Interconnect Clearinghouse to serve as firewall against fraud

When the Interconnect clearinghouse comes

The National Communication Authority (NCA) will soon be calling for public consultation on four new telecom industry license categories, one of which is the single Interconnect Clearinghouse License, intended for a number of purposes including serving as a national firewall against a number of industry frauds.

Cabinet has sanctioned the announcement for public consultation on the four license categories and currently high level industry consultation is ongoing, pending a wider publication consultation later this month to discuss the implementation timelines.

The four license categories are Unified Licenses (for all telcos to have fixed line operations), three MVNO (Mobile Virtual Network Operator) licenses, three International Wholesale Transit (IWT) licenses and finally one Interconnect Clearinghouse (IC) License.

Whereas all the four license categories are important, of key interest to industry players is the interconnect clearinghouse license.

The license would create a one-stop-shop interconnect clearinghouse where all communication within the country and from overseas into the country would go for clearance before terminating on the intended network. The spectrum of communication which would go through the clearinghouse include calls, SMS and even data communication.

Apart from linking all the telecom networks in the country at one point, the clearinghouse would also link all internet exchanges and serve as the operator that mandates all traffic as legal before that communication is allowed to continue to the intended network or customer.

Effectively, it would be the connection point between telco, ISPs, Value Added Service VAS providers/app developers and international traffic carriers.

A similar player exists in Nigeria, but it is not compulsory for telecom players in that country to connect to it. But this writer can confirm that the one being proposed for Ghana would do more than what the Nigeria one does. And it would appear that industry players would be compelled to connect to the clearinghouse in Ghana because of the spectrum of services it is intended to provide.

Very often, telcos and their VAS providers send communication (SMS, ringtones, etc.) to people who have not subscribed to such services and charge them for it. But with a clearinghouse in place, such communication would be barred from reaching people who have not subscribed to them.

It is also very common to find fraudulent text messages and or calls from overseas phone numbers and messages on social media platforms like WhatsApp, Facebook and others requesting recipients to perform some action. Responding to such messages could sometimes cost the recipient dearly.

But the clearinghouse, working as a firewall, would sieve out such unwanted messages and prevent them from entering into the gateways of the country, much less hitting any mobile network and getting to customers.

The clearinghouse would be a private telecom service provider and would also be regulated by almost the same regulations that apply to other industry players. It would be required to meet the laid down quality of service standards and other regulatory requirement and be penalized when they fail on any of those.

SIM Boxing

Ghana has been grappling with the lingering menace of SIM box fraud, where some fraudsters here and abroad route calls from overseas through the internet and terminate them through local SIM cards fitted into devices called SIM boxes. That way they create the impression those calls were generated locally, so they pay only local rates and rob the country of huge sums of money.

But to the extent that all those calls come from overseas, a national firewall, in the form of the interconnect clearinghouse would bar such fraudulently routed traffic from entering the country.

So the overseas carriers who give traffic to SIM box fraudsters to bring to Ghana will have problems if they do not use the approved routes, i.e. the gateways of the telcos and any approved private international wholesale transit (IWT) operator.

Kenya has a national firewall, which prevents calls from abroad going through unapproved routes from entering into that country. So SIM box operators do not find Kenya attractive, even though the telecom industry in Kenya is very big.

But in Ghana, the industry regulator, NCA has been pushing telecom operators to establish systems on their own to fight SIM boxing, and it has not worked so far.

NCA tried to do real time monitoring of telcos international gateways through a private company called GVG (Global Voice Group) from Haiti. But it was not clear how that was going to stop SIM box fraud, since there was no talk about the monitoring systems also working as a firewall.

But the coming clearinghouse is said to have presidential backing and is therefore a national policy, other than just a project by the NCA, to ensure sanity in the system and to also prevent fraud originating both here and abroad in the telecom space.

VAS providers

The telecom operators have been duly informed about the clearinghouse and the other licensing categories, and some of them have issues with its implications for their respective businesses. But they shy away from making public pronouncement on it until actual implementation.

However, their VAS partners seem to be very glad about the clearinghouse because the net benefits to the VAS industry in Ghana are vast.

