europe may not necessarily need that, and Europe may even have several other and better sources of national income.
GVG FACTOR But the side of the argument that telcos are actually concerned about, but are shy to be heard saying in public is the partner the NCA has chosen for this whole business of monitoring incoming international calls. The partner is called the Global Voice Group (GVG) from Haiti. The telcos are not comfortable with allowing a third party monitor all international calls that come into this country, and some argue that it has national security implications. Indeed, in Haiti, where GVG comes from, it is not a secret that GVG’s equipment listens into private calls. And the NCA admitted to it by saying it works like a post office where the staff have the opportunity to tamper with people’s letters and parcels but are forbidden by law. That is ridiculous because in spite of the law, post office staff tamper with people’s parcels all the time.
The other concern about GVG is that the telcos are still not too sure if GVG is really contributing anything to the fight against SIM Box fraud, which was the original reason government gave for bringing in GVG. Telcos have proven that without GVG, they are fighting and winning the war against the SIM Box fraud, so the only obvious reason government is insisting on installing GVG equipment is revenue for the state.
Meanwhile, GVG itself was said to have been relieved of its duties in Senegal under some weird circumstance, for which the telcos, and indeed other industry players, do not think it was a good idea bringing them to Ghana. First of all, GVG is getting a percentage, am told, which sums up to about US$1million a month from the 6 cents government gets off the 19 cents per minute of inbound international call. But the SIM box numbers that bypass the systems of the telcos also bypass the equipment of GVG, so the question telcos are asking is, how is GVG helping to fight SIM Box fraud? There is nothing that GVG discovers that the telcos do not discover on their own, probably even ahead of GVG, so what is the point?
In fact one telco Revenue Assurance Official told this writer the vendor they use for monitoring incoming international calls deliver better results for less than what government is paying GVG; so why GVG and why the insistence that all telcos must allow GVG equipment – who brought GVG to Ghana?
When the name GVG first came into this country, efforts to check their background proved very difficult because there was not much information on their website, except a press release, which borrowed from an article this writer wrote in the past. But that press release was taken off days after this writer discovered it.
On GVG’s website, there is no telephone number or email address they could be reached on, except recently they have stated that their Accra office is on the Third Floor of Adwoa Adjeiwaa House, off the Osu Oxford Street. The same building in which Airtel’s customer service office is. It is strange that GVG works in the telecom industry but does not see the need to provide its telephone/email contacts on its website. The NCA insists on telcos being transparent with customers, but the NCA does not seem to push its own partner, GVG to be transparent with the public; double standards.
The most surprising thing about GVG is that it has changed its name in Ghana to TCMS (Telecoms Consulting and Management Service) without the knowledge of some industry players. Could this be because of the allegations about the company and its CEO, Laurent Lamothe, for which GVG/TCMS itself decided not to offer any services in its own home country, Haiti, where Lamothe is now the Prime Minister Designate? (For details of the allegations against GVG and Lamothe, and their response, check these links: http://www.haiti-liberte.com/archives/volume5-34/Who is Laurent Lamothe.asp#. and http://globalvoicegroup.blogspot.com/2011/07/formal-denial-from-laurent-lamothe-and.html)
But of course, the revenue side, where government employs a third party to secure revenue for the state, seem to be because of distrust for the telcos. Government does not seem to trust the monthly CDRs the telcos give to the NCA so they need a third party like GVG to verify it. It was not a surprise therefore when the NCA recently announced it is going to start auditing the CDRs to ensure that they were accurate, and ‘lying’ telcos could lose their license if they are found out. That kind of language obviously reveals there is no trust between the telcos and the regulator.
The NCA has said it is committed to making the environment conducive for the operators to succeed in Ghana, but it made a rather strong statement that liberalization of the telecoms market does not mean the country’s spectrum should be left for multinational telcos to ‘thrash’.
By all means, the NCA cannot leave our spectrum for telcos to thrash, but it would also do the public great good if we understood the terms of the contract NCA has with GVG; what is GVG doing for us right now and how much we are paying them?
Samuel Nii Narku Dowuona