It is not a secret that soon there will be four new telecom industry licensing categories in Ghana. The four are MVNO (mobile virtual network operator) licenses, Unified Licenses, International Wholesale Traffic Licenses and one Interconnect Clearinghouse License.

All four categories promise to deepen local participation in the telecom industry. But even though the Clearinghouse license is only one, it is already generating the most interest and debate in the industry even before government issues official communications on it.

The Clearinghouse license is originally intended to create a one stop shop for all forms of telecoms communications within the domestic space and from overseas into Ghana. It will be a common meeting point for telcos, Value Added Service (VAS) providers, content providers and App developers and would create a fair playing field for all these players, simply put.

The Clearinghouse, by intent, would help muscle up local VAS providers and App developers to a large extent because it would negotiate better deals for them in their dealings with telcos. Currently, the telcos take up to 70% of revenues generated on the VAS front, and leave a pittance for VAS/CPs and App developers to share. But a Clearinghouse will change that.

The Clearinghouse would also be where all communication, calls, SMS and data from any local network to another local network and or from overseas to any local network would go through before hitting the network the communication was intended for. Clearinghouse would then generate its own call detail records (CDRs), as well as SMS/Data detail records for reconciliation between the various players and between the players and government.

Below is are two simplified diagrams. The first showing the status quo of interconnect arrangement between telcos without a clearinghouse. The second shows what the interconnect arrangement would be when the clearinghouse comes into the picture. It shows that when the clearinghouse comes, IDD (coloured purple) will no longer go directly through the telcos' international gateways. It will first go to the clearinghouse before it will be routed to the respective telcos.

So, as the diagrams show, one other important role the Clearinghouse would be playing by default is real time traffic monitory, which has in the far and recent past generated heated debates among industry players and regulators; and at some point even led to a court action by customers who believe such monitoring would not be in their interest.

 

Global Voice Group (GVG)

Industry regulator, National Communication Authority (NCA) had employed the services of Haitian traffic verification company Global Voice Group (GVG) to do real time monitoring of the international gateways of the telcos and verify how many minutes of calls are coming into Ghana through the gateways of each of the telcos.

The status quo was, and still is, that the telcos generate call detail records (CDRs) from activities on their international gateways and submit to the NCA to determine taxes due government from the revenue thereof. The challenge is that the NCA is unable to tell if those records were doctored or not because they are generated independently by the telcos.

So GVG’s role would have been to install monitoring/verification equipment on the networks of the telcos and collect real time data as and when the international traffic came in. But the telcos and some of their customers argued that it would affect call quality because the traffic would have to go through more equipment. Secondly there are insurance issues regarding who bears the liability in case there is damage to any telcos equipment due to installation of GVG equipment.

But the biggest concern from customers, for which they sued the telcos, NCA and GVG was the fear that the GVG equipment would listen into people’s private calls, and that posed a challenge to the security of the country. That GVG story has since been virtually dead and information reaching Simcardblog is that GVG is actually on its way out of the country.

 

Subah

While the GVG story was dying out, another company emerged, Subah Infosolutions Limited, a member of the Jospong Group of Companies belonging to Ghanaian millionaire Joseph Siaw Agyepong. Subah was contracted by the Ghana Revenue Authority (GRA) to verify domestic traffic of the telcos to ensure that they paid the appropriate taxes on revenues generated locally. The Subah contract got bad media because it would appear the company was paid over GHC74million for work not done.

The contract was for them to monitor domestic traffic real time and audit the records to ensure the telcos paid exactly what was due government. Their work required that they install monitoring equipment on the billing systems of the telcos. They was to earn 13.5% of every incremental revenue their work realizes. But they were paid GHC74million plus between 2010 and 2012 even though within that period the telcos did not even know about Subah, much less having Subah equipment installed on telcos networks.

Even though the question still remains as to what exactly Subah was paid for, some of the dust has since settled and now Subah has installed its monitoring equipment on the networks of all the telcos. The installations are at various levels of completion so Subah has not yet started actual real time monitoring. Meanwhile, the contract is due to expire May 2015, which is eight months away.

But while Subah is yet to start executing its contract proper, government is now in the process of licensing a clearinghouse that threatens to render both Subah and GVG completely useless. The point must be made that Subah’s work was on contract, but the coming Interconnect Clearinghouse would be a sole licensee for the purposes of creating a meeting point for industry players and reconciling records. The only way the clearinghouse could independently reconcile records is to monitor activities on all the platforms real time.

It is now obvious GVG’s work is taken and they are on their way out. But Subah is more or less now coming in. So what happens to their Subah contact, for which they have already been paid ahead of execution?

 

Possible candidates

This writer is reliably informed that the Clearinghouse will render Subah also useless, but not if that clearinghouse is Subah. One would expect that at this stage when the license has not been issued yet, even impeccable sources would remain tight-lipped on who the possible candidates for the single clearinghouse license are.

Meanwhile, one of four companies in the run for the Clearinghouse license have confirmed that Subah, Afriwaves Telecom Ghana Limited, GVG and South African company called Gigima have been shortlisted for that license. They are each preparing their tender documents. But Subah is said to have announced to government and the regulator that it has bought GVG. This writer has asked NCA for confirmation but it has been months now and the NCA has remained totally silent on the matter. Top officials of Subah have also been asked to confirm their participation but they have also remained silent on that matter.

This is a case where a ‘yes’ answer might generate even more controversy around Subah, and a ‘no’ might also set them up for an even bigger controversy in the future if it came out that Subah eventually becomes that interconnect clearinghouse. So this is a typical situation where silence is indeed golden.

Cost

But what is likely to be the cost of such an important license, which promises a two-prone benefit for the country – help muscle up local app developers and VAS providers so they could become more competitive and be able reach out more to local consumers; and also guarantee the country proper and real time monitoring of the activities of telcos and other players within that space for tax revenue assurance.

Industry experts have hinted that in other jurisdictions, the cost of a clearinghouse license for just mere interconnect activities between telcos is about US$20million. But this is a license that ropes in almost the entire ecosystem in the telecom industry, except the regulator so the license might cost a bit more.

This is where Simcardblog would like to propose that in order to encourage local investors to put their money into such a venture that guarantees gains for the country’s budding Wireless Access Service Providers (WASPs) and App Development industry, there is need to give out this license at a subsidize rate. Even US$20million could put off the locals and, as usually, bring in another multinational to occupy that space.