Consortium of Telecom companies to curb Grey Traffic (international Calls):
LAHORE (June 20, 2011): In a significant development which may ultimately bring international calling rates down for Pakistanis while overseas callers may have to pay more, the telecom industry and most of the Long Distance International (LDI) operators have agreed to form a consortium to establish an International Clearing House (ICH) to get rid of illegal grey traffic.
In this connection, LDI operators have agreed to surrender their rights to terminateinternational incoming traffic at their ends and instead all incoming traffic will be terminated at a single exchange/gateway at least for two years.
Gray traffic is a parallel arrangement and operators do not need a licence, LDI or a huge set up. They just need to have a room equipped with some equipment and the international carrier who is willing to give you business on much reduced rates as compared to other LDIs.
The gray traffic operators bypass the legally established telecom network in order to avoid due taxes and to gain financial advantage by offering very low rate and wrongfully deprive legitimate LDI operators of lawful revenue. Once these traffickers are eliminated, the rates for overseas callers may go up.
As far as rates are concerned they will definitely improve as this time round almost the entire industry is going to strike a deal with the international carriers as a single entity so the rates are expected to a witness downward trend.
The telecom companies will also make profits as earlier they were indulging in a cutthroat competition and many LDI operators are at the brink of being declared defaulters.
Most of the LDI operators are of the view that arrangements had been made with complete agreement and the purpose of this step was definitely to wipe out the parallel arrangements of bringing the international call termination into Pakistan.
They said this step would help the government to improve foreign exchange reserves, besides helping the LDI operators to manage their business without having a fear of the direct threat from gray traffic. “In such a situation the rates can be managed to a level acceptable to both consumers and LDI operators to survive,” they said.
They said if exploited to its optimum level, it could even pave the way not only to get rid of gray traffic, but also enable the country not to take foreign aid.
“The arrangements can improve the overall situation of revenue generation, besides allowing LDI operators to get legitimate share of profit as presently many operators are just trying to survive,” they added.
They said this is a big achievement as LDI operators of the country have finally agreed at least for market sharing formula and it would help both LDI operators and consumers to have a sigh of relief if everything goes in right direction.
After going through hectic consultative sessions, the telecom industry has finally came to the conclusion that the only solution left to counter the bigger than life size menace of illegal call termination is to join hands to form a consortium.
As per the International Clearing House (ICH), all international calls landing into Pakistan will converge at a single technical exchange/gateway, as against being handled by 14 different licensees. The idea is that if all calls are routed through a solitary exchange point, it will be far easier to detect illegal gray traffic to a maximum possible level though not possible to bring it down to zero level.
A draft agreement named as International Clearing House Agreement (ICHA) has been forwarded to the LDI operators in order to determine the terms and conditions under which the international clearing house framework arrangements will operate. This agreement is going to be effective from August 1 and will remain intact at least for two years.
Legal representatives of some LDI operators will have a joint meeting to devise a strategy to ward off against any possible adverse actions by competition authorities. It is also agreed to engage one tax consultant each who will make recommendations to minimize the tax burden and avoid possibilities of double taxation on the LDI operators.
It was also jointly agreed that the consortium partners will devise a tiered credit management mechanism whereby the international operators will be classified into Tier-1, Tier 2 and Tier 3 operators based on their credit history and business profile. The LDI operators agreed that based on the credit limits defined for international operators, the consortium partners will share the bad debt.