ESTIMATION OF GREY TRAFFIC AND RATIONALIZATION OF MEASURES TO CURB ILLEGAL INTERNATIONAL

Abstract

Pakistan, like the rest of the developing countries, stands strong as a potential beneficiary from the worldwide ICT related businesses provided a liberal Internet policy is adopted at all levels. When PTCL was a monopoly in telecommunications in Pakistan and in came the cellular operators, positive things happened for the consumers – services improved, rates declined and availability got almost ubiquitous. With the advancement in technology and improvement in service quality, the expenses increased and necessity of enhancing the Approved Settlement rates was felt and done accordingly. Due to this reason many licensed as well as unlicensed operators started to indulge into illegal termination and origination to save money, and hence succeeded in avoiding payments of Access Promotion Contribution to the Government. The licensed Long Distance International operators requested the PTA to go after the grey traffic operators and invested in equipment that claims to detect and mitigate VOIP traffic in real time. This equipment has been on the international exit points in Pakistan. Suspected IP traffic is detected and investigated to see if it is grey. So far, the business-saving and law-enforcing arrangements by the LDIs and PTA appear to be logical and permissible. No one likes grey operators – they steal legal traffic from licensed players, do not pay taxes and do not help tracing criminals. This thesis gives an overview of the technologies used by the grey operators to run their business. An effort is made to bring into notice the amount of grey traffic entering in Pakistan; PTA’s current efforts are also reviewed with reference to the management issues in regard to control of this illegal practice. The menace of Grey Telephony is negligible in developed countries and usually very prominent showing almost similar trend in developing countries like Bangladesh and India in addition to Pakistan. The study starts with a review of the Telecom Sector and International Traffic Termination and Origination in Pakistan. The concept of Grey Traffic and Grey Telephony techniques is introduced next. The most feasible technology i.e. Voice over Internet Protocol, adopted by the grey operators is identified and a technical overview of this technology is given. Moreover review and correlation of the Approved Settlement rates and the International Traffic entering Pakistan in the span 2005 to 2009 is carried out. The approach adopted for estimation of Grey Traffic is partly based upon the facts and figures collected from relevant agencies but weight age has been given to personal research firstly based on the analysis of survey carried out in this context. The analysis undergoes necessary observations, tests, and calculations inferences to arrive at realistic and logical outcomes. Secondly the data collected from relevant agencies has also been analyzed on different modes of interpretation as part of this research. Each variable including ASR (Approved Settlement Rates), APC for LL (Access Promotion Contribution for Local Loop), APC for USF (Access Promotion Contribution for Universal Service Fund), MTR (Mobile Termination Rate) and LDI share (Long Distance International Share), contributing towards international traffic has been graphically analyzed on fairly long span of time. The theoretical derivation arrived at, in the study has also been augmented through trend analysis. The study brought out very interesting findings which have been appropriately discussed where applicable in the documentation. Few of these observations include that legal traffic is inversely proportional to APC, meaning that with the increasing APC there is a proportionate decline in the legal traffic. Similarly with the decreasing trend of APC, the legal traffic proportionately increases. This suggests that APC needs to be optimized in such a way that without sacrificing the need of purpose for which it is generated, a limit be placed on it such that does not encourage grey traffic. Government of Pakistan has been seeing this illegal practice with concern and so do the other stakeholders who believe in fairness of doing business. The subject has been discussed and an account of measures taken in this regard has been included in the last chapter. Finally certain concrete recommendations have been made. A three part approach has been attempted to formulate these recommendations. Some are of policy and regulatory nature, while others are administrative steps or advisory matters.