Telecom Fraud

Telecommunication is the biggest industry in Afghanistan; creating billions of dollars for the economy and millions in taxation benefit the government. However the conduct of the industry and the relationship between ATRA, the regulatory body and GSM companies haven’t been scrutinized. One of the things I have noticed lately is the revenue from international calls. Telephone companies in different countries use a variety of international telecoms routes to send traffic to each other. These can be legal routes or other arrangements the industry calls grey routes, a euphemisms.

Grey routes are arrangements that fall outside the regular course of business between the licensed telecoms companies in each country. The grey part of the route is usually at the far end where the call is terminated. Up to that point, there are normal arrangements to deliver the call from the subscriber to the sending carrier and between the sending carrier and the satellite or cable operator for the trunk part of the call. The grey-ness arises because at the far end the call is made to appear as if it originates locally, as a domestic call, rather than a more expensive international call.

By terminated the calls through grey channels telecoms and other organizations make millions of dollars. I just did an assessment of how much money is made by GSM operators and other agencies and calculated how much is therefore lost in taxes. According to CIA, world factbook, there are 15 million cell operators in Afghanistan. Data on the volume of international calls terminated in Afghanistan is unavailable. Instead I used data available from similar least developed countries (LDC) taking into consideration the volume of diaspora and the heavy presence of international community. I then multiplied that figure with the 15 million users estimated by various sources, but deducting 13 percent which is the normal rate for dual simcard ownership in other LDCs. My calculation estimates that the government is losing 17.5 million every month in revenue due to fraudulent termination of international calls coming into Afghanistan.

The situation where international calls are being terminated on mobile phones as local cell phone numbers is a fraud.

ATRA, the communications regulator, should ensure a uniform tariff of $0.19 per minute on all in-bound international calls. This would safeguard government's revenue earnings of about $210 million a year from in-bound international calls.

International calls to Afghanistan usually terminate on the receiver's phone as either 'Private Number', 'Unknown' or '000000', but lately some international calls terminate with local cell phone numbers, as if they are local calls.

the technology for terminating international calls is real simple and I know a few of the “operators”. All needed is a small satellite dish on the roof and a little capacity on a transponder, a company can become a small-scale international carrier. A device GSM gateway is needed to hack into mobile networks and route international calls to local mobile or landline numbers within the same network the call was to terminate, then re-route the call from that local number to the number the international call was originally intended for.

the telcos and whoever is in the business make it look like the call originated and terminated within the same network so the payment of international interconnectivity fee is avoided and government loses in terms of taxes on such calls.

I suspect that some of the telecom operators have their own grey routes for terminating international calls or are conniving with external contractors. it would be repetitive to talk about the old song of corruption in Afghan government but the the telecom regulator, ATRA, i suspect is deep in it to the neck. i happen to know that member of ATRA board are regularly greased up by the cash rich GSM operators.

I also suspect some of the telcos are not here to operate a GSM network but terminate international calls. MTN for instance has 7 Afs (14cent) rate for internetwork connection. This is extremely high to any standard; moreover they do little advertising to expand and diversify their products. One can’t help not to wonder why they are here.

i am not saying this to point to obvious corruption in telco but the potential of the industry and how little any player knows about it. the government has little idea and the proof of that is lack of time and money invest ment in regulation; as a result most of the profit is swept away by a few players.

using sms to organise kite festival

using sms to organise kite festival

Trading and market information with cellphone

Market linkages are critical for creating a trading area for small entrepreneurs, shopkeepers, sellers and businesses in Afghanistan. In order to create market linkages sellers need to identify their potential customers. Identifying their customers and reaching them is the daunting challenge for micro entrepreneurs in Afghanistan. Reaching the customer requires marketing and infrastructure. Many micro entrepreneurs even cannot afford to set up a place to sell. Many roadside sellers would be better off if they could set up a delivery system but if they are off the street they lose the limited number of customers. Hundreds of foreign agencies hand out things like a sewing machines and a couple of weeks of training. That woman with the sewing machine will never be able to find customers. My latest preoccupation has been to create a structure for economic activities in the face insecurity, limited mobility and crushing poverty.

