Those who work in telecoms assurance know it is not the centre of the universe, though some believe and wish it was closer to the centre. However, the attention currently being given to assurance in Ghana offers some insights into how and why assurance can rise up the public agenda. It also shows that such exposure has downsides as well as benefits. Recently we featured stories about the implementation of a new national interconnect clearing house in Ghana, and how this has been linked to the prevalence of simbox fraud and the consequential impact on government tax revenues; see here and here. In the last week, there have been yet more developments in this story. Opposition MP Kwaku Kwarteng has blasted the government’s clearing house plans, saying they are “dishonest”. In an article for Ghana’s JoyOnline news station, the MP wrote:
Government is in the process of appointing an Interconnect Clearing House (ICH) operator to connect calls from one network to the other on behalf of the telecommunications service providers.
This is nothing but connivance between government and its cronies posing as some Interconnect Clearing House company to make undeserved money from subscribers and users of telecommunications services…
…perhaps the strangest of all government conduct is the attempt to justify the ICH by presenting it as an answer to sim box fraud. Not only is this deceitful, it is also laughable. Sim box fraud is the practice of routing international calls through the internet in order to bypass the legitimate route for international calls. This is done criminally to avoid taxes. There is nothing about an ICH that can check this bypassing, and government knows this.
I must agree with Kwaku Kwarteng, who also sits on the Communications Select Committee in the Ghanaian Parliament. It makes no sense to combat the illegal bypass of legitimate telecoms operators by imposing a new mechanism for transferring interconnect traffic between them.
The real issue is whether Ghana’s government is getting all the tax they are entitled to, and want, from Ghana’s telcos. You can decide for yourself if what they want is the same as what they are entitled to. However, we can all agree there is a fine line between assurance work designed to validate the accuracy of revenues reported, and audit work designed to extract more tax from businesses. The distinction lies in the objectives and motives of the professionals who review accuracy, and of the people who employ them. Clearly political tensions are running high following a special government-mandated audit of Ghana’s telcos. In response to various insinuations, Vodafone Ghana has felt it necessary to make a public statement about the results of the audit, and how it should be interpreted. When discussing one fine subsequently imposed by the regulator, Vodafone asserted the following:
The fact that Vodafone was providing handling fees to International Carriers for securing its traffic from going via SIMbox fraudsters was perceived by the NCA [Ghana’s regulator], based on an ambiguous regulatory clause, as a regulatory breach (not a revenue assurance breach) and that accounted for the penalty.
In other words, Vodafone took care to say their data was accurate but they disagreed with how the regulatory rules were interpreted and applied.
Vodafone clearly feel they have received unfair criticism from some quarters, as emphasized by the closing paragraph of their statement:
In the name of fairness and transparency, Vodafone reserves the right to exercise all available options, including legal, against any individual or group, who impugns on the hard won image and reputation of the company by peddling falsehoods about this issue.
Meanwhile, rivals MTN Ghana released an extraordinary press release stating they ‘remain committed to the fight against simboxing‘. What makes the press release so unusual is that it efficiently explains what simboxing is, before detailing the various ways that MTN detects and responds to the crime. They then go on to give a table comparing local call rates to international termination costs in several African countries. It shows that simbox fraud occurs where the difference between these prices creates the incentive for crime. This leads MTN to conclude:
The so-called monitoring solution that is practiced by many countries in Africa is one that attempts to treat the problem after the fact, in other words, attempt to put out the fire after it has started. By its very definition monitoring is aimed at detecting the fraud while it is already in progress. Due to the lucrative nature of the business, SIMboxers are able to employ highly skilled technicians adept at detection avoidance. They are also able to side-step controls instituted by telcos to streamline SIM registration.
MTN believes steps must be taken to stop the illegal practice altogether. If the US$0.19 mandatory pricing is removed SIMBox fraudsters will have no commercial reason to even practice SIMboxing in Ghana.
Ghana is not the first country to have debated the purpose of telecoms assurance, only to discover that political and selfish reasons can lead to contradictory conclusions. However, I doubt that any country in the world has ever engaged in such a high-profile and tense public debate about what is, and what is not, telecoms revenue assurance. In my view, this is a foretaste of an increasingly public debate that will occur in more countries. Industry consolidation will lead to less competition between telcos. This will encourage increased political speculation about whether telcos charge ‘fair’ prices, and if their revenues, profits and taxes have been transparently and accurately calculated. Distinctions will be drawn between assurance work done within telcos, and audits conducted on behalf of the government. In turn, this will draw attention to grey areas in the calculation and reporting of some numbers. If our profession is weak, there will be plenty of people employed on either side, each pulling in different directions. It would be better to have a strong profession, that avoids such conflict by being rigorous about its techniques and its terminology. But either way, this tension will make additional work for audit and assurance practitioners.