NCA struggles to justify ‘sweetheart’ ICH deal

Business News of Friday, 20 January 2017

Source: B&FT

2017-01-20

NCAFile photo

The National Communications Authority (NCA) has courted controversy by awarding a multi-miilion cedi revenue assurance contract to Afriwave Telecom Ghana Ltd., when Subah Infosolutions is already performing that task.

Revenue assurance is a form of audit that verifies directly from the network telecom companies the volume of traffic and juxtapose it with the taxes the companies pay, to correct anomalies.

The controversial contract is part of the NCA’s agenda to establish an Interconnect Clearing House (ICH) for the mobile network operators to route calls made between networks and ultimately minimise the incidence of disputes arising from bills settlement, among others.

The telcos have said the ICH is not necessary, arguing that they have sunk millions of dollars into network infrastructure, which already enables customers to make calls across networks.

The revenue assurance license tasks Afriwave Telecom Ghana Ltd. to audit the volume of traffic and determine the accuracy of taxes that due on same.

Subah Infosolutions has been performing revenue assurance on government’s behalf in a contract that was awarded the company by the Ghana Revenue Authority (GRA), the only authority mandated by the Financial Administration Act, 2003 (Act 654) to supervise and monitor the finances of the country.

The Finance Ministry, in a letter addressed to the NCA in July 2015, before the ICH contract was penned, said any contract that seeks to take away the function of revenue assurance from GRA is an anomaly that will cause embarrassment to government.

Parliament has also stated categorically in the amended Electronic Communication Act 2016, which came into force in March 2016, that an Interconnect Clearing House will not provide tax revenue assurance, and shall not be responsible to account for tax revenue to government.

The NCA, however, went ahead in August, 2016, to award the contract to Afriwave, which contract shows that the NCA will pay GH¢3.52 million every month to the company for “monthly report on traffic volumes and revenues.”

Sources close to the NCA told the B&FT that Afriwave has, so far, been paid for its services for the months of September and October 2016.

Donald Gwira, Director of Corporate Affairs at Afriwave, confirmed to the B&FT that the revenue assurance function for which his company gets paid GH¢3.5 million every month, rides on traffic volume monitoring, a function Subah is already performing.

“Revenue assurance goes hand in hand with telecommunications traffic volume monitoring because you cannot do the former without knowing the volume of minutes that is terminated by the mobile network operators and service providers,” Mr. Gwira said, confirming the suspicion of critics that the contract amounts to duplication of efforts.

In justifying the Afriwave contract, however, the NCA told the B&FT that: “The operating word is Tax Revenue Assurance, which is not the same as Revenue Assurance that the ICH undertakes for the NCA.”

According to the NCA, the process to establish the ICH is yet to be fully completed, as it expects that the domestic interconnect traffic should commence in full by end of this month.

“Currently, the services which are live per the licence are the International Traffic Monitoring, NCA surcharge and Licence fee validation, and SIM box fraud monitoring. International incoming traffic routing is ready and the ICH is waiting on the MNOs to submit data for traffic to be routed to them,” the NCA said.

Per the Afriwave contract, the NCA would pay a total of GH¢56.32 million between August 2016 to December 2017, for revenue assurance functions alone, without taking into consideration the other functions of the ICH for which Afriwave is paid separately.

“As per Section 19 of the ICH Regulations, which provides that until January 2018, the Authority shall remunerate an ICH engaged in interconnection with monies that the Authority collects on behalf of Government for the use of the Authority,” the NCA disclosed.

The NCA maintains that from January 2018 when it stops paying Afriwave for its services, mobile network operators can now pass on the cost of clearing house onto consumers, a move that is expected to increase the cost of communication services enjoyed by consumers.

The fact that the ICH operations have cost implications for telecom services alone enrages the telecom operators, who continue to argue that they already provide interconnect services to consumers at no extra cost, while the new clearing house will add additional burden for their customers.

The additional cost to consumers and operators, in itself, is a deviation of from preliminary discussions had among stakeholders such as parliament, telecom operators, among others.

Sources within the telecoms industry say an agreement is yet to be reached over how the cost will be borne after the NCA stops making payment to Afriwave.

According to available telecoms data, 30 percent of all calls made in the country are from one mobile operator to the other, ie telco A to telco B, with the rest being made within a network.

Per the timelines, by the end of this month, Afriwave must be ready to handle about 30 percent of all domestic calls, a move that the telcos are afraid will create a single point of failure should something happen to the ICH, not to talk of the potential impact on quality of service.

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