KARACHI: Illegal telephone exchanges are causing billions of rupees revenue losses annually to the government and denting the share of licensed Long Distance International (LDI) operators.

A spokesman of the Pakistan Telecommunication Authority (PTA) informed Dawn on Wed­­­­­nesday that the authority in a bid to curb grey trafficking conducted 14 raids in Multan, Bahawalpur, Rawal­pindi and Lahore earlier this week and recovered illegal SIM cards and equipment.

Estimates suggest the government incurs over Rs3bn losses due to grey traffic. The spokesman said that “illegal routes are used to make calls. It’s no different from smuggling.”

“These illegal exchanges make money by bypassing government taxes based on the number of minutes. The caller pays the same amount for the call. Traffic is high during Eid holidays and these exchanges are most active then,” the spokesman said.

The PTA defines grey traffic as “the use of illegal gateway exchanges to bypass the legal gateways and terminate/originate international traffic, through VoIP gateways, GSM gateways, WLL phones, mobile SIMs or other related equipment so as to avoid applicable taxes and/or regulatory fee”.

According to Section 31 of the Pakistan Telecommuni­cation Re-organisation Act (1996), operation of Telecom­munication System without obtaining a valid licence from the PTA is a punishable offence and empowers the court of law to impose a fine of up to Rs10 million or imprisonment of three years.

Besides this, Section 32 of the Act authorises PTA to obtain a search warrant from the court of law to take action against illegal operators.

Despite a passage of almost two decades when significant changes have taken place in terms of technology and its usage, the authority has yet to update the Act.

Published in Dawn, December 11th, 2014