The Northern Corridor One Network Area — an initiative that eliminated mobile telephone roaming charges for networks in Kenya, Uganda, Rwanda and South Sudan — appears to have collapsed due to discordant tax policies in the region.
The project had sought to harmonise roaming charges on voice calls followed by data charges at a later date.
The regional Heads of State Summit had recommended that a framework for harmonised EAC roaming charges — including the removal of surcharges for international telecoms traffic originating and terminating within the EAC — be put in place by July 15, 2015.
Under this arrangement all calls among the EAC countries were to be treated as domestic calls. However, The EastAfrican has learnt that the project is facing challenges, which have made its implementation difficult.
Frequent travellers in the region began experiencing a reversion to pre-2015 roaming surcharges at the start of October as, one by one, member networks in Rwanda, Uganda, Kenya and South Sudan started charging 16 US cents per minute for roaming calls, up from the previous common tariff of 10 US cents set in February 2015.
Save for MTN Rwanda, which sent a notice to its customers on September 29 alerting them that effective October 1, they would pay Rwf22 (2.5 US cents) on top of normal calling rates, none of the network operators were willing to talk about the development.
MTN Uganda chief executive Wim Vanhelleputte said he was not aware of any adjustments to the roaming tariff and declined to comment further.
But Kenya’s Communications Authority (CA) confirmed that the project is facing hitches and there is a need to review the strategy for its implementation.
“Yes, we have experienced challenges in the implementation of this project. On paper, it is assumed to be working, but the actual implementation is facing hitches,” Francis Wangusi, CA’s director-general told The EastAfrican. He added: “Currently there are gaps in the implementation of the project.”
The project had brought together Kenya, Rwanda, Uganda and South Sudan, while Tanzania and Burundi had said they would join in, but never did.
The EastAfrican has learnt that finance ministers from the four countries have not harmonised their laws in line with the one network area requirements while telcos are not fully adhering to the enforcement mechanisms of the project.
Some partner states are said to be uncomfortable with the modalities of determining the harmonised termination tariffs through SIM card boxing process.
Mr Wangusi said the issue will be a top agenda in the next Northern Corridor Summit, expected before the end of this year.
“We shall relook at the implementation and challenges facing this project so that it can be successful and yield the anticipated results,” he said.
The EAC has prioritised four main areas where progress must be made to drive the region’s integration agenda forward.
They are communications (harmonisation of roaming charges); civil aviation (high air travel fares); One-Stop Border Posts (transit charges) and, the need to actively engage the private sector on the integration process.
As part of decisions endorsed by the EAC Sectoral Committee on Transport and Communications in October 2014, mobile network operators in Northern Corridor member states suspended roaming surcharges for telephone users operating outside their home networks. Charges for receiving calls while away from the home network were also eliminated.
However, industry sources are linking the hitches to tensions around Uganda’s tax differential on the industry, which encouraged dumping of international traffic, and the recent installation of a mobile network traffic management and fraud detection system, after it suspected that mobile network operators were under-declaring revenues.
According to these sources, the system exposed the extent of grey traffic — international calls that were being terminated by networks from neighbouring countries as local traffic between member networks.
“As soon as the system was installed, traffic from one of the member networks dropped by 70 per cent. This drop reflected the losses emanating from rackets that were terminating Uganda-bound international traffic disguised as ONA traffic,” a source said.
Uganda ignored industry lobbies and went ahead to enforce a nine cent levy on each minute of international traffic.
With an ONA traffic terminating at less than five cents, rackets emerged in South Sudan where operators of Sim Boxes began to feed international traffic into Ugandan networks at ONA rates. The practice is said to have hit Ugandan operators hard, with one reporting daily revenue losses of Ush1 billion ($262,000).
The bulk of the grey traffic is being linked to a Juba-based Lebanese gang which at one point was said to have been routing up to 38 per cent of Kenya-bound international traffic, which was terminated as local traffic originating from South Sudan.
Typically, Sim Box operators create illegal international gateways, which they connect to as many as 500 SIM cards registered on a local network that receive and then relay international calls.
Until Uganda’s installation of a fraud detection system, regulators in the region had tried to curb the practice by limiting the number of mobile phone lines that can be owned by an individual.
Although the ONA has been blamed for the surge in grey traffic, the International Telecommunications Union (ITU) disagrees. In a report it published in 2016, the ITU, argues that ONA was not the primary cause of grey traffic and instead lays the blame on tax differentials, which result in a wide gap between domestic and international tariffs.
The ITU credits ONA for the rapid growth in cross-border voice traffic in the ONA, pointing out that Kenya and Uganda witnessed a near five-fold increase in cross-border voice traffic while Rwanda saw a 30 per cent increase.