I am designing cellphone business, simple enough to be used by low literate Afghans. In this project, we will focus on using cell phones, especially via SMS/MMS, but also voice, to create a market place where sellers can send product information and buyers can search for the lowest price with a reasonable quality. After finding the proper product information with the seller's contact information, buyers and sellers can finish the transaction. iBazar will have a web interface too; having an online credit card to iBazar gateway. The project will pilot in Kabul for three months and expand to six regional cities within a year. the scheme below shows how it works.

I am seeking investors and funders for this project and quite rightly many asks if this thing is actually going to work. The key effect on the will to invest is conditioned by factors namely; market demand conditions and market maturity. It will make it easier to invest in my proposal if demand and market uncertainties are low. There is a benefit for investing in- what I call- iBazar at this stage when market demand condition is almost impossible to determine or will cost as much as setting up the project. Investing in a market of uncertainty and demand indication will enable iBazar to enjoy economies of scale and scope in long run to maintain the profitability. iBazar as an early entrant will be well established in the market.

Demand uncertainty is predominantly exogenous because it is widely assumed that consumers' lack precedence for such a service therefore low confidence in attempting to use it, this is a valid point and has been tackled well in our marketing plan under outcome number three.

When we are talking about whether Afghan market is ready for iBazar we are inevitably asking the question of what is the level of certainty in the mobile market. mobile phones have been around for six years now, some 9 million Afghans are using them. To turn iBazar into a success we target a substantial number who are well informed and aware about features of cellphones and relative benefits; plus our marketing is designed to engage cellphone users which we find the best way to inform.

Demand uncertainty is not going to result in failure for iBazar because that is only certain in monopolistic cellphone market competition; Afghanistan has at least five large telecommunication operators with a very healthy and vibrant competition.

Another factor which reduces iBazar demand uncertainty is price. There is no initial cost for iBazar customer to start participation. They will not buy new devices or medium to connect but use handsets which are multi-functional device and already owned. The cost of use is low too. At the initial stage the eMobilizer (both voice and text) will be toll free to facilitate network diffusion.

Mobile phones are often used not only for work –essential communication tool - but also for entertainment and pleasure… missed call is a good example. It is probably one of the single acts which could have various different meanings. It means how are you? It means let's take a walk or... missed call which is the most basic feature of cellphone have been turned into something very useful and recreational.

perceived playfulness plays a significant role in the developing the intention to use as well as the attitude toward iBazar. iBazar is a simple platform which could be used to mean many different things. Additionally, system quality is inherently relevant to the model, many people will become reluctant to use iBazar if they experience frequent delay in response, frequent disconnection, lack of access, errors and poor security. The recognition of this point means system quality will be given enough attention.

A core question when assessing user attitude formation is why would an Afghan use iBazar? not from commerce or communication viewpoint but merely attitude.

Utilization of mobile products and services holds a far greater meaning than simply the purchasing of mobile handsets, sending message to Afghan Star, calling friends, buying ringing tones, flashy light and etc. Indeed, the consumption of mobile services is to a greater degree seen as a means of self expression, individual identity-formation, creativity, or even art. Using mobile technology, consumers express their identity by personalising the appliance itself through design, size, ringtones, logos and screensavers; as well as the actual use of the various available mobile voice and text products and services.

SMS messaging is by far the most popular mobile data service both domestically and worldwide. In 2008 more than 140 billion SMS messages were sent world-wide, demonstrating the service as an ideal subject in the examination of mobile data consumption meanings. As with asynchronous text-based such as traditional email services, SMS messaging is valued because it allows users time to select, craft and edit the personality they present. Studies have shown that consumers develop new and deeper relationships through the use of SMS messaging.

