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Published on June 12th, 2007 | by Babar Bhatti


Grey Telephony in Pakistan

Continuing the discussion on VOIP in developing countries and in particular in Pakistan, this post looks at the issues with regulating VOIP and the Grey telephony market. Pakistan Telecommunication Authority (PTA) defines Grey telephony as: the use of illegal gateway exchanges to bypass legal PTCL gateways and terminate/originate international traffic, including through VoIP gateways, GSM gateways, WLL phones, mobile SIMs or other related equipment. This traffic may then be distributed onwards using WLL and mobile numbers. It is claimed that gery telephony costs losses of over Rs. 3 billion annually.

Of course the laws regarding unauthorized or illegal use of VOIP vary from country to country. Developed countries regulate the technology to protect consumers and to encourage competition. Developing countries view VOIP as a legal and revenue issue and try to exert control over it. Many times its the law which is vague and does not clearly specify clearly when VOIP is allowed and when its not legal.  Last year in Pakistan there was lot of hue and cry when a software company in Islamabad was harassed on suspicion of illegal VOIP activity – it proved to be a completely baseless allegation. See this article for a good roundup of the story and for the different scenarios of VOIP usage in Pakistan. This kind of blatant use of authority and regulatory uncertainty combined with lack of technical knowledge by the authorities is a major obstacle for VOIP adoption and hurts the business deeply. Operators deserve to have a clear and predictable regulatory framework that helps to guarantee returns on investment.  Please note that the picture above of a VOIP lab (courtsey Flickr) is just for illustration.

In the paper Future of voice and VOIP, referred to in my last post there is some interesting discussion which I’ve included below with my comments.

Grey markets can offer cheaper rates because of the high profit margins that may be charged by incumbents that enjoy a monopoly (such as PTCL which had a monopoly a few years ago). For example, a caller might have to pay the 100 Rs for an international call that costs the incumbent operator about 3 rupees. Against this background, and despite legal crackdowns in various countries, the grey market looks set to flourish in Africa. According to Russell Southwood of Balancing Act, in most African countries the grey markets can be substantial (accounting for between a quarter and a third of international call revenues), and this has exerted strong downward pressure on prices.

Here’s some more commentary from the report about Pakistan’s VOIP situation:

PTA has issued technology-neutral licenses. VoIP services may be offered by Long Distance & International (LDI) and Local Loop (LL) licensees. 11 companies in Pakistan offered VoIP in 2005. Some new operators are looking to deploy IP-based networks and PTA is working on the necessary arrangements to tackle issues of QoS, numbering plan, internet telephony and costing methodologies etc. ISPs are not allowed to offer VoIP.

ISPs are licensed as either Electronic Information Service (EIS) or Non-Voice Communication Network Service (NVCNS) providers, neither of which permits licensees to allow voice over their data circuits.

PTA has issued policy guidelines to ISPs, PTCL, cellular mobile, LDI, LL and WLL operators to address illegal call termination/origination. Different guidelines have been issued to licensees, depending on the nature of their businesses. Licensed operators are responsible for maintaining updated client records, monitoring clients (in specific categories such as heavy users, users with a specific pattern of usage etc.), the correctness of their customer’s antecedents, and for overseeing clients on the transportation of voice on data circuits and formulation of their SOPs /procedures to discourage illegal activities and helping PTA. A clear strategy and a Vigilance Committee have been established to eliminate grey traffic and illegal call termination in June 2006, comprising the Pakistan Telecommunication Authority (PTA), the Ministry, PTCL and other operators. PTA now regulates international bandwidth rates and has directed PTCL to review its rates to promote broadband in Pakistan, building on Pakistan’s Broadband Policy published in December 2004.

