IMANI Alert: NCA's dubious, exploitative policies stifle telecoms growth but…

Ghana has been at the vanguard of Africa's ICT growth for the past two decades. As remarkable as that feat may be, all the gains from the rapid growth of this sector and its contribution not only to the nations GDP, but also to the growth and stability of the nation stands to be undermined considerably by poor policy decision-making.

A litany of successive absurd and completely baffling policy decisions with regard to the evolution of technology, especially with relation to the ability of service providers to organically grow has the potential to derail any future viability of technology infrastructure in this country. The organization that seems to be leading the charge towards an implosion of this industry is the regulator itself, the National Communications Authority (NCA)

While in every jurisdiction, the major task of a regulator is to ensure the presence of good standards enforcement, the defence of consumers and the institution of sound policy guidelines to improve the quality of service and infrastructure in any sector, the NCA on the other hand has been only erecting barriers to the consummation of technology in cheap, efficient and equitable distribution in the country through very badly thought out policies.

This alert focuses on aspects of the telecommunication industry where the NCA's locus of operations is not only unnecessarily burdening telcos, but being deficient in addressing market trends and maximizing their potential to the Ghanaian consumer. It is important that the NCA does not become a conduit for exploiting the market for taxable revenue at the expense of the growth and development of the whole sector.

SIM Box Fraud and the Electronic Communications Act, ACT 786

A very clear example of such anti-progressive directives initiated by the Authority is in its enforcement of the Electronic Communications (Amendment) Act, Act 786. The NCA recently imposed penalties of GHC 14 million on mobile network operator MTN basically for not charging a minimum price of $0.19 on incoming calls from ECOWAS nations. Under the law, the networks are to give $0.06 to the government for each incoming call, which the operator in question obliged to, fully rendering its obligation in that regard. It is baffling therefore that after this obligation was met, the NCA proceeded to punish MTN for ensuring that consumers had better rates in calling ECOWAS countries at charges below the $0.19, which presented a discretionary loss to MTN as a company and NOT the Government of Ghana.

The first question we should be asking is why there is an insistence on the magic figure of $0.19 as the minimum price for incoming calls while the government takes 32% of that figure. Why is the NCA imposing a minimum price on a highly competitive product and charging penalties for those who can be flexible in their pricing? While it is anti-competitive even from a business perspective, it does not take into consideration evolution in technology as well as changing trends in the landscape of mobile telecom operations.

Already, most customers of telco operators are relying less on voice calls and more on other ways of communication using data, and in order that operators stay economically relevant as an option, they would need to be able to be much more flexible in pricing offerings in order to stay afloat in a saturated market. The anti-competitive stance by NCA, and its insistence on addressing this aspect of the law to the letter is then a testimony for the success of the purveyors of SIM BOX Fraud.

Given that telcos like MTN cannot go below the $0.19 surcharge, even when they are discharging statutory obligations of paying $0.06, it shouldn't be a surprise that, just like smuggling, others are exploiting this loophole to make money for themselves at the expense of the state. It is disheartening therefore that instead of solving this problem from the root, i.e. re-examining the law and its atrocious and draconian punitive stance, the NCA rather believes that the best way to tackle this issue is to introduce another intervention in the service structure, using the Interconnect Clearing House.

The NCA should be seen therefore as the biggest culprit in allowing SIM BOX FRAUD by allowing such an obnoxious law to still persist, and still even more confusingly, insist on penalties on such a law. While the government will keep on haemorrhaging potential revenue, the glaring problem still persists. The NCA has not bothered to even offer an amendment to the law that will call for a far better equitable remedy, and it has neither bothered to bring stakeholders together to think through a solution for the root cause of the problem.

Poor policy direction towards 4G Licensing and LTE EVOLUTION

Already, the NCA's dogged stance and policy on service evolution licensing means that they have already truncated the ability of existing Telcos to leverage their massive infrastructure base across the country in providing 4G and Long Term Evolution (LTE) service offerings. It is akin to saying that because you own a fleet of Taxis you cannot own a fleet of buses. This means that the nation has already been robbed of new revenue streams that could have accrued from taxes of data services by these companies, whose clients already number millions and have an existing client pool to tap into.

The argument proffered by the NCA in defence of the awards of the 4G licenses leave much to be desired in terms of the flimsy arguments that the current 3G operators did not fulfil their terms and obligations, hence were not eligible for the award of 4G licenses. MTN for example invested and successfully met all required conditions for a license, and yet with their nationally ubiquitous infrastructure and most favourable bid positioning in terms of value, were inexplicably refused a license. In almost all comparable jurisdictions, 4G licenses are allocated to those who can show value as well as a wide reach potential. For now, Ghanaians might have to wait for years and stay behind the internet distribution curve just because of the reluctance of the NCA to do the right thing and extend the 4G capabilities with the established telcos, at a time when almost all mobile devices produced since 2014 are all 4G enabled.