Chief Operating Officer at TXTGhana, Eyome Ackah, who worked with almost all telcos in this country before joining the VAS industry believes the interconnect clearinghouse is a fantastic idea because it would inject some regulatory regime into the telco-VAS players relationship and also stop the telcos from bluffing the VAS players.

“Currently we deal with telcos purely on relationship and so they can decide to bluff or cut you off as a VAS player if they are not happy with you. But I believe that relationship needs to be properly regulated so that the telcos would not be able to bluff,” he said.

He noted that with the clearinghouse onboard, VAS players would just have to go to the clearinghouse for connectivity to all telcos at a go before going to each telco to talk business based on the new regulatory regime.

Eyome Ackah said the clearinghouse system is expected to inject some regulation into the VAS revenue share arrangement between telcos and VAS providers.

“Under the telcos interconnect regulations, if a call originates from telco ‘A’ and terminates on telco ‘B’, telco ‘A’ is supposed to pay telco ‘B’ a specified amount of 5Gp per every minute of that call. But with VAS, the telcos unilaterally decide what to charge and the VAS providers have no say. And they take between 55% and 70% of the revenue,” he said.

General Manager of MobileContent, Conrad Nyur said regulation under the clearinghouse arrangement is important because it promises to kill the way telcos unilaterally decide on what percentage of the revenue they took without recourse to the views of VAS providers and content owners.

“They often tell us the share they take is based on orders from their mother companies abroad. I think that is unfortunate because those mother companies do not work in Ghana so they do not know what pertains in our economy,” he said.

Nyur however believes the best purpose the clearinghouse could serve is to be a firewall against fraud, particularly the ones being perpetrated by unregistered VAS players and individuals both in Ghana and overseas, sending communications into the country without any restrictions.

General Manager of SMSGH, Alex Adjei Bram believes some of the work of the clearinghouse is already being done by telcos and some VAS providers, but the one-stop-shop clearinghouse idea is not a bad one to the extent that it would ensure sanity and organization in the system.

“We came together to form WASPAG (Wireless Application Services Providers Association of Ghana) for the purposes of self-regulating to clean up the abuse in the system, but I believe when the clearinghouse comes in the work will be much easier because it will serve to prevent any such abuses at one point and save us the headache,” he said.

Adjei Bram also believes the clearinghouse would bring organization into the VAS/telco relationship because even customers wanting to stop a service from a particularly short code or service provider would just have to go to the clearinghouse and give one instruction.

“It would also streamline several of the industry processes that otherwise involved various stages of implementation by different bodies,” he said.

Adjei Bram also thinks the clearinghouse would take care of some of the equipment some telcos invest in specifically for VAS services, adding that “when that happens the telcos will spend less and therefore feel comfortable to adjust the revenue share arrangement so that the VAS players and content owners could get a lot more of the money to share.”

He described the current VAS revenue share arrangement as “a dumper on the industry”, saying that an adjustment in favor of VAS players and content owners will be “the greatest heaven.”

Questions

Meanwhile, questions are being asked of the implications of the clearinghouse to the industry. First of all, telcos already have automated interconnect arrangement which is working fine so far, so questions are being asked as to why a telco should be compelled to a separate clearinghouse.

Secondly, what would be the cost implications of the private clearinghouse to telcos, which have already invested in their existing and effective interconnect systems – and what happens if the interconnect clearinghouse holds up interconnect fees belonging to telcos, just like what is happening in Nigeria, where the clearinghouse owes telcos?

Thirdly, an alarm is being raised that connecting all internet exchanges to a clearinghouse could mean monitoring and censoring of the internet communications including private emails, which could infringe on people’s freedoms on the internet. It brings up the term ‘North Korea’ in the minds of pundits. Some have even suggested that the interconnect clearinghouse is simply ‘evil’.

Nine Licensed Telcos in ‘little’ Ghana – Part Two

Six mobile voice/data players and three data service players with voice licenses

The second part of this article looks at whether the 4G players would also sell to multinationals, and also touches on the challenges the cedi depreciations poses to the new entrants and whether population size played any role at all in the decision to license nine telcos in Ghana.

