Secret telecoms war in South Africa

A recent press statement by Huge Networks and Connection Telecom has unearthed a secret telecoms war between VoIP providers and big telecoms companies.

In the statement, Huge Networks technical director Anthony Engelbrecht said call blocking by South Africa’s biggest network operators is negatively impacting South Africans.

Engelbrecht said call blocking means many local telecoms customers cannot always successfully complete phone calls.

He said clients of many Voice over Internet Protocol (VoIP) telecoms networks are increasingly finding that calls they place are not reaching the intended user.

He lays the blame at the feet of the big operators – Vodacom, MTN and Telkom – arguing that VoIP providers are a thorn in their side because of the competition they bring.

“The incumbent telecoms operators seem to be pulling out all the stops to fight back against consumer choice,” Engelbrecht said.

“On an operational level, this is leading to billing disputes where excellent and mutually-beneficial relationships have existed in the recent past.”

Call termination the root of the problem

Engelbrecht said the current issue harks back to a decision made by ICASA regarding call termination.

ICASA’s Call Termination Amendment Regulations 2017 excluded calls made outside of South Africa from the regulatory framework.

This decision, he said, has seen rates charged by operators for terminating internationally-originated voice calls escalating to as high as R3.30 per minute.

This is significantly higher than the local regulated termination rate of R0.12 per minute.

“What is being charged bears no relation to the underlying cost of delivering the service,” Engelbrecht said.

He said enormous profits can be made when an operator bills a locally-originating call at an international interconnection rate.

This can happen, knowingly or unknowingly, because the call has certain hallmarks of being placed or journeying outside South Africa’s borders.

Connection Telecom director Rob Lith added that call blocking related to international call termination rate disputes involves potentially hundreds or thousands of blocked numbers.

This, he said, is impacting millions of telecoms users.

Interconnect Bypass Fraud

Industry insiders told MyBroadband this dispute partly relates to certain South African VoIP providers terminating international calls disguised as local calls.

They explained that rogue VoIP providers sign deals with international clients to route their calls via their South African network.

Known as Interconnect Bypass Fraud, international traffic that should be routed through a legitimate international gateway is routed to bypass those gateways using VoIP through the Internet.

This means the international calls are terminated at local interconnect rates. At R0.12 per minute, these local rates are much lower than the international rates which they should be charged at.

Because of the difference in local and international interconnect rates, there are big arbitrage opportunities.

A local VoIP provider can route the international calls through its network or a SIM box and only pay local termination rates.

It then charges the international client somewhere between the local termination rate and the international termination rate, and pockets the difference.

According to an industry source, many South African VoIP providers are engaged in Interconnect Bypass Fraud because it is so lucrative.

MTN SA executive for corporate affairs Jacqui O’Sullivan told MyBroadband that their network is currently inundated with irregular interconnect bypass activities.

These activities, which are being carried out by certain MTN interconnect partners, entail international traffic destined for the MTN network being bypassed or refiled.

This, O’Sullivan explained, results in the calling line identification (CLI) that MTN receives being reflected as a domestic number, as opposed to the international number of the originator of the call.

The CLI is manipulated so that domestic termination rates, as opposed to international termination rates, are billed in relation to the bypassed call or SMS.

The graphic below, courtesy of Mobileum, illustrates how interconnect bypass fraud takes place.

Calling Line Identification

CLI is used by operators to identify where a call is coming from and to charge the correct interconnect rate.

CLI has many other purposes, but in the context of this article, we will focus on it being used to determine the origin of the call.

For Interconnect Bypass Fraud to work, a VoIP operator has to hide the true origin of the call by removing or spoofing the CLI.

Telkom said the 2016 Numbering Plan Regulation prohibits licensees from transmitting inaccurate CLI.

This does not stop rogue VoIP providers from engaging in CLI manipulation. In fact, it is so widespread that it has become an international problem.

O’Sullivan said that in addition to lost revenue and tax in South Africa, spoofing CLIs also pose security risks.

She said inaccurate CLIs means telecoms operators are unable to provide accurate details of the originator of a call for legal purposes.

It also has an impact on consumers who are not able to identify an international call.

The graphic below, courtesy of Latro, illustrates CLI refiling and masking.

VoIP providers and CLI

Engelbrecht said South Africa’s VoIP operators are in full agreement for the need to present accurate originating call details.

“However, there are innumerable instances where international calls are received on a local PBX system and then immediately diverted to an SA mobile phone,” he said.

The relevant regulations require that the original CLI details are preserved as the call is routed from overseas to the local mobile number.

“This means the forwarded call is charged at international termination rates by the relevant SA mobile operator,” he said.

He also accused the operators of adopting creative approaches towards the determination of internationally-originating voice traffic.

“They know that much traffic which, on the surface, appears to be international traffic is, in fact, local,” he said.

“They know that switching equipment could be located outside of South Africa or that a foreign network subscriber could be roaming on a local network.”

Call blocking

To fight Interconnect Bypass Fraud, companies like Telkom, MTN, and Vodacom often abort calls where the CLI is inaccurate.

Vodacom spokesperson Byron Kennedy said they only block calls when they are identified to have bypassed the International Termination Rate (ITR).

“We take this action to protect our customers who are inundated with calls bearing inaccurate CLIs,” he said.

He added that interconnection partners are presented with ITR bypass evidence at the latest a month after the event has taken place.

O’Sullivan said given the attack on MTN’s network as a result of international bypass activities, they are required to take steps to protect its network. Such steps include call blocking.

Telkom also confirmed that it aborts received calls from other licensees when the CLI is inaccurate.

Ongoing war

At this stage, VoIP providers and incumbent operators are accusing each other of widespread fraud and unlawful practices to profit from arbitrage opportunities.

This war is likely to continue – at least until local and international interconnect rates are not significantly different.

Engelbrecht pins his hope on the regulation of internationally-originating calls by ICASA.

He said these regulations may “introduce a measure of realism into the determination of international interconnection fees”.

He also hopes they will clarify what exactly constitutes an internationally-originating phone call.

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Secret telecoms war in South Africa