Kenya losing Sh500m annually to phone fraud

Kenya could be losing about Sh500 million annually to SIM Box fraud, a new form of crime where international calls are routed as local calls.

The Communications Commission of Kenya (CA) has revealed that unscrupulous individuals are infiltrating mobile communication exchange connections that allow users to make and receive local and international calls outside the legal grid.

By diverting international calls to the local network, the operators have wooed majority of subscribers with their low cost charges without the knowledge of their host.

CA Director General Francis Wangusi said the regulator has banned the devices, saying they have derailed the quality of communication services.

Speaking in Nairobi Monday during the East African Communications Organisation forum, Wangusi insisted that despite the ban, telco operators are not off the hook.

"These services are hosted on their networks which raises questions on the quality and oversight of their systems. It is them who allow rogue individuals to purchase more than 10 SIM lines yet they are not a company or in business," said Wangusi.

"We have noticed there are unlicensed people who are procuring SIM cards and installing SIM boxes which are a security threat because in the first place they facilitate untraceable communication and can be used by harmful agents," stated Wangusi.

Wangusi blamed the operators for not providing enough surveillance on their services to curb the vice.

"We are soon doing an enforcement because we have hints of where this is happening, but mobile phone operators are not off the hook and we have already written to them informing them we are going to carry out inspections on their switches and where need be we are contemplating installing a monitoring system to monitor traffic going into the country," Wangusi warned.

Poor reception and busy tones are some of the ways of detecting SIM boxes calls. Safaricom has already installed software that enables them to detect such calls in five minutes.

In carrying out SIM box fraud, individuals or organisations buy thousands of SIM cards offering free or low-cost calls to mobile numbers.

Local calls are cheaper than international calls due to interconnection fees. Applicable taxes are also higher. By using local numbers to portray an international call as local, the Government loses out on the tax for international calls.

Mr Wangusi further stated that service providers in Kenya will now be required to pay 0.2 per cent of their annual turnover in penalties if their services fail the quality threshold set by the government. The annual quality of service report assesses telecommunication service providers along eight key performance indicators including completed calls, dropped calls rate, call set up time, call set up success rate, handover success rate, speech quality and receive/transmit level.

In the latest edition of the report released in June this year, all three service providers attained a score of 62 per cent out of the regulator-set 80 per cent benchmark failing for the fifth year running to meet the targets.

"We are in the final stages of picking a consultant who will conduct the surveys on our behalf and increase the survey frequency from annual to quarterly," said Wangusi.

Information Communication Technology Principal Secretary Joseph Tiampati noted that increased integration of ICT into all facets of socio-economic life, quality of service has become vital for the country to benefit fully from the sector's revenue.