SIM boxing in Ghana – The unanswered question.

For many years, people receive international calls which voice quality is very poor. In between the calls, there are also a lot of delays which makes the flow of the conversations boring and disjointed.  There is also another phenomenon which is that, the number calling appears as a local call instead of the international format that is well known to all.

All these happen because of SIM box fraud which has become a major funds sucker to many telecom companies and governments alike all over the world including Ghana, where the crime has assumed an alarming proportion.

For instance, there are reports indicating that mobile operators and governments are losing up to US$150 million US dollars every year to fraudsters who illegally terminate international calls as local calls. This is said to be the new headache that mobile operators are now facing, something that might drag the mobile industry’s developments in Africa.

SIM Box defined

SIM Box fraud is a system by which some unscrupulous persons re-route international calls coming to Ghana through some boxes in which they have inserted local SIM cards, and they terminate the calls using those SIM cards, to make the call appear as a local call.

It can also be described as the unauthorized use of GSM gateways used to bypass the international gateway switch and associated termination fees, which directly results in revenue losses and other problems for mobile operators.

The drain

Many organisations have been in hiding and all they do is to buy thousands of SIM cards from telecom companies. Through the use of their SIM boxes, they are able to offer free or very low cost calls to mobile numbers.

The SIM cards are then used to channel national or international calls away from mobile network operators which are deliver as local calls and this costs operators huge revenues.

In 2009 alone, SIM box fraud denied the state an estimated US$5.8 million in taxes per month and in Kenya, it was reported that the government and operators lose 12 to 15 million minutes worth of revenue to this SIM box fraud. This is approximately US$440,000 per month. In Ghana, the situation is not any better.

The fraudsters have the luxury of offering as low as 0.037 US cents per minute, to terminate calls to our local networks. This they are able to do because they have not paid for licenses; invested in the network infrastructure; and also, they do not pay taxes.

The fraudsters need a SIM box that can store up to about 800 SIM cards, target networks offering cheapest rates and free offers, and a small office in town, to offer these services.

In the case of Ghana, most of the arrests made reveal the use of Airtel SIM cards more than any other network.

The reason is because, Airtel seem to offer the real cheapest call tariffs in the country with a lot of freebies for their customers, and hence an easy target for the fraudsters who seem to be gaining grounds in the country.

Instead of acquiring new equipment to improve their networks, telcos are forced to incur unnecessary expenses in buying software, software licenses, and basically, purchasing a whole application to detect and block these illegal call terminations.

In other instances, they are also forced to employ additional dedicated staff to deal with this malpractice.

In blocking SIM cards detected carrying out the scam is also said to be expensive and it is an additional cost to the players. The cost of producing one SIM card is also quite high and, therefore if a SIM card is not used in generating revenue for the business, then the company incurs a lot of loses.

Government therefore passed the Electronic Communication Amendment Act, Act 786, 2009, which fixed the tariff for inbound international call at 19 cents (33Gp) per minutes, out of which 6 cents is for government and 13 cents goes to the telecom operators.

Some telcos have argued that the 19 cents fixed rate is rather encouraging SIM Box fraud because it is high, compared to the lowest flat local call tariff, which is currently 8.4Gp, so the fraudsters are able to make lots of money even if they charge less than 19 cents and terminate the call at only 8.4Gp.

The telcos therefore argue that reducing international call rates to the level of domestic call rates will automatically drive out SIM box fraudsters like it has in other countries like Nigeria.

But Mr. Peprah said while 19 cents may be an attraction for SIM box fraudsters, the NCA cannot reduce international call rates to the level of domestic call rates just because of the bad guys, adding that the good guys like the telcos in Ghana are now getting an assured 13 cents per minute of international call, and government is also getting an assured 6 cents for national development.

“Through dynamic regulation the country’s telecom industry has grown and become very attractive and huge international traffic is coming in everyday and the country has the right to benefit from that – we are not going to sacrifice that benefit just because some bad guys are stealing from us,” he said.

He noted that since the implementation of the fixed rate, both government and the telcos have raked in millions of dollars, which would have been lost to SIM Box fraudsters, and to persons who also route calls through VOIP (voice over internet protocol) and pay only about 5 cents to telecom operators in Ghana.

“Last year alone we raised almost US$60 million for the state through the fixed rate, and that is why we are firm on the demand for all telcos to keep a record of registered SIM cards so we can trace fraudsters, otherwise the telcos would have to pay the 6 cents if we discover their SIMs in SIM boxes,” he said.

He said it is difficult meeting World Bank requirements to get a loan of US$60 million, so that was good money for Ghana, which the country would not have to pay back at all, much more with interest.

Mr. Peprah said the latest trends indicate the SIM box fraud is going down in Ghana, and the fraudsters are getting busted and some are leaving the shores of the country because the NCA and the telcos have put systems in place to track and flush them out.

“At the end of the day there will still be SIM boxing but we are working to reduce it to the barest minimum so country Ghana can benefit,” he said.