Overall, the identity-building aspect of mobile use is the most revealing aspect of the technology's effect on consumer behavior. Studies reveal that many view their mobile devices as essential elements of the intimate, personal space, having integrated them as part of their own identity. Through the use of SMS messaging, consumers can construct their own virtual identity, free from the physical restraints of everyday life. Afghans, in general, are industrious people. Working hard to make a better living for their family which is a source of pride and pride is a central value of Afghanness. Afghans are diligent when no monerary reward is expected to help out friends or a common fellow. Diligence is encouraged and laziness is frowned on strictly. Hard work is a quality of good person. Creating an arena for business combines a key element of daily life with working class and entrepreneurial self expression.

Another important issue is when the venture is going to be actually start making money. Enterprises that are resolving strategic market chain bottlenecks are very lucrative. There are great profits to reap at various segments of supplying market chain connection. Certain aspect of market chain connections, such as market information and communication, are hard to monotise. This is perhaps the second biggest contributor, after lack of physical infrastructure, for fragmented markets and loss of millions in Afghanistan.

Should iBazar be charging buyers or/and sellers? The premise is simple: iBazar charge for the right to post product on the eMobiliser and for make asynchronous searches with an off-line cellphone possible. Product posting creates disproportionate amount of value for buyer and sellers in comparison to iBazar. For instance, let's evaluate agribusiness sellers. Farmers are only growing a small quantity of seasonal crops, such as onion or watermelon; enough for the family consumption and to sell at local Bazaar or a whole buyer but it is never large enough to cause major losses if it is not sold. Agriculture in Afghanistan is flactuating; at certain season there is plenty of onion but for almost 10 months the price goes up to 400% higher. At the season the farmer can not sell to enough people who can conserve or consume at large quanitity either at household level or business; due to lack of market connection. The onion farmer can benefit tremendously from iBazar. the basic law of capitalism compel to ask how will iBazar benefit.

It is pivotal quesiton: should iBazar open-platform orchestrators get compensated for adding value to user entreupreners? And would monetary incentive systems spur more value creation or possibly taint the dynamics that have made participatory communities, say ebay, google, paypal and hundreds of others, successful.

This seems like a simple question but to answer I look at successful participatory platforms; specifically at those which like our proposed idea match buyers to the sellers and vice versa such as gumtree, craiglist and many smaller ones. These companies have long been in the business to establish successful ecosystems.

I also want to say there are systems of value other than, or in addition to, money, that are very important to people but espicially Afghans: connecting with other people and markets (espicially for women and other marginalised groups), creating a business identity, not least, garnering other people's attention. iBazar –indeed Afghanistan- would be a much poorer place without the collective generosity of its contributors. The culture of generosity is the very backbone of the iBazar.

i expect to profit from iBazar, and profit handsomely if we can. We emphasize the need to build the largest network possible first, and it has been proven that the profits will soon follow. It sounds a little like dot-com logic, but the difference is that iBazar provide an envrionment for experimentation, and then seize on the things that users find valuable. The key to this is openness. Put profits first, and we will cripple the network we are building.

iBazar as a market chain connection and cellphone enterprise will be built openly and as big and as fast as possible; this will ultimatly put us in the best position to figure out where the real economic value is. Google built the world's most popular and useful search engine, and eventually became an ad company. Skype built a free phone service, and eventually sold it to eBay. Craiglist built a free classified –ads community, and is turning a healthy profit – while killing tradational publishers – with its comparatively low-cost job ads. The main reason for thoroughly piloting the project is to assess cash-flow and revenue generation forecasts, tested wherever possible upon the market and take into account each of the revenue streams.

Three key points stand out from my business model. First, all applications of a new technology go through an evolutionary process in which a period of early experimentation gives way to shakeouts, and then the truly viable business models emerge. Second, radical decentralization and openness create tricky environments in which to build genuinely viable business models – success lies in "closing up" the right parameters and monetary rewarding without destroying the characteristics of the system that make it innovative. Third, iBazar will only remain viable for as long as all the stakeholders are adequately and appropriately compensated for their contributions – we are not offering free ride forever.