Opinions Fri, 17 Dec 2010

Exposed - the DNA of telecom operators

When yours truly first wrote the article with the title “the telecoms of half truths and non-transparency” it sounded like the article was meant to do damage to the telecom operators in the country, but what is unfolding now shows that there is no damage anyone can do to the telecom operators than they have already done and are doing to themselves.

The telecom operators have mastered the art of using half truths, misrepresentations and non-transparency to appalling levels.

It has always been about what the current Minister of Communications Haruna Iddrisu has set out to do in the interest of the public – ensuring transparency and value for money for subscribers and the state as a whole.

The telecom operators in Ghana are so used to and obsessed with the era when the regulator endorsed non-transparency and allowed the use of half truths and misrepresentation to mislead subscribers and the government.

Now they are finding it so difficult understanding why their cronies in the regulatory bodies would allow this young minister to give them such hard time.

They must be saying in their various board meetings, “how can the big guys at the National Communications Authority allow this “small boy” to come stop the mutually beneficial arrangement we had with the then NCA at the expense of the ignorant and gullible masses.”

When the minister first set out to implement international gateway management to check fraud and generate revenue for government, it was met with resistance from operators and some pressure groups. The minister said he had evidence of fraudulent mobile phone lines being used for criminal termination of international calls in the country.

The practice denied government of tax revenue from international calls, and the telecom operators also claim it denied them revenue, and yet they would rather live with that instead of allow government to monitor those calls and prevent the fraud.

The minister invited yours truly to his office to provide about 3,000 phone numbers involved in the practice, but some telecom operators got wind of the minister’s move and called him before your truly got to his office. The operators pleaded with the minister not to expose the numbers to the media yet, but rather invite them to his office to solve the problem behind closed doors.

In the midst of trying to solve the problem in the best interest of the public and the state, the telecom operators have gone to hide behind France Telecom and the West African Telecom Conference (WATC) and issued a communiqué condemning the exercise meant to halt fraud and generate revenue for the state and even for the telecom operators themselves.

Initially, their beef was that the system would create room for breach of subscriber privacy and also put national security at risk. That concern was ably deflated by the affable minister, Haruna Iddrisu; and now the telecom operators are raising questions about taxes and levies on incoming international calls, saying it is a breach of international telecom laws.

They tell us that the system breaches ITU protocols, ECOWAS Treaty and West African Union Treaty.

But as masters of half truths, misrepresentation and non-transparency, they did not tell the ‘ignorant’ and ‘gullible’ public exactly what those treaties, laws, protocols and the rest say in full. They just hid comfortably behind the technical jargons, as usual, and picked portions out of contest, leaving the average reader thinking “how could the government break all these laws, protocols and treaties.”

They also tell us of how the monitoring and levying system will increase retail prices and call tariffs for subscribers, reduce incoming international calls, reduce revenue and increase fraud, but they did not tell us what the domestic laws say about taxes and subscribers, and exactly what has pertained since call monitoring begun in Ghana.

It is not as if they do not know the entire truth; they are very much aware, but they cannot just shake off what is in their DNA – non-transparency, misrepresentations and half truths.

They have only mastered how to use half truths, misrepresentations and non-transparency to mislead the public and draw sympathy to themselves; but guess what-they are gradually beginning to realize the days of regulator laxity and compromise, and public ignorance are fast fizzling away like dust carried by the wind. Indeed a strong wind is blowing from Tamale South and it is exposing the true colours under the camouflage MTN yellow, Vodafone red, Tigo blue, Airtel red and Expresso white.

First off, the telecom operators and their WATC and France Telecom cronies said call monitoring and taxes on calls are a breach of international laws and treaties. They cited ECOWAS, WAU and ITU protocols.

Since they were not exactly specific, it is important to look closely at which ITU protocols they conjure to plead their deflated case. We draw from the Ministry of Communications’ response to the hot air by the telecom operators.

In their rush to discredit the exercise by the NCA to establish mechanisms to prevent the fraud and raise revenue for development, the telecom operators in their statement made serious misrepresentations about how international telecom operates.

They made an assumption that the tax on international traffic runs counter to the decision of the ITU Plenipotentiary Conference of 1998 that requires settlement fees to be cost based. Their ill intended communiqué issued on November 25, 2010 demonstrates a clear mis-understanding of the ITU.

What the telecom operators did not tell Ghanaians was that the protocols of the ITU Plenipotentiary Conference also reserve the right of individual countries to set aside the provisions of the Conference where these conflict with sovereign interests of the particular country. ITU accepted that taxes are a major source of revenue for developing countries and so its protocols can be set aside when it conflicts the taxation drive.