In Pakistan, illegal grey traffic is estimated to cause losses of around Rs.3 billion annually. Pakistan has established a clear strategy to eliminate grey traffic and reduce illegal call termination. In June 2006, a Vigilance Committee on illegal telecom traffic was established, including the

Ministry of IT & Telecom, the Pakistan Telecommunication Authority (PTA), PTCL, telecom operators and other concerned agencies. The Government of Pakistan sees grey market telephony as a serious concern, causing revenue loss not only to Government, but also to all stakeholders. DSL operators and Internet Service Providers (ISPs) were asked to provide antecedent static IP addresses to PTA on monthly basis so that suspected IP users can be located. The PTA has developed Call Data Record (CDR) analysis that enables PTA to identify illegal sources of call termination. This may result in Long Distance & International (LDI) licenses being cancelled. Steps are being taken to curb the illegal call termination business. Last year, PTA reduced the Accounting Settlement Rate by 38.6 per cent to reduce the financial incentives for grey telephony and conducted 20 raids against illegal call termination business (with the help of PTCL and the FIA). Technical solutions to monitor grey traffic are being explored.

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23 Responses to Grey Telephony in Pakistan

  1. usman says:

    Aaaslam o ALaikum,
    We are intend to setup (VoIP Calltermination) and Calling card business in Pakistan. What should we do?
    Thanks, rate pk india srilanak nepal

  2. syed raza says:

    salam.can any 1 tell me why grey telephony is legal in kuwait

  3. AKHTAR ALI says:

    is grey telephony can be legal.

  4. muhammad sarwar says:

    my question is that:is ptcl officials & officers are involve in grey telephony & what is their roll in grey telephony.

  5. irfan says:

    I wana start voip business call termination from UK to pakistan.

    Can any body guide me,where i can get complete information,or any company in lahore guide for this,and much money need to start voip business.


  6. sajjad says:

    what i have written is a fact and the fact is sometime bitter

  7. sajjad says:

    the big guns in this country are doing this so caled ilegal bussiness , for them it is legal , for the rest it is illegal this is rubbish .

  8. kamran says:

    i want to report illeagle gateway system in pakistan can someone tell me how to do that

  9. Aslam says:

    I want to carry VoIP Traffic from Pakistan to Norway through Analog Switch(EMD), Can anyone tell how to do it, and how many E1s will be required for one user.


  10. IDRIS KHAN says:

    v r belgium based company want to open 4 E1 from pakistan and pop .so is it possible somebody tell me about procedure and cost appx
    idris khan

  11. khurramsajjad says:

    how can i make a call on voip phone iraq to pakistan with lowrate can u help me? here cellphone has high rate plz help me

  12. Khalid Ahmed says:

    So Gizmo, FWD, Vbuzzer, SIPGATE, etc are illegal to use now according to PTA new definition /Terminology, vague defination?

    They have not bothered to a public guideline for this but will be very happy to execute their powers like in case of that software company.

  13. Gul Jee says:

    Can anyone please tell me the mechanics of Grey Telephony? i.e. how does it actually work behind the curtain?

  14. Raza says:

    Hi Raza.

    We are a Hk based Call termination company Offering A-Z termination, pls send email for information panazian (at) yah00

  15. Muhammad A. Ch says:

    Hi Muhammad A CH.

    We are a Hk based Call termination company Offering A-Z termination, pls send email for information panazian (at) yah00

  16. Raza says:


    i want to start voip business legally in pakistan or start termination can it possible ,plz reply


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  19. Muhammad A. Ch says:

    Aaaslam o ALaikum,
    We are intend to setup (VoIP Calltermination) and Calling card business in Pakistan. What should we do?

  20. ASIF says:


    Yes khurram shahzad u can make net call from any where to any where in world,but the only need is net
    VOIP: is voice over internet protocol

  21. Khurram Shahzad says:


    i am living in the Netherlands. i do not have enough technical knowledge about VOIPs. i have a simple question i.e whether it is allowed to make a phone call from Netherlands to pakistan using a VOIP such as lowrate voip.

  22. Pingback: Grey Telephony in Pakistan « State of Telecom Industry in Pakistan

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