Will the 4G LTE operators also sell?

It has been established that five mobile licenses were given to Ghanaians or companies with Ghanaian involvement, but they are now in the hands of foreigner largely. Glo is for a Nigerian, and so far it is only the BWA licenses (4G LTE operators) which remain firmly in the hands of Ghanaians. But given the kind of muscle needed to sustain a telecoms service and make it profitable in this harsh economic conditions and highly competitive market, one wonders how long the Ghanaians would hold on to the BWA licenses without the help of multinationals.

John Taylor is the man behind Surfline, and he recently said after paying US$6million for the BWA license (which he described as expensive even though NCA thinks it is cheap), he has spent over US$100million dollars to build the network to cover only Accra and Tema. And according to him, “we are still spending.” Meanwhile, he has more than 100 districts capitals in nine more regions to cover.

Unlike the other networks, which had coverage beyond Accra at the time the multinationals came in, Surfline started from scratch with coverage in Accra and Tema, with just about 220 cell sites, which makes it the biggest 4G LTE network in Africa right now. But pundits say 220 cell sites are still not enough to cover Accra, as the existing networks are each using up to 450 cell sites in Accra alone, and are still having problems providing excellent service. Indeed some Surfline customers complain of “no coverage” in some parts of Accra.

Blu is set to launch soon but it is not clear how much they have invested in building their network after paying US$6million for the license. Blu CEO Emmanuel Collision recently told journalists “we raised millions of dollars locally and invested in building our network.” Blu is still running tests prior to the launch in small communities in Accra; grow gradually to cover the whole of Accra before even thinking about going outside the capital. The reason is admittedly cost. Goldkey has not even turned on their golden key yet. They have remained virtually silent on what they intend to do with their BWA license.

Dollar Depreciations and Competition

The other challenge facing the BWA licensees is that after acquiring licenses at US$6million and investing several millions of dollars into building their networks, Ghana’s currency has depreciated so heavily just at the time they are about starting operations. This might mean they now have to make twice the effort to recoup their investment. And that is not going to be easy in the face of the stiff competition from six traditional operators and several other existing ISPs, which are already complaining of dwindling revenues. Pundits say the BWA operators must necessarily be affordable to remain competitive. But experts say that would not sit well with them, if they have to recoup the heavy dollar-based investments they have made so far. Moreover, there is another 4G LTE player, Yoomy, preparing to enter the market through a local partner. They already have an ISP license on 2300MHz frequency.

Secondly, there are not many 4G devices that would drive consumption of 4G LTE. The few 4G devices available are not affordable; and mass consumption, which means affordable devices are key to the profitability of the 4G operators. Surfline is currently giving free devices (dongle, Mi-fi and Router) for each data bundles purchased. But the limitation is they, like the other BWA licensees, are limited to data service for now. They cannot provide voice services. And so even though affordable handsets for 2.6GHz LTE do exist, Ghana’s 4G operators have no use for them now.

So the question on the minds of pundits is, would the LTE guys also sell like the other six did because of the huge cost involved in providing telecoms service, plus the pressure of competition in Ghana, characterize by seven active operators with two more to come in a relatively smaller population like Ghana?

That question is more relevant because, despite the obviously huge profitability telecoms promises, banks in Ghana have not done well in supporting locals to invest in the industry and keep Ghanaians in the mainstream. The banks are quick to advance loans to foreign companies in the industry. So there is a doubt as to whether the Ghanaians in the industry now will remain in there over the next five to 10 years.

Telco-population analysis

So effectively, there are now nine licensed telcos in a relatively smaller populations like Ghana. It would appear that the NCA and government for that matter, was more focused on raising money into the consolidated fund, than considering the size of the country’s population in awarding the licenses. They did not appear to have considered the profitability of the telcos, which would then make them able to expand and provide service even in areas that offer very low average revenue per user (ARPU). Government’s strategy seem to have been focused on quantity rather than the profitability of the investors.

