The telecoms industry is slowly dying for one simple reason that has nothing to do with technology or economics. It is dying because businesspeople no longer have any genuine connection to the emotions of their customers. Emotion is the spur for all activity. We are motivated by love and fear, trust and doubt. Instead of understanding this, the decline of telecoms is intimately connected to executive decisions that leave telcos incapable of distinguishing between legitimate and illegitimate users of their services. I am standing in this year’s election for the Council that governs One Consortium, an association created by Philippe Millet and Christian Michaud with the intention of bringing together carriers and regulators to harmonize anti-scam expectations for international traffic. My objective is to pursue consistent know-your-customer (KYC) rules as the most vital prerequisite for tackling crime that crosses borders. I am contesting this election although I expect to lose.
That anybody can speak to anybody is a tremendous wealth, but this common wealth can only exist as a public trust, not as items on the balance sheets of private corporations. Telcos make a strategic error when they allow bad actors to drive away other users just because they collectively failed to discriminate between good and bad customers. The evaluation of whether a customer is good or bad should not just depend on whether that customer pays their bills, but also how the customer’s behavior affects all the other customers of communications services. The introduction of robust and universal KYC controls is vital to halting the decline of telecoms business models. This necessary change in the mentality of telcos is being resisted when it should be embraced. If left unchecked, the mistake of treating bad customers like good customers will kill voice calls, text messaging and telephone numbers.
Oscar Wilde observed that a cynic knows the price of everything and the value of nothing. Telcos have become too cynical in how they compete with each other. They know how much payment they receive from a customer but not if that customer is good or bad. They know how much they spend on their own networks and on purchasing capacity from other networks, but not the value of the emotions that users feel when they pick up a phone. In 1971, the songwriter Labi Siffre recorded a song named “Bless the Telephone” about the happy feelings associated with receiving a phone call. Those emotions are so powerful that TikTokers continue to share this song over 50 years later, via a medium that did not exist when the song was written. Few of us now treat an unexpected phone call as a blessing. We fear the telephone.
There is a part of society that can help telcos to work together for their mutual benefit. Cynics will scoff, but we need governments and regulators to put pressure on telcos that use weak KYC to undercut their rivals. Telcos need to treat rule-makers and enforcers as partners, not opponents. Somebody needs to punish telcos that repeatedly refuse to work to the same KYC standards as their competitors. But that first requires the establishment of common KYC standards. When the traffic is international then the standard needs to be consistent across borders. Otherwise we encourage a fantasy that the recipient of communications should trust the source despite nothing being done to ensure the source is trustworthy. The public are not fools. Lying about being trustworthy soon backfires.
Note the use of the word ‘standard’, which has a meaning distinct from wooly phrases like ‘best practice’. Standards are enforceable; best practice is not. A level playing field, maintained through genuine enforcement, is a benefit to those telcos that already impose tough KYC checks. Sadly, US telcos exhibit some of the lowest KYC expectations I have encountered. US telcos also have more influence over One Consortium than is healthy for them or anyone else. There is very little chance of my winning an election where there will be more Americans voting than any other nationality, and where I am standing against nominees who work for American-owned businesses, while I demand tougher KYC standards than is the norm in the USA. But I feel compelled to try. If nothing else, somebody should demonstrate to regulators that the norms established by American corporations do not have to become the norms for the entire world.
Some American businesses will dispute my assertion that KYC is unusually weak in the USA. I base my observation on six kinds of evidence:
- The actual wording of the only KYC rule imposed by the US Federal Communications Commission (FCC) so far;
- Criticism of that rule by American experts including former FCC Commissioner Nathan Simington;
- Publicly-available data about crime that is consistent with the USA having a weak KYC control environment;
- Insights into the KYC failings of the US industry provided by diligent American scamhunters;
- Private testimony from American telco employees who talk to me about their KYC concerns while remaining unwilling to speak publicly because of the threat to their careers; and
- The way some American members of One Consortium responded to a proposal that One Consortium base its KYC advice to regulators on the KYC Code of Conduct published by i3Forum, a sister organization to One Consortium.
Most readers of Commsrisk will not really need all this evidence. Anyone with common sense and a little knowledge of telecoms around the world can determine that the situation in the USA is different to that in countries that record the fingerprints of phone customers (such as Pakistan), are introducing facial recognition for phone customers (such as South Korea), or which have imposed billion-dollar fines on telcos that failed to meet KYC expectations (such as Nigeria). In some countries, the abuse of networks is associated with terrorism and other threats to national security. The governments of many poorer countries depend heavily on the income they receive from telecom taxes. It is natural and customary for these governments to take more interest in the methods that telcos use to verify their customers.
But even if you did not know that, I believe most people who take time to read this article will be disappointed when they see the following account of the way One Consortium members behaved in response to a KYC proposal submitted to them by an existing member of the Council. One peculiarity of One Consortium is that it has been publicly signaling an interest in establishing KYC norms even though it has no KYC working group. I assume this is because of the KYC Code published by i3Forum, a sister organization established by the same founders as One Consortium. Despite the lack of a working group, I was asked at short notice to attend a conference call with an exclusively American group of One Consortium members to discuss the i3Forum’s KYC code, presumably because I was its main author. When I joined that call, it became immediately apparent that I had been invited to defend the i3Forum’s code. For reasons that baffle me, this exclusively American group took it upon themselves to recount all the reasons that they believe the i3Forum KYC code is wrong.
