Business News of Monday, 16 March 2015
Contrary to Ghana government’s many stated positive reasons for launching a single Interconnect Clearing House to stem a long list of claimed abuses, such as SIMBox fraud and tax under-declaration by the telcos, a Swiss-Ghanaian consulting firm has produced analysis to show that the ICH will handle less than 15% of domestic calls.
The Interconnect Clearing House (ICH) is an intermediary facility, to be operated by Africwave, a Ghanaian IT firm,that recently won a license issued by the National Communications Authority to set up the ICH to handle all international inbound calls, as well as domestic calls between the different telecom networks. Currently, the telecommunication companies (telcos) had developed mutual arrangements and infrastructure for interconnecting calls. However, government is now asking them to abandon their interconnect infrastructure and route their calls through the ICH.
According to the report by Konfidants, industry statistics, show that about 85% of all domestic calls are ‘within-network’, which means that they do not need interconnection to other networks. Part of the reason for the low cross-network traffic is because a high proportion of callers in Ghana have multiple SIM cards that allow them to call different networks by simply dialling from the target network’s SIM. That way they talk to people on different networks without necessarily making cross-network calls.
Konfidants’s analysis also shows that due to the current trends in on-net tariffs, this practice of callers using multiple SIM cards to avoid cross-network tariffs will increase in the years ahead, potentially reducing the number of calls that transit the ICH to about 10% in the next three years.
“That will mean more than 90% of all calls will eventually not even go through the ICH, because that is what an ICH does – connect calls from one network to another. Trying to force the telcos to raise their on-net prices to encourage more cross-network calling, as the NCA has been trying to do of late, will simply be thwarted through discounts, and is at any rate a price-fixing measure that is unproductive in the medium-term,” Konfidants said.
MP sues NCA
Meanwhile, the Member of Parliament (MP) for Obuasi West, KwakuKwarteng, together with Mr Elijah Adansi-Bonah, the Research Director of Development Data (a policy research organisation) has sued the National Communications Authority (NCA) over the ICH issues.
They are praying the court to declare government’s move as “unlawful and unnecessary.” They contend that while they have standard agreements with the telcos to transmit their communication, they have no such agreement with any ICH operator. The plaintiffs further claim that the ICH is an “unconstitutional” interference in the communication rights of all telecommunications service subscribers and are asking the court to order government not to proceed with the implementation of the ICH.
Way forward according to Konfidants
Going forward, aggressive on-off net price differentiation shall be the order of the day as the big telcos use new tools to encourage callers to stay within the network. The high number of subscribers with multiple SIMs strongly encourages subscriber behavior to align with the preference of these big telcos to incentivize on-net calling.
The ICH’s weak share of all domestic calls, and its restriction to the most transparent segment of the whole industry (the inter-network activity), as well as its preclusion from the most opaque part of the industry (the internal networks of individual telcos) and uncertain capacity to manage internet traffic renders it largely useless in achieving virtually all of its accountability goals.
For internet services, in particular, the situation is even more stark as co-location and sharing of infrastructure has simply not taken off, making an ICH worthless as an enabler of transparency, efficiency or accountability.
Government has made the case that the ICH, by serving as independent monitor of call volumes, will help stop call volumes under declaration and tax evasion by telcos, as well as prevent SIMBox fraud. But if the ICH cannot monitor 85% to 90% of domestic calls, and if all SIMBox traffic can be confined within a particular network thereby completely evading the ICH, how can the ICH be justified as an accountability measure for domestic calls? This is the interesting question being posed by Konfidants.
Lastly, according to Konfidants, global best practice shows that any company seeking to run such a critical national infrastructure should be certified to ISO 9001:2008/TL 9000 standards by a reputable auditor, something lacking in all the companies shortlist to run the ICH.