It is pertinent to mention that during the ITU Global Symposium for Regulators (GSR) involving stakeholders from government, telecom operators, equipment manufacturers, civil society, etc, held in Dakar on 9-10 November 2010, the Industry Leaders Forum that was held as a side-event of the GSR introduced the same issue of taxation on international telephone traffic and it was made clear that developing countries consider taxation as a vital source of revenue, and should therefore be respected. The telecom operators also referred to a meeting of ICT Ministers in Bamako on 29th July 2010 and said the decision from that meeting debars ministers from imposing special levies and surcharges on telecom operators. What they failed to tell the public was that the meeting was among francophone countries so Ghana is not bound by the decision from that meeting.

It is also strange that the discussion on taxes failed to recognize that the European countries, including France, Spain, Hungary, and Portugal have also instituted general telecommunications taxes to be managed by their respective telecoms regulators. In the last year for instance, special taxes have been introduced by European countries as a way to increase tax revenue in periods of large public deficits.

In France, Law 2009-259, of 5 March 2009, imposed on French telecom operators with revenue of more than €5 million, a special tax of 0.9% of their total revenue from subscribers minus VAT for the financing of public broadcasting. The total amount expected to be raised is around €400 million a year.

In Spain Law 8/2009 of 28 August 2009 imposed a special tax; Hungary instituted a special ‘crisis tax’ of 6.5% of gross revenue by the Act of Parliament in October 2010. Portugal has also made public a draft bill instituting a tax on total internet access revenue of 1.5% to finance local cinema production.

Aside from these special taxes, the European countries also impose General Telecom Tax, Numbering Tax; Spectrum Tax; and Land Occupation Tax on operators for occupation of land for the deployment of their networks.

The telecom operators said levies on international call will lead to increase in retail prices for subscribers. What they did not say was that in Ghana, Act 786 specifically provides in section 1.3 that ‘a network operator shall not charge its customers for its services because of the minimum rate for international incoming electronic communication traffic’. It is therefore incumbent on the telecom operators to comply and ensure that no increase in retail prices will be made on account of the observance of the minimum rate for international incoming traffic to affect subscribers/consumers.

Again, contrary to the charge that the tax will cause a reduction in incoming international traffic accompanied by a reduction in revenues and diminished fiscal receipts, the Ghana experience has witnessed significant increases in traffic through the legal international gateways bringing along buoyant revenues that some of the honest operators have attested to.

The Minister of Communications recently announced that government has come from a loss of about $6 million a month to fraudulent termination of international calls to earn more than $14 million in taxes due to international call monitoring – this means the telecom operators have even earned more money from the system.

Again, since the inception of the fraud watch exercise by the NCA, the numbers of fraud lines detected and reported to the Telecom Operators is 59,180. An average 5,918 fraud lines are detected every month.

Obviously, the Anti-Fraud Task Force of the NCA, which include representation from the telecom operators together with the Security Services are succeeding, and yet the telecom operators prefer to see fraud prevail as long that means they can maintain their non-transparency, half truths and misrepresentations.

In addition to the detection of the fraudulent numbers, the anti-fraud taskforce has also seized some equipment, which are undeniable evidence of the fraudulent activities. The equipment includes one Cisco router 1800 series SN: FHK1243F4BM, eight GSM Gateways: Each GSM Gateway processes eight cards and each of the eight cards can hold 4 SIM cards, one SVC port, 3 FE port, 1 COM port and 1 VGA port. GSM Gateway Manufacturer Type SN

The evidence gives credence to the judgement of the minister and regulator, the system itself, and the work of the taskforce in establishing and exposing how the fraudsters have been buying the large quantities of SIM cards and Scratch Cards and how some of these get to be registered by the telecom operators who continue to provide services for the use of the routers?

Gradually it will be possible to identify who the fraudsters buy the international traffic from so as to alert the telecom operators and prevent them from sending Ghana traffic through the unauthorized routes?

For the first time in Ghana, the National Communications Authority is now in a position to assess the volumes of international incoming telephone traffic; this is the result of the implementation of the Gateway Management Exercise, and the improvement of its capacity to verify the authenticity of the Call Data Records (CDR) being submitted by the operators.

So how right can one be to say the telecom operators in Ghana, and by extension Africa, are masters of half truths, misrepresentations and non-transparency. In fact it is their DNA.

Long live the whole truth, long live transparency, long live straight forwardness. ENDS
Columnist: Samuel Dowuona