But the NCA has often argued that if Ghana was not a profitable telecoms market, as some often argue, how come the multinationals kept trouping to Ghana even though there were other multinationals already in the Ghanaian market?

So more licenses have been given out with the hope that service would be expanded to the “unserved and under-served”, but that has not necessarily happened without the intervention of a universal access program run by the state-owned Ghana Investment Fund for Electronic Communication (GIFEC). The same telcos, which complain of dwindling revenues due to competition, pay one per cent of their profits every year into the universal access fund. And GIFEC claims it is investing the fund properly, but the telcos privately raise questions about the use of fund.

Figures from the Ghana Statistical Service indicates that when Mobitel was licensed in 1990, Ghana’s population was estimated at 15.04million; then Celltel came in 1993 when the population was estimated at 15.431million (plus 391,000). Spacefon came in 1995 when population was estimated at 16.23million (plus 799,000); Onetouch came to meet a population estimate of 16.644million (plus 414,000) in 1996; Westel came 1997 when population was 17.07million (plus 426,000), and Glo came in 11 years later in 2008, when populations was 22.532million (plus 5.462million).

Now there is Blu, Surfline, and Goldkey here from June 2013 when population was estimated around 26.43million. So within the 23 years from Mobitel to the BWA licensees, Ghana’s population has increased by 11.39million. So for the additional 11.39million people, there are at least six additional telcos. And all of them have licenses for nationwide coverage. And while rural coverage is still not the best, urban dwellers seem to have more than necessary number of telcos to choose from.

Other jurisdictions

Indeed in countries where lots of telcos have been licensed, some of them have licenses to cover only smaller communities rather than nationwide. In Nigeria, for instance, where the population is estimated at about 170 million, only four telcos have licenses to go nationwide; MTN, Etisalat, Airtel and Glo. There are five other smaller ones. But that is understandable in the population of 170million.

In India, the population is over 1.27 billion and they have 13 telcos, plus a few others which are limited to covering smaller communities. In fact one of the supposed nationwide coverage license holders in India, T24 Mobile has 0% market share. Recently some telcos folded up in India because of non-profitability.

United Kingdom is a more advanced economy with a population of over 64million. It has five major telcos with nationwide coverage, BT (British Telecom – fixed line service), Vodafone, EE (everything everywhere), O2 and 3 (Three). But there are 43 MVNOs (mobile virtual network operators), which are limited to specific coverage areas.

United States has four major nationwide telcos in a population of over 320 million. The telcos are AT&T, Verizon, T-Mobile, and Sprint. There is a fifth nationwide operator called US Cellular, but it is virtually non-existent. There are smaller telcos in the US, which are limited to smaller coverage areas by license. And there is hardly any complaint about dwindling revenues for telcos in the US and in the UK, because the populations are big enough to accommodate a certain number of smaller operators with limited coverage areas.

But Ghana, with an estimated population of 27million, has seven active telcos with two more yet to launch. And all have nationwide coverage licenses. It is therefore not a surprise to find telcos in Ghana complain of dwindling revenues and possible mergers. Indeed, some former officials of NCA have said in public that eventually just about four or five telcos would stand in Ghana. And that day seem to be fast approaching as more telcos get into the system and threaten to even neutralize revenues further.

India is a typical example of where telcos revenues dwindled so much, they started increasing call rates and some telcos simply folded up recently. Ghana has also started experiencing increases in call, SMS and data rates. And some argue the telcos might become a cartel as a way of surviving the harsh conditions; stiff competition, no-mercy regulator and some unfriendly citizens who cut telecom fibre and steal cables, fuel, batteries and other equipment at telcos’ base stations.

So the question still remains, that in ‘little’ Ghana with nine licensed telcos, faced with dwindling revenue, would some telcos fold up soon or merge with others as predicted – would the new entrants also sell to multinationals or partner with foreigners because of the cost of sustaining telecoms network in such harsh economic conditions and competitive market, or would the banks be bold to support the locals to survive – and lastly, with the threat of dwindling revenue, would any multinational be willing to come into Ghana and partner with startups like Surfline, Blu or Goldkey, even if any of the three want foreign partners in the future?

