Grey Traffic Costs Pakistan US$47m Annually

Illegal termination of international traffic is a thorny issue. Balance the right of a sovereign government to raise funds as it pleases with the benefits that flow from cheaper international communications. The Pakistan Telecommunication Authority (PTA) reports that PKR3bn (US$47m) is lost annually to the exchequer and national operators as a result of grey traffic. Chapter 2 of the PTA Annual Report for 2007 announced plans to purchase a solution to detect illegal traffic, with costs being split amongst industry stakeholders. The chosen solution is from Californian firm Narus Inc, and is supplied via the Pakistani solution provider Inbox Business Technologies; see the press release here. The software will be used to detect illegal VoIP gateways and hence eliminate grey traffic.

Smuggling telecoms traffic over borders is in principle no different to any other kind of smuggling. You can spend money on border controls, and make life harder for smugglers. You can fine them and imprison them. But the economic reasons that promote smuggling will remain: the costs being paid for international traffic are higher than they would be in a free market without border controls. Whilst it is easy to assess the loss in tax revenues due to illegal traffic termination, those revenues have to come from somewhere. With many Pakistanis living and working overseas, particularly in the USA, UK and Saudi Arabia, communication brings great benefits for society and the economy. There has been an explosion in international traffic with Pakistan, and prices are coming down, but I hope that the PTA learns both lessons from this experience. Not only do you need to automatically monitor networks to assure revenues, but you also need to drive down prices to the rate that would prevail in a free market. Only the two together will deliver the best overall return to Pakistani citizens and consumers.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.