Cellular industry under attack

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By Zafar Usmani

Each operator in the cellular industry has provided equipment, under the terms of the licence, costing between $5-6 million to enable the intelligence agencies to monitor calls, messages and track their movements. This adds up to $30 to $36 million. Furthermore, cellular operators de-activated all the SIMs in the market and introduced verification-based activation through 789 to ensure their verification

PAKISTANS CELLULAR industry has helped in bringing about an ICT revolution, created jobs, created business opportunities over the last 15 years. Today, we have more than 123 million subscribers and the cost of calling and messaging has actually declined over the years. The industry has invested over $11 billion, contributes over Rs120 billion in taxes every year and has created jobs directly and indirectly for over a million people. It has made business easy, lowered the cost of doing business and provided a vehicle for large-scale self-employment in urban and rural areas.

The cellular industry has a total of around 2000 franchises – each of these has invested over six billion rupees – over 200,000 retailers and customer service centers all across the country, employing over 600,000 people. The main source of income for these franchisees and retailers comes from the sale of SIMs and from providing existing customers with services to select preferred networks through the MNP process.

The cellular industry, the franchise owners, the retailers, the employees of the cellular operators franchises and retailers and the three million people whose livelihoods depend on cellular products, are unhappy with the approach taken by Pakistan Telecommunication Authority (PTA), at the behest of the Ministry of Interior, to fix the law and order situation.

The PTA has banned sales of SIMs from all outlets to consumers, be it retailers, franchised offices and cellular operator owned customer services centers, effective from November 30, 2012. The PTA has also ordered that all SIMs in the market should be withdrawn and has banned Mobile Number Portability (MNP) with immediate effect.

MNP was put in place in 2007 with the help of all five operators as part of de-regulation of the telecom sector and under the Telecom Policy of 2004. It was the first MNP platform launched in this region and has been presented as a model for many countries.

Customers will no longer be allowed to port out to any other network and will no longer enjoy the freedom to keep their number and switch to any network of their choice.

MNP also supports national security therefore no one can dodge the LEAs by instant change of cellular networks. Moreover, the basic ID of the customer remains the same and can be tracked whether one ports in or out of any cellular network, and the PTA understands this but did not push back.

The new process prescribed by PTA through which cellular operators will sell SIMs to the people of Pakistan is as follows:

Companies will take orders from potential customers, get their CNIC and address. They will have the SIM delivered to customers via TCS. The customers will have to provide utility bills, rental agreements and ownership documents as proof of address. This makes a majority of women ineligible for a cellular phone connection. Further, the customer has to receive the SIM himself/herself.

In a recent talk show in which I participated, the honorable chairman PTA said that he too, was not in favour of the ban on SIM sale but he reluctantly issued written directives banning MNP and SIM sales. He mentioned that the directive was triggered by the fact that the police had recently caught one of the operators with a pre-active SIM in Sargodha and justified his actions claiming that operators were only revenue focused, not interested in the security situation of the country.

The PTAs directive is an unusual document. In my years of service in telecom, I have seen written policy directives from PTA invariably containing the words “This is being issued with the approval of the Competent Authority.” However, this particular directive does not include these words. It is a huge shift in telecom policy, which is the domain of the Ministry of IT and Telecom. The PTA knows this full well as the current chairman was the Secretary IT and Telecom prior to becoming the chairman.

The PTA chairman mentioned that the police had recovered pre-active SIMs from Sargodha. This, if true (pre-active SIMs are never issued by the companies and they can only be activated by following the 789 process), is a blatant violation of the procedure and exposes the people of Pakistan to security threats. The PTA should have made an example of the cellular operator by imposing a punishment to clarify that violation of the laid out policies and procedures will not be tolerated.

Instead, the PTA, at the behest of the Ministry of Interior, punished the entire industry and the people of Pakistan – banning MNP and making it difficult for the youth, the female population and those who are not home-owners to get a cellular connection. Cellular operators are not just concerned with revenue. Consider the various security steps taken by the industry working with the PTA, Ministry of IT and Telecom and Ministry of Interior: Each operator in the cellular industry has provided equipment, under the terms of the license, costing between five and six million dollars to enable the intelligence agencies to monitor calls, messages and track their movement. This adds up to $30 to $36 million. Furthermore, cellular operators de-activated all the SIMs in the market and introduced verification-based activation through 789 to ensure that the SIMS are only activated for citizens who can be verified.

The cellular industry has been under attack since August, immediately after the change of guard in the PTA chairman office. First, there was the closure of all mobile services on chand raat and Eid, followed by closure on first Muharram in Karachi and Quetta, and now the act of banning MNP and SIM sales.

These events lead one to question why the Ministry of IT and Telecom gave policy directions directly to the PTA. I have worked in the telecom industry and I know that it is an upright industry. The same can be said of the PTA. Although I am no longer in telecom, I take pride in the PTA. It is a truly professional organisation.

To reduce security risks, both the PTA and the industry must work together. In an environment where the MOI has a lot to do to improve its own capacity, the PTA needs to push back the MOI to MOIT rather than act as a messenger and take action. The PTA also needs to understand the mechanics and performance of each component of the distribution channel to find the least damaging solution.

The industry needs to re-think its distribution programme. We all know that franchises and customer service centers function as part of the cellular companies. They are monitored in real time. The retailer part is the one that needs to be monitored. An analysis of the SIM sales through retailers would reveal that 20 per cent of the retailers account for between 80 to 85 per cent of new connections. As such, the industry should voluntarily offer to limit the sale of SIMs through franchises, customer service centers and about 20 retailers tied to a franchise. This will reduce the number of SIM-selling retailers from over 200,000 to 40,000. The overall number of SIM selling retailers can be further reduced by 25 to 30 per cent if the franchised retailers were to sell SIMs of all five operators. This would enable the operators to monitor the franchised retailers in the same way as they do the franchises and customer service centers.

The MOIT has been without a minister since 2008. It is time the government appoints someone who has the courage to keep the Ministry of Interior at bay, and who will work with the industry to solve both the industry and security problems. Further, the industry must adhere to its licensing obligations, display a high level of integrity in implementing the policies and procedures as set by the regulatory body and in the matters of consumer rights, network services, customer services and billing its customers.

The writer is former COO, Zong; former SEVP, PTCL; former CEO, ExxonMobil, Pakistan, and former Member Board of Directors PTCL.


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