Poor policy framework and an inquisitor type administration model will not be the solution to Ghana's growth. Instead of padding up interventions in the communications industry, the NCA will do well to ensure that policies already put in place address issues related to the growth and resilience of the industry, instead of finding ways to police the system and trump up offenses just to justify perceptions of exploitative tendencies by telcos.

If it is anything to go by, it is the NCA that is being manipulative and exploitative by seeking to use these loopholes in the law that directly affect the telcos as a reason to install a monopoly in the interconnect clearing house that seeks to only duplicate already existing functionality in the existing telcos. Why should the telcos be obliged to create peer to peer interconnection systems only for them to strengthen such investments and have an alien policing system imposed on them?

OF INTERCONNECT CLEARING HOUSES AND OTHER INTERVENTIONS IN TELECOM OPERATIONS

It seems the NCA is not really very conversant with the versatility and plethora of telecommunication products and services. Shoring up all the risks of quality of service issues under the ambit of ONLY ONE CLEARING HOUSE, when most of the telcos have already invested heavily in their own interconnect switching is risky. Not only does it expose the national communication infrastructure in terms of voice to one monolithic destination, it also does not allow for any redundancy whatsoever.

Secondly, this interconnect clearing house has a very shady mandate, which seems to cover everything from SIM card registration, billing, and a whole set of invasive activity that is definitely bound to be abused by any ambitious or paranoid political power either to spy on private activity or to illegally monitor and police individuals. There are concerns therefore that the loose setup of this clearing house will end up interfering in the already existing communication protocols, and open systems up to an abuse by endangering privacy of communications, a mandated inalienable right of every citizen of the country.

It is highly imprudent that a company that has not been tried and tested anywhere in this world and with very little knowledge of the ever-evolving service profile of telco operations, especially in the mainstream and Value Added Service (VAS) space is allowed to wade into these murky waters without a clear definition and limit of what their scope of interference will be.  Just like the perception that telcos make lots of money and under-declare profits and must therefore be heavily supervised, this alarming intervention by the NCA into what should purely be the purview of a collaboration between telcos on standards, rules of engagement, due diligence and clear appraisal of functionality of designated is not only dangerous, but spells doom for an industry that is already so competitive and low margin driven.

What's more, if the telcos have already invested in peer-to-peer systems that already work according to specifications mutually agreed upon, why is there a need to duplicate that function and punish the telcos with the additional cost of running those clearing services on the excuse that the NCA cannot seem to manage it? Would it not be rather prudent on the side of the NCA to spend time and resources, which would be comparatively much less in getting to understand fully the existing systems? Is that the justification for putting the whole infrastructure at risk?

That perceived revenue leakages should be the raison d'etre for a clearing house with monopolistic tendencies and no clear guidelines that could rather encourage the outsourcing of such activity on a voluntary basis by the telcos where they could set their own standards for proper due diligence and essential security protocols is very naïve both in thought and eventually in its execution.

Even the mode of bidding for these companies to establish this clearing house is based more on a condescending approach and a lack of trust and integrity more than anything else. Why should there be ONLY ONE CLEARING HOUSE as a MONOPOLY? As the scenario has played out in the provision of 4G licenses, by what time can the clearing house fully deploy its services to ensure accurate interswitching amongst the networks? Note that, of the 4G licensees who were chosen above those with existing infrastructure, only one has been able to deploy, and even its deployment has been truncated with a lot of quality of service issues. Should that be the benchmark for NCA's quality of decision-making, then some of the nation's most vibrant sectors in what is a gloomy economy could be snuffed out just by the naïve attitudes, idiosyncrasies and perceptions of a regulator?

There are no relevant laws covering what the ambit and locus of what the clearing house operators are mandated to operate, and the monopoly that is sought to be operated only smacks of cronyism by a few people with inside knowledge who will want to exploit a grey side of the industry for their own profit.

In the face of recent cyber terrorist activity in the country, evidenced clearly by the defacing of important facilities such as the websites of most ministries, including the main government of Ghana portal, it is important that the NCA concentrate on how to secure communications and ensure that operational aspects of service delivery are rather strengthened instead of weakened by the imposition of dubious systems with no clear operational guidelines.

The revenue leakages and exploits by the fraudsters are a direct result of poor laws and policy which does not have characteristics of being forward looking in the first place. The first step is to have a second look at the Electronic Communications Amendment Act, Act 786, which will be far cheaper, economic and prudent to do than the proposed full-scale machinery. Sometimes, the laws need to be changed, not the system.

Instead of all these cosmetic additions and conduits in already relatively well setup systems, the NCA should as a matter of course begin to examine its own mandate and laws and clean up obnoxious ambiguities where it wants to be the judge and a big player in the industry when it is supposed to focus on creating a progressive and vibrant environment for one of the biggest catalyst of growth for Ghana.

The truth is simple: No task force or regulatory authority can successfully supervise poor laws and directives in a vibrant market space. This will only lead to inefficiencies and loopholes where these poor laws will only spawn more committees, task forces and consequent poorer directives at the expense of real sectoral growth.