Telcos data bundles offer way better value

A closer look at the various time-bound data bundles of the telcos in the country indicate even though they each have expiry dates, they give better value for money than unbundled data at default rates.

Several data customers of telcos claim they get confused about whether they are better off staying with the default rates, or going for data bundles on their respective networks. Some also say they do not understand why the telcos have placed expiry dates on the bundled data.

But Conrad Nyur, a Mobile Value Added Service provider said he is an active customer of all five GSM networks and he has data bundles on all five, which he uses to monitor how his VAS services are working 24/7.

He told Simcardblog “I could not have afforded to run data 24/7 without the data bundles. Even though there are expiry dates on the bundles, they still make absolute sense because by the time of the expiry date even if I have not consumed everything, I would still have paid way less for what I have consumed than I would have paid if there were no data bundles.”

Nyur said he therefore does not understand why some customers have issues with expiry dates on data bundles.

For those who complain that their data bundles run out faster than necessary, Conrad Nyur said every smartphone consumes data automatically once the phone’s operating system is activated. The applications automatically update themselves and they consume data so no one can accuse any telco of stealing their credit.

“There is something called a chronological timer which runs on the background and keeps checking for updates for all applications on your phone, once it finds an update it activates it for you and data is consumed. That cannot be blamed on the telco,” he explained.

A closer look at the various data bundles on all GSM networks would show Nyur is right.

Closer look

Default rate per a megabyte of data on MTN and Airtel is 10Gp, on Tigo and Vodafone it is twice that, 20Gp, while on Glo it is 8Gp and Expresso is doing 5Gp per megabyte of data.

This means if a data customer bought airtime and did not bundle any of it, he or she would be paying 10Gp for every megabyte used if that customer was an Airtel or MTN customers. If that person was a Vodafone or Tigo customer he/she would pay 20Gp for the same megabyte. But Glo data customer pay only 8Gp per megabyte with a bundle and Expresso customer pay only 5Gp for same.

But each of the data bundle categories on the various telcos offer way cheaper rates than the default rates each of the telcos offer. And even with the expiry data on the data bundle, the customer gets value for money even if he/she uses just half of the bundled data before the expiry data.

MTN’s default per megabyte rate is 10Gp, so for GHC20 unbundled, the customer gets only 200MB of data. But the highest a customer pays on a bundled data on MTN is 2Gp, and that is on 1GB (1,000MB) for GHC20 bundle. That is five times what one gets for unbundled data.

The other bundles on MTN even offer lower per megabyte rates. It is gets as low as 0.8Gp (less than 1Gp) per megabyte on the 100GB for GHC800 bundle. But that bundle is said to have no much patronage.

The default per megabyte rate on Vodafone is 20Gp, so for GHC20 one gets 100MB unbundled data. But Vodafone offers 1,600MB (1.6GB) bundled data for same price, GHC20. This means the customer pays only 1.25Gp per megabyte. Meanwhile other bundles on Vodafone even offer less prices per megabyte.

Meanwhile, Vodafone in particular offers a set of promotional bundled dubbed, Vodafone Red Packages. These offer both data, SMS and voice minutes for local and international calls for way less than what a customer would have normally paid.

Tigo’s default rate per megabyte is 20Gp so for GHC30, one gets 150MB of unbundled data. But Tigo is giving 5,500MB (5.5GB) of bundled data for GHC30, which means the customer pays only 0.54Gp (less than 1Gp) per megabyte. Tigo even have a 10GB (100,000MB) data for GHC50, which cost 0.5Gp per megabyte, the lowest rate on the market.

The default rate on Glo is 8Gp per megabyte. This means for GHC55, one gets 687.5MB of unbundled data. But Glo is offering 6,000MB (6GB) of bundled data for GHC55, and that comes of 0.9Gp per megabyte. Glo also has two other data bundles which cost 1.25Gp per megabyte each.

Airtel also has one of the highest default data rates of 20Gp per megabyte. This means for GHC60 one gets only 300MB of unbundled data. But for GHC60, Airtel gives 5,000MB (5GB), which is six times what one gets a default rate.