I was the principle author of that particular KYC code but it is not my job to defend it. The code was approved by the i3Forum’s multinational anti-fraud working group. It was approved by the Board of the i3Forum. I was frustrated with the long series of delays before the KYC Code was published by the i3Forum, but that just reinforces how many people had the opportunity to object to its content and demand changes before it was finalized. Now that it has been published, I have no need to argue for its merits. The onus is now on every telco that wants a watered down alternative to justify their position. How can they argue they are establishing KYC norms for the entire global industry while simultaneously diluting a voluntary code of conduct that many telcos have already agreed is reasonable? And how can they do that while claiming that experiences drawn from a single country are more representative of what the world needs than a compromise that has already proven acceptable to telcos from many different countries?
It was a misstep by those American members of the One Consortium, including some current Council members, to confront me in the manner they did. The smarter approach would have been to simply ignore me, and to barrel whatever watered-down guidance they wanted through a Council that is already dominated by American interests without alerting me to their intentions. I can only assume they genuinely believed their arguments would persuade me to think differently. It had the opposite effect. It made them appear inconsistent, claiming to occupy the moral high ground on KYC while rejecting the i3Forum’s code because they feared the possibility that the FCC might use a voluntary code to set baseline expectations for enforceable rules in future.
I am no diplomat by nature, but I know enough about the differences between cultures to observe those differences and to remain conscious of those differences without expecting to change anyone’s culture. When I dealt with people in Indonesia, they had a way of doing things, as did the people I dealt with in Barbados, as did the people I dealt with in Oman. Human beings have much in common, but there are always differences in how they think. Persuasion involves understanding how other people think, and that can include understanding cultural differences too. That these One Consortium members lacked the guile to involve a single supporter of their views from another country reflects poorly on their understanding of how to manage work in a multicultural context.
American business culture is adversarial and litigious. This seeps through into the ways that big businesses fight with government too, though they are also adept at gaining favor through political donations and by hiring former government employees. However, that is not the model for how telcos and governments interact in every country. In some of the countries where I worked, it was normal for captains of industry to negotiate deals with government representatives with the belief that both would prosper by working together. Those countries have a culture better suited to agreeing and maintaining common KYC expectations than the USA. When it comes to harmonizing KYC globally, it would be better for US culture to bend towards the ways that some foreigners do things, not the other way around.
Irrespective of culture, it is generally true that the quickest way to get something you want involves empathizing with other people, aligning with their goals and acknowledging their priorities, rather than imposing your own. That is why the arguments you see me make about how to fight scams will address you as a human being first and foremost, not as somebody who does a specific job in the telecoms sector, or as somebody who comes from a specific country or culture. If I can remind people that they and their children, partners and parents can all be the victims of crime too, and that telecoms scams are a truly global problem that needs truly global solutions, they may feel differently about the choices made on behalf of the organizations that employ them. I try to appeal to everybody’s common humanity, and not to dwell upon their particular experience of working with a particular national regulator. Focusing on national particulars makes it harder to overcome the barriers to compromise.
I could go on; if I was having an argument with American members of One Consortium about who has the most international experience then the argument would not last long because I have more international experience than any of them. A list of all the telcos, countries and cultures I have dealt with would be tediously long. The key takeaway is that nobody ever made a convincing argument for having the most knowledge of what is needed worldwide by assembling a group of people from just one country and asking them to decide what is in the best interests of everybody else. Naked self-interest fools nobody except the people who want to be fooled. Whilst criticizing cultures is not my purpose, a lack of empathy for other ways of living life is one the failings that foreigners notice most often in Americans. The high priority attached to material wealth makes the American economy strong but it has downsides too.
The irony is that since that unpleasant interaction there has been a step-change from the FCC, which is now proposing tougher KYC expectations than before. I expect US telcos will lobby ferociously in response, making it uncertain how much will ultimately change. Nevertheless, the fact that a Republican-led FCC sees the need to place greater KYC obligations on businesses is also confirmation that American telcos have not voluntarily done a good enough job of protecting the public. A truly global association needs to be mindful of debates occurring within specific nations, but must also rise above them. There is no route to harmonization of international expectations that involves making them sensitive to every change in the political wind blowing from a single country.
So I expect to lose this vote, not least because this article shows the limits of how far I will bend to ingratiate myself with this particular electorate. Bending to a single country is wrong because we need compromises that all countries will tolerate. If that seems an impossible goal then I accept you may be right; that does not change my prediction about the demise of telecoms if we do not negotiate common KYC standards for the sake of the common good. I will persist anyway. And losing this election is not such a hardship for me, because I do not need to win this election. I just need to be effective at communicating my concerns about weak KYC to the audience that I really care about: regulators. Members of the Council of One Consortium gain opportunities to influence regulators that others will lack. But they do not gain an exclusive right to speak to regulators about which anti-scam policies will be effective, and which will fail. Some of you are regulators, and I am speaking to you right now.
Sometimes it is necessary to fight a losing battle to keep alive the hope of winning a war. Bad actors have been winning the war against legitimate phone users. They mostly do it by trying to appear like legitimate phone users. Too many telcos have enabled the bad actors to the detriment of everyone else. KYC is the battleground that will determine the outcome of this conflict. It is not too late to reverse the advances made by criminals and to restore the public trust in the telephone. If you can vote in the election for One Consortium’s Council then please consider voting for me.
“Bless the Telephone” by Labi Siffre is a beautiful song. You can listen to him performing it below.
