M Aslam Hayat

The recent incident in Peshawar has shocked and shaken everyone in Pakistan and we all share a common responsibility to take all the necessary steps to ensure that this does not happen again ever. The Peshawar incident exposes many vulnerabilities in our systems but unfortunately the only area being focused and debated in the media is the sale of unverified SIMs.

Let me clarify at the outset, there is no such thing as unverified SIMs. Every mobile operator has record of SIM sales from its warehouse up to the retail level, where subscriptions are acquired. Against every SIM sold, mobile operators have necessary data as per the regulatory requirement. However this does not mean that the system is foolproof, there is possibility that at the retail-end, some of the sellers may violate standard operating procedures (SOPs) for small gains without the support and knowledge of the mobile operators. The big question is why somebody would do this and why there is demand for SIMs on fake subscriptions.

Without fear of contradiction, I can say with confidence that no franchisee or a retailer will ever knowingly sell a SIM to a terrorist or a person having intent to commit a heinous crime. The dominant buyer of bulk SIMs is the group of people involved in bringing grey international incoming calls. These grey traffickers are willing to pay very high prices, (reportedly up to Rs. 5000 per SIM), for these SIMs which turns out to be a substantially motivating factor for some in the retail channels to ignore the company’s laid sales process. Many of such grey international gateways have been busted by PTA and law enforcement agencies (LEAs) and it was revealed that those bulk SIMs were bought and top-up was done from selected sources. LEAs have plethora of cases to support this fact.

This grey traffic has increased exponentially since 2012, when International Clearing House (ICH) was formed on the directive of the then Government and Accounting Settlement Rate (ASR) was raised very high. Through an official estimate, it has been observed that grey traffic has increased by 75% since the ICH formation. Rough industry estimates place it at 400 million minutes per month. Now this is a staggering increase which in turns clearly shows that the demand for illegal exchanges must also have gone up over this period thus increasing the demand for SIMs because over 90% of these grey minutes are terminated over local mobile networks.

As long as demand for SIM with fake subscription will remain in place, people will engineer and exploit loopholes in any SIM verification system. Such reservations were shared with the governments from the onset at various stages when various verifications systems were being put in place, be it the 668 process to 789 process in 2009 and now the Biometric Verification System (BVS). However the decision to impose these systems was still implemented by the government and followed by the operators.  However time has again and again validated these reservations.   The publication of the voter’s lists for 2013 elections made the 789 process vulnerable and now the Peshawar incident has shown that even BVS can also be manipulated if there is a vested interest.

So far mobile operators have spent over Rs. 24 billion over the years on these mandatory verification requirements. The Peshawar incident has mounted so much pressure on the government that they are again planning to come up with a directive of re-verifying all existing valid industry subscriber base through BVS in a very limited time frame. The time frame is very challenging and is expected to cause a huge inconvenience to over 100 million subscribers in Pakistan. As previously the mobile industry will once again comply with these directives at its own expense, spending billions of rupees in capital costs, losing billions of rupees in revenue and possibly a large customer base acquired through sheer hard work and after following all the prevailing processes over time and even giving subsidy on each subscription to our customer.

 A targeted approach would have yielded better and desired results within realistic timelines without causing unnecessary inconvenience to over 100 million subscriptions. We as an industry are very cognizant of how we serve our customers and would like to cause as less a hardship to them as possible. Also with these new possible directives the specter of the already heavily taxed industry losing any further investments seems all too real.

The fact that over the years new SIMs verification processes have been introduced by various governments time and again despite the industry’s reservations just gives cause to the belief that six to eight months down the road we will yet once again see another new verification process or exercise emerging. The mobile industry will yet once again find itself at another so called defining moment regarding the SIMs verification issue.   Ideally the solution should come from the mobile operators as they know fully the complexity of their business better than anyone else.

Through this article, I am focusing on only one cause of fake subscriptions. Let me predict with confidence that the re-verification of the entire customer base through BVS will not solve the problem we are trying to address, simply because we are not addressing the root cause: As long as there is a demand for bulk SIMs with fake subscriptions the supply will continue unabated.

The Government is very well aware of this problem. Ministry of Information Technology rightly revoked the notorious ICH Policy in June 2014, which was supposed to end the grey traffic or significantly reduce it from 01 August 2014. Unfortunately  a Government owned company and some Long Distance International licensees obtained multiply  stay orders from the court to stop the implementation of this wise policy directive of Ministry of Information Technology. PTA, which was supposed to give new Accounting Settlement Rate (ASR) for post 01 August period, has been stopped by those court orders to perform its statutory duty.

Grey international incoming traffic is a big headache and is causing losses to all the mobile operators.  The mobile operators are aggressively trying to block those SIMs which are generating the grey traffic but new SIMs keeps on cropping up. Once we eliminate the incentive to use SIMs on fake subscriptions, then it makes sense to clean the existing subscription base, otherwise we will be just repeating ourselves over and over again like we have done so far with the 668, 789and BVS processes.  It is also unfair to penalize the mobile industry for something that it is not guilty of. The government owned company and some LDI operators are reaping the benefits of this grey traffic and over 100 million subscribers and the mobile industry will pay the price for it.

Bold and immediate action needs to be taken with these culprits in order to effectively end ICH, grey traffic and subsequently the demand for SIMs with fake subscriptions. The government is definitely in a position to tackle this headlong. Absence of SIMs with fake subscriptions in the market means no SIM for terrorist and criminal activities.

Towards the end, we all must acknowledge that these are defining moments and the government needs to think beyond mobile network shutdown, crackdown on mobile subscriptions and restriction on double-sawaree, if it really wants to fight terrorism. Focus should be eliminating the terrorism, not the business environment or causing unnecessary hardship to legitimate users of telecommunication. As mobile operators, we have always known our responsibility in this war against terrorism and will continue supporting the government in winning this war.

The writer is Chief Corporate Affairs Officer, Telenor Pakistan