This article looks into the issues with regulating VOIP and the Grey telephony market, a rising dilemma in developing countries, in particular Pakistan. Pakistan Telecommunication Authority (PTA) explain Grey telephony to be: the use of illegal gateway exchanges to bypass legal PTCL gateways and terminate/originate international traffic, including through VoIP gateways, GSM gateways, WLL phones, mobile SIMs or other related equipment. This traffic may then be distributed onwards using WLL and mobile numbers. It is claimed that grey telephony costs losses are of over Rs. 3 billion annually.
The laws regarding unauthorized or illegal use of VOIP, of course vary from country to country. In developed countries the regulation of technology is carried out in order to protect consumers and encourage competition.
To the developing countries VOIP is viewed as a legal and revenue issue which is attempted put forth control over it. Many times it’s the law which is formless and does not clearly specify about the usage of VOIP, as to when it’s allowed and when it’s not legal. In Pakistan, as of last year there was lot of hue and cry when a software company in Islamabad was harassed on suspicion of illegal VOIP activity – it proved to be a completely unjustified allegation. This kind of blatant use of authority and regulatory uncertainty combined with lack of technical knowledge by the authorities is a major hindrance for VOIP adoption and has an effect over the business profoundly. Operators deserve to have a distinguished and predictable regulatory framework that helps to guarantee returns on investment. In the paper Future of voice and VOIP, there is some interesting discussion over the topic of concern.
Grey markets can offer cheaper rates because of the high profit margins that may be charged by office-bearer, who enjoy a monopoly for instance, PTCL which had a monopoly a few years ago. Here is a little example; a caller to place an international call might have to pay about Rs 100 that costs the office-bearer operator hardly 3 rupees. The difference is such, which turns one to opt for VOIP. Against this setting, and despite legal crackdowns in various countries, the grey market seems all set to flourish in Africa. According to Russell Southwood of Balancing Act, in most African countries the grey markets can be substantial, accounting for between a quarter and a third of international call revenues, and this has exerted strong downhill pressure on prices.
PTA has issued technology-neutral licenses. VOIP services may be offered by Long Distance & International (LDI) and Local Loop (LL) licensees. In 2005 11 companies offered VOIP. Some new operators are looking to deploy IP-based networks and PTA is working on the necessary arrangements to embark upon issues of QoS, numbering plan, internet telephony and costing methodologies etc. ISPs are not allowed to offer VOIP.
ISPs are licensed as either Electronic Information Service (EIS) or Non-Voice Communication Network Service (NVCNS) providers, neither of which permits licensees to allow voice over their data circuits.
Policy guidelines have been issued to ISPs, PTCL, cellular mobile, LDI, LL and WLL operators to address illegal call termination/origination. Different guidelines have been issued to licensees, depending on the nature of their businesses. Maintenance of updated client records is the responsibility of licensed operators, monitoring clients in specific categories such as heavy users, users with a specific pattern of usage etc., the correctness of their customer’s past history, and for overseeing clients on the transportation of voice on data circuits and formulation of their SOPs /procedures to discourage illegal activities and help PTA. A clear approach and a Vigilance Committee have been established to eliminate grey traffic and illegal call termination in June 2006, comprising the Pakistan Telecommunication Authority (PTA), the Ministry, PTCL and other operators. PTA now regulates international bandwidth rates and has directed PTCL to review its rates to promote broadband in Pakistan, building on Pakistan’s Broadband Policy published in December 2004.
The PTA has developed Call Data Record (CDR) analysis that enables PTA to identify illegal sources of call termination. Last year, PTA reduced the Accounting Settlement Rate by 38.6 per cent to reduce the financial incentives for grey telephony and conducted 20 raids against illegal call termination business (with the help of PTCL and the FIA). Technical solutions to monitor grey traffic are being explored.
Islamabad- Prime Minister Nawaz Sharif has constituted a high-powered committee to scan through the existing monitoring system installed at the Pakistan Telecommunication Authority (PTA) to curtail grey trafficking and decide the fate of International Clearing House (ICH) policy.
“This committee has been empowered to take decision on ICH policy, keeping in view the results generated through installed monitoring system at PTA on the exact volume of grey trafficking (voice and data communications) coming in and going out from Pakistan,” (The News)
On the recommendation of Minister of State for Information Technology, Anusha Rehman for consulting various stakeholders on the issue of grey trafficking in the context of ICH policy, the PM has approved the constitution of the committee under the chairmanship of Finance Minister Ishaq Dar. The committee’s notification has also been issued.
Anusha Rehman stated that the involvements of high revenues were related to ICH policy, so she had requested the premier to constitute a committee for taking decision on ICH policy. With the help of monitoring system, she said, the government would get exact volume of grey trafficking, which would enable the government to decide the fate of ICH policy.
She explained that the monitoring system installed at PTA was permanent and the committee would reach the decision after checking outcomes of grey trafficking generated through the installed monitoring system.
“We have not utilized any money from the national exchequer to install this monitoring system, rather long distance and international (LDIs) have contributed the whole amount,” she added.
A press statement issued by Ministry of IT said the government has taken serious notice of the complaints about the international incoming traffic through illegal channels (grey traffic) and is fully determined to curb this menace. In this regard, the government has constituted a high level committee, under the chairmanship of federal minister for finance, and minister for it, minister of science & technology, secretary IT, secretary finance, chairman PTA, etc., said the statement. The committee has been mandated to review the existing policy implications, examine the current mechanism of monitoring of international incoming traffic, and submit recommendations for government’s consideration, it added.
The Government of Pakistan sees grey market telephony as a serious concern, causing revenue loss not only to Government, but also to all stakeholders.
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