Grey traffic causes $1bn annual loss

Updated March 31, 2014

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- File Photo
- File Photo

ISLAMABAD: Within two years the recorded volume of incoming international calls has dropped from an astonishing two billion minutes to less than 500 million minutes per month, giving a massive boost to grey trafficking in the country in which illegal telephone exchanges are used.

According to a Pakistan Telecommunication Authority (PTA) official, over the past one and a half years the country witnessed 75 per cent increase in grey trafficking which he mainly attributed to setting up of the controversial International Clearing House (ICH) by the PPP-led government in October 2012.

The PML-N government has done little to reverse the trend.

Although the PTA official was non-committal about the precise amount of loss the national exchequer had suffered because of the ICH, Dr Ramesh Kumar Vankwani of the PML-N put the figure at over $1 billion per year.

Dr Vankwani had on Thursday moved in the National Assembly a notice drawing attention of Minister of State for Information Technology Anusha Rehman Khan to the matter.

“One can put the blame for putting in place the ICH on the PPP-led government, but we have been running the government for 10 months and unfortunately are not able to curb grey trafficking which continues to afflict the telecommunication sector,” Dr Vankwani said while talking to Dawn.

The PTA official said that former IT secretary Farooq Awan came up with the idea of ICH and then implemented the highly contentious decision as chairman of the PTA.

Under the ICH, the entire incoming telephonic traffic was put at the disposal of the Pakistan Telecommunication Corporation Limited (PTCL). All the 14 long distance and international (LDI) licence-holding operators formed a consortium which through an agreement allowed the PTCL to manage the incoming telephone traffic and, in return, receive their proportionate share in the income.

According to Dr Vankwani, after the setting up of ICH in October 2012, the volume of recorded international incoming calls declined to less than one billion minutes per month within a few months.

The PTA official confirmed the figures of the PML-N lawmaker. The rate of incoming calls was increased by the previous PTA administration from 6.5 cents to 8.8 cents per minute, which also contributed to the swelling of grey traffic business which offered cheaper call rates to overseas Pakistanis.

“Throughout last year, incoming telephone calls only once crossed 400 minutes per month, which clearly suggested the degree of losses the government has suffered,” Dr Vankwani remarked, adding that with the increasing use of internet applications such as Skype and Viber, one could understand some decline in the use of telephone. But this sudden and sharp fall needed to be investigated at proper forum.

Dr Vankwani said the loss of one billion minutes to grey trafficking meant over $1bn loss to the national exchequer.

Grey traffic is defined as use of illegal telephone exchanges for making international calls, bypassing legal routes and exchanges. These illegal exchanges include VOIP (voice-over internet protocol) using a computer, GSM (global system for mobile) gateways, WLL (wireless local loop) phones or mobile SIMs.

This traffic may then be distributed onwards using WLL and mobile numbers. Grey routes are arrangements that fall outside the regular course of business among licensed telecom companies in each country.

In a telephonic conversation with Dawn, Minister of State for IT Anusha Rehman admitted that it was a faulty decision which led to the formation of ICH in agreement with LDI operators, but said some in the PTA argued that the amount of government receivables had increased over the years and, therefore, the arrangement should continue.

“I have asked for a comprehensive exercise by involving the finance ministry and the Federal Board of Revenue to determine the exact financial impact of the ICH. The future of ICH will be decided after receiving the findings from them,” she said.

Another PTA official told Dawn that the organisation had suggested to the IT ministry to impose a levy of 1.35 cents per minute and let the LDI licence holders compete among themselves. A summary to this effect is with the minister’s office.

The official alleged that people with vested interests were using their connections in the corridors of power to keep the present ICH arrangement in place, but a final decision would be taken by the government.

The official recalled that the Competition Commission of Pakistan (CCP) had ruled against the ICH, describing the arrangement as cartelisation. It will be a tough call for the government if it decides to carry on with the ICH.

Speaking on the issue of grey trafficking in the National Assembly last week, former IT minister Awais Leghari had alleged that powerful lobbies were carrying out this illegal business through gateways set up in Karachi. He said the only and best possible way to deal with grey traffickers was to significantly cut down on access to promotion charges which the government received.

“Grey trafficking will die its own death if cheaper calls are made available to customers,” said Mr Leghari, who was minister in the Musharraf government but joined the PML-N after winning the election as an independent candidate.

The PTA official agreed with Mr Leghari’s suggestion and said that to avoid government tax LDI licence holders themselves were involved in grey trafficking.