Sharp practices in Africa's telecommunications sector are not abating as the menace of SIM boxing, Call masking, and refilling appeared to be on the upward swing.
While Nigeria had been battling the menace for the past two and half years, which had impacted negatively on security and costing the country about N3 billion loses, according to the Nigerian Communications Commission (NCC), Uganda on Monday, said it was losing about $60 million yearly to the challenge.
A 2018 report on the menace revealed that two years back, SIM box fraud had brought in losses of 12 to 15 million minutes' worth of revenue to Kenyan government and operators, and about $5.8 million to Ghana government.
The report claimed that Africa as a whole lost about $150 million every year to interconnection frauds.
But to bridge this gap, governments in the region have been charged to treat the issue urgently to avoid imminent collapse of the sector.
According to experts, if adequate strategies through collaboration are not implemented, more revenue loses, and security lapses become imminent.
SIM boxing is a practice in telecommunications whereby a person or group of people set-up a device that can take up several SIM cards (a SIM box) and use it to complete international calls it receives from the Internet as voice over IP (VoIP) and in turn serve them to the in-country mobile network subscribers as local traffic. The SIM boxer thus bypasses the international rates and often undercuts the prices charged by local mobile operators.
According to Independent ICT Consultant, Derrick Sebbaale, in 2016, it was estimated that telecom companies in Uganda on a yearly basis were losing about $60 million due to illegal redirection of international calls traffic. The amount in part led to revenue from voice services to remain flat or grow sluggishly in 2015, 2016 and 2017 - according to telecom revenue analysis in those three years. The illegal redirection is known in technical terms as SIM boxing.
Neeraj Upadhyay, Digital Marketing Lead for Subex, a telecom analytics solution provider, said technological advancements have contributed hugely for the rise in interconnection frauds.
He said the growing sophistication around SIM box technologies has made fraud detection difficult using traditional methodologies. "SIM boxes are programmed to mimic the activities of a normal call user. The equipment can have SIM cards of different operators installed, so a single SIM box can operate with several GSM gateways located in different parts of the world. The availability of SIM cards at cheaper prices and the lack of law enforcement over the sale of prepaid SIM cards have also favored the growth of SIM box fraud, further," he stated.
Sebbaale said for example, if you are making a call from the United Kingdom to Uganda, the subscriber will call via their operator (provider A - i.e. Vodafone) that has an International Gateway (e.g. BICS, TATA, etc.) and has termination agreements with operators in Uganda including network X (could be MTN or Airtel). They send the call via their connections to Network X that looks for its subscriber and terminates the call.
"In this scenario, all operators - A, BICS, X and the government receive their fees as per set agreements and taxation laws.
"This is the legal mode of operations and guarantees revenue for all parties involved. However, some unscrupulous individuals have found a way around this. The time this issue became rampant or visible, was when the One Area Network (OAN) was launched in 2015, which unfortunately became the transit route for calls originating from other countries.
According to him, If someone made a call from the UK to Uganda, on your phone it would be displayed as a call from Kenya because it would have been diverted by some unscrupulous individuals.
"The SIM Box has several SIM cards of operators and could also take advantage of any existing on-net (same network) voice bundles and thus ends up paying very little or nothing for the termination of the said call - that is disguised as a local call."
Sebbale noted that in such scenario, the interconnect operator C undercuts the market interconnect rates and offers cheap rates by spoofing quality. The GSM operator in Uganda (Network X) is cheated of charging the call at premium international rates but rather gets local rates or even earns nothing (if already purchased voice bundles are utilized). The government is also cheated of the $9 charged on international calls per minute.
He said while telcos are losing huge revenue, earnings accruable to government are also lost to the menace.
According to him, as the telecom operators and the government are counting their losses, some unscrupulous individuals that have only spent a meagre amount to acquire a SIM box machine are reaping at the expense of legitimate business and causing financial loss to government in the form of lost tax revenue. He lamented that these SIM boxers can breakeven in less than one month and continue to rake in profits for years, saying there is no deliberate under declaration of telecom revenue because of the investment made in order to be compliant with the tax authorities.
Uganda Communications Commission (UCC) recommended that operators have SIM box detection tools that need to be updated often because the SIM boxers keep finding new ways of bypassing the traditional operators.
The Executive Vice Chairman of NCC, Prof. Umar Danbatta, called on the public to report cases experienced to the commission for investigation and necessary enforcement actions.
He explained that investigations revealed that the practice started in September 2016 when the commission reviewed and implemented the termination rate for international inbound traffic from N3.9 per minute to N24.4 per minute.
He added, "What is happening is a clear indication that some unscrupulous elements want to continue to fraudulently profit from the earlier lopsidedness in the international termination rate, which we had before the 2016 review."
Danbatta described call masking as a serious challenge to the telecoms industry, and a security, and economic threat to the country and to consumers.
The Director, Legal and Regulatory Services, NCC, Mrs. Yetunde Akinloye, pointed out that as of August last year, the commission discovered a 45 per cent reduction in call masking and 25 per cent drop in SIM boxing in July.
Speaking at a telecoms forum, a representative of MTN, Olumayowa Oloyede, stressed that virtually all operators lose between 500 minutes and 2.5 million minutes to call masking.
In order to find a lasting solution to the menace, Oloyede said the company was running trials on the technology solutions from companies that submitted their proof of concept to the NCC.
NCC had given approval to five companies to present the evidence of the design of their software and equipment that could detect and prevent interconnect traffic bypass and SIM boxing activities.
In its compliance report, the NCC said, "In order to curtail these illegal activities, the Commission has issued approval to five companies to carry out 'Proof of Concepts' of their software and equipment that they claim can either block or completely stop call masking, call refilling and SIM boxing activities."
The SIM Box has several SIM cards of operators and could also take advantage of any existing on-net (same network) voice bundles and thus ends up paying very little or nothing for the termination of the said call - that is disguised as a local call.