Monday, December 06, 2010

Telecom Fraud

Telecommunication is the biggest industry in Afghanistan; creating billions of dollars for the economy and millions in taxation benefit the government. However the conduct of the industry and the relationship between ATRA, the regulatory body and GSM companies haven’t been scrutinized. One of the things I have noticed lately is the revenue from international calls. Telephone companies in different countries use a variety of international telecoms routes to send traffic to each other. These can be legal routes or other arrangements the industry calls grey routes, a euphemisms.

Grey routes are arrangements that fall outside the regular course of business between the licensed telecoms companies in each country. The grey part of the route is usually at the far end where the call is terminated. Up to that point, there are normal arrangements to deliver the call from the subscriber to the sending carrier and between the sending carrier and the satellite or cable operator for the trunk part of the call. The grey-ness arises because at the far end the call is made to appear as if it originates locally, as a domestic call, rather than a more expensive international call.

By terminated the calls through grey channels telecoms and other organizations make millions of dollars. I just did an assessment of how much money is made by GSM operators and other agencies and calculated how much is therefore lost in taxes. According to CIA, world factbook, there are 15 million cell operators in Afghanistan. Data on the volume of international calls terminated in Afghanistan is unavailable. Instead I used data available from similar least developed countries (LDC) taking into consideration the volume of diaspora and the heavy presence of international community. I then multiplied that figure with the 15 million users estimated by various sources, but deducting 13 percent which is the normal rate for dual simcard ownership in other LDCs. My calculation estimates that the government is losing 17.5 million every month in revenue due to fraudulent termination of international calls coming into Afghanistan.

The situation where international calls are being terminated on mobile phones as local cell phone numbers is a fraud.

ATRA, the communications regulator, should ensure a uniform tariff of $0.19 per minute on all in-bound international calls. This would safeguard government's revenue earnings of about $210 million a year from in-bound international calls.

International calls to Afghanistan usually terminate on the receiver's phone as either 'Private Number', 'Unknown' or '000000', but lately some international calls terminate with local cell phone numbers, as if they are local calls.

the technology for terminating international calls is real simple and I know a few of the “operators”. All needed is a small satellite dish on the roof and a little capacity on a transponder, a company can become a small-scale international carrier. A device GSM gateway is needed to hack into mobile networks and route international calls to local mobile or landline numbers within the same network the call was to terminate, then re-route the call from that local number to the number the international call was originally intended for.

the telcos and whoever is in the business make it look like the call originated and terminated within the same network so the payment of international interconnectivity fee is avoided and government loses in terms of taxes on such calls.

I suspect that some of the telecom operators have their own grey routes for terminating international calls or are conniving with external contractors. it would be repetitive to talk about the old song of corruption in Afghan government but the the telecom regulator, ATRA, i suspect is deep in it to the neck. i happen to know that member of ATRA board are regularly greased up by the cash rich GSM operators.

I also suspect some of the telcos are not here to operate a GSM network but terminate international calls. MTN for instance has 7 Afs (14cent) rate for internetwork connection. This is extremely high to any standard; moreover they do little advertising to expand and diversify their products. One can’t help not to wonder why they are here.

i am not saying this to point to obvious corruption in telco but the potential of the industry and how little any player knows about it. the government has little idea and the proof of that is lack of time and money invest ment in regulation; as a result most of the profit is swept away by a few players.

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