Laws the hinder fight against Simboxing – 2

This is the concluding part of the article that points out how the Electronic Communication Amendment Acts, Act 786 blocks any attempt by any telcos to use cost effective means to fight simboxing.

The whole of Act 786 is an amendment to Section 25 of the original Law (Electronic Communication Act 2008, ACT 775). So it is captured as Section 25A.

Here is what the law says:

Subsection 1: A network operator shall charge the minimum rate for all international incoming electronic communication traffic as specified in the schedule (the schedule says the minimum is 19 cents per minute)

Subsection 2: A network operator that charges a lesser rate than that specified in subsection 1 is liable to pay to the Authority (NCA) on behalf of the government a penalty of twice the difference between the specified rate and the rate actually charged.

Subsection 3: A network operator shall not charge its customers a higher fee for its services because of the minimum rate for incoming international communication traffic.

Subsection 4: Where it is established that a network operator has increased the fees for its services because of the minimum rate for international incoming electronic communication traffic, that operator is liable to pay the Authority a penalty of twice the sum of the value of increase.

Subsection one clearly states that the minimum ITR is as provided in the schedule of the Act 786, and the schedule states categorically that the minimum ITR is 19 cents; nothing less. This means any telco could charge higher than 19 cents but one cannot charge less. Indeed charging higher only put one out of business because simbox fraudsters are charging way less than the 19 cents and are making comfortable profits, while their cronies, the overseas wholesale traffic carriers like Belgacom and Tata Mobile make even much bigger profits.

Subsection two gives the reason telcos cannot charge less than 19 cents in order to kick out simbox operators. The reason is that the NCA is happy to sanction any telcos that dares to charge anything less. If there is anything that the NCA has specialised in, it is revenue collection. And every government is happy with state institutions that generate heavy revenue for the state. But the same law (Subsection 9) says that the NCA is allowed to spend the moneys it generates for its day to day operations and only report to the Ministry of Finance.

During the debate on the amendment in Parliament, on December 17, 2009, Honorable Hackmann Owusu Agyeman asked what NCA would be using the money for. The least said about what NCA is using the money for the better. Suffice to say, however, that the NCA has said it will use some of that money to fund the setting up and operations of the Interconnect Clearinghouse. But prior to that, only God knows where that money went.

Vodafone and MTN

It was because of subsections one and two that recently NCA fined at least three telcos, Vodafone, MTN and Airtel millions of dollars for alleged undercharging on the international front. Vodafone recently came out to explain that it did not undercharge but rather paid handling charges to organisations which secured traffic for Vodafone instead of giving the traffic to simbox fraudsters. In other words, Vodafone rather made a sacrifice on its share of the 19 cents just to prevent simboxing but NCA, in its typical revenue collection style, rather fined Vodafone for preventing simboxing.

This writer is reliably informed that NCA came to the realization of its mistake in fining Vodafone in particular and the latter considered going to court to defend its stance on having done the right thing. But they later rescinded the decision and paid the fine just to avoid further confrontation with the “revenue-hungry” regulator.

MTN admitted to undercharging particularly for calls within the West African sub-region. They explained that the reason was to promote trade among people of the sub-region. But what is important is that for all the calls it undercharged, MTN said it paid the 6 cents meant for the government, and yet NCA fined MTN; and also tried to create the impression that MTN under-declared revenue. Airtel has still not given any open explanation of its conduct, which led to the fine placed on them.

Now as if subsections one and two were not enough, the law introduces two more very trapping subsection three and four, which arguably made the day of the simbox fraudsters and killed it for the telecom operators.

As stated above, if the law does not allow telcos to charge less than 19 cents per minute, the other option for the telcos would have been to raise the domestic call rates to 19 cents (57gp per minute) to neutralise the profits of the simbox fraudsters. But subsections three and four clearly states the telcos cannot increase their domestic call rates because of the 19 cents; and if they did, the NCA is happy to, as usual, slap a fine on them.

Any existing and or potential simboxing operator reading such a trapping law would sip a chilled beer, smoke a cigar and pay for drinks for everyone in the bar. They would have big expectations of free money with very little investment into simboxes and domestic sim cards. And they would not care about the consequences because the regulator is happy to line its pockets with heavy fines on telcos who try any hard line measures to nib simboxing in the bud. The simbox operators are aware if they are detected, they will be arrested and be paraded in public. But the law does not have what it takes to bite them.

One can understand why the recently arrest former GREDA boss is in court pleading not guilty of engaging in fraud. If he finds good lawyers they can easily get him off the hook, in spite of the fact that simboxes, loads of sim cards and other items were found on his premises. The truth is that the possession and use of those items in themselves are not a crime. So it is up to the custodians of the law to prove that those found possessing and using simboxes have committed a crime. Indeed many such arrests have been made but very little have been heard of how the laws of the land dealt with those arrested, apart from being paraded in public for PR purposes.

NCA deny

The NCA insists that it did not set the 19 cents on its own but the telcos went to them in 2008 and proposed a minimum rate as a mechanism to get more money from the international wholesale carriers. Now both the telcos and NCA have realised the ‘folly’ in that decision and the telcos are crying on top of the roof for the 19 cents to be dropped but the NCA would not listen. The NCA is rather proposing more money-wasting strategies like reregistration of SIM cards, after the woeful failure of the first one largely due to poor National ID verification system in Ghana.

The NCA is also pushing telcos into investing in systems to fight simboxing on their own. Tigo for instance is doing well in the fight because it has a system that requires it to visit and tamper with its customer activity database every 15 minutes. The Tigo Ghana CTO told this writer “I will not recommend what we do to all telcos because it is very expensive, tedious and risky. We tamper with our system every 15 minutes and that means we risk interfering with even genuine activity on our network and that is not good for business.” Meanwhile, the NCA is happy to commend Tigo for using that strategy without knowing what risk the company ran using that strategy.

The other telcos are also investing heavily in the fight against simboxing. But they are unanimous in their chorus that the single means to kill simboxing once and for all is to use regulation to kill the 19 cents and save the telcos from using more money to run after simbox fraudsters.

The NCA and its surrogates often argue that some telcos and or their staff are involved in sim boxing. But whether that is true or not, there is no doubt that once the incentive is not there, simbox operators, whoever they are, whether with the telcos, with the NCA, or are completely private individuals without help from telcos or NCA, would vanish from the system.