Surfline does not have a pay-as-you-go default rate. It only has bundles. And its bundles are currently priced between 0.45Gp and 1.25Gp per megabyte right now. Beginning from October 1, 2014, it would resume to its normal data rates and that would mean the highest rate would come to 2.5Gp and the lowest would be 0.89Gp.

Expensive

But even though telcos usually do lower prices on higher bundles, some of the telcos have slotted in some higher bundles which actually cost more than some of their own lower bundles.

Vodafone, for instance has a 3.5GB for GHC45 bundle, which comes to 1.29Gp per megabyte. It also has a 6GB for GHC80 bundle, which comes to 1.3Gp per megabyte. Those two cost higher that smaller bundles like 1.6GB for GHC20 and 2.5GB for GHC30.

Airtel also has a 6GB for GHC875 and 12GB for GHC150, which of which come to 1.25Gp per megabyte. This is higher than the 5GB for GHC60 bundle, because that one comes to 1.2Gp megabyte.

It is also important to note that, currently, the most expensive data bundle on the market is MTN’s 1GB for GHC20, which comes to 2Gp per megabyte and the cheapest is Tigo’s 10GB for GHC50, which comes to 0.5Gp per megabyte.

However, for those who would join Surfline from today, October 1, 2014 they would get half what the existing customers get for the same price, and when that happen, Surfline would then have one of the most expensive data bundled on the market, that is 1GB for GHC25.

But clearly, even though the various data bundles have expiry dates, the customer pay way less than he/she would have paid normally.

Tecno to launch Phantom Z next week

The sleek Tecno Phantom Z

Tecno Ghana is living up to its promise to flood the local market with affordable smartphones. It begun to the Tecno N series and now it is on the Tecno Phantom series. The first in the series was Phantom A, followed by Phantom A+, Phantom AIII and now Phantom Z is here.

Your authoritative Simcardblog can confirm the Tecno Ghana would be launching its latest smartphone, Phantom Z next week Tuesday with a flexible and juicy data package across networks.

Officials of Tecno Ghana have told Simcardblog that they are negotiating deals with the telcos to give their customers value in terms of data bundles on the new sleek but affordable Phantom Z smartphone due to the hit the market in less than a week.

The estimated price for the premium model dual-SIM Android 4.4.2 Kit-Kat Phantom Z handset on the global market is US$421 (about GHS1,480) but Tecno Ghana is known for beating competition on price with their consistency on affordability. Simcardblog does not expect anything differently from Tecno Ghana this time round.

Find the specifications of the Phantom Z handset below:

It is a 3G handset. Not yet 4Gcompliant. It has an IPS capacitive touchscreen with 16million colors, and the screen size is 5.2 inches just like the Samsung Note 3. It has a plastic body with metal borders.

The sleek handset comes in Black and White variations, depending on the users color preference. It has a 16megapixel rare camera and 8megapixel front camera. Picture taking features include autofocus, panorama, geo-tagging, simultaneous video and picture recording, all of which would be enhanced by a LED Flash light on the handset.

The internal memory size is 32GB and 2GB operating memory (RAM), which promises very high performance comparable to any of the top smartphones on the market. It has a 2GHz octa-core Cortes-A7 processor and a MediaTek MT6492 chipset, plus a Mali 450-MP4.

In terms of connectivity, it is Bluetooth complaint and it has Wi-Fi connectivity, plus it can be a Wi-fi hotspot and comes with a Wi-Fi direct features.

The phone has loudspeakers and a 3.5mm audio jack. It also comes with a 3030mAh Li-Ion battery, which gives 960 hours standby time and up to 24hours talk time.

Other features include FM radio, which is not available on even Samsung Galaxy S4, MP4, MPEG4 and H.263 players, MP3, WAV, eAAC+ AC3 and FLAC player, image viewer, document reader, predictive text input and preloaded apps like Gmail, Gtalk, Google Now, Youtube, Flash Share (which comes with other Tecno smartphones) and Swiftkey.

The only few down sides are it has no addition memory card slot for increased memory, and it is not compatible with Java.