The battle to swich off 'fake' mobile phones

10 November 2012 | Tim Phillips


It’s not every day that one operator cuts off 680,000 customers at one time, but in Kenya, that’s what Safaricom did. With 19.1 million subscribers, many of whom use the M-PESA money transfer system, being cut off means losing more than a dialtone.

And Safaricom wasn’t alone. On October 1, 1.4 million Kenyans woke up to find that their phones weren’t working any more, as the other networks joined in too.

Kenya’s problem isn’t Kenya’s alone – it is endemic throughout the developing world. These 1.4 million users had bought counterfeit handsets.

Estimates at the start of 2012, pre-dating a crackdown and trade-in campaign, had the figure at 2.5 million fake phones. Dealers are now being threatened with fines if they sell fakes. The action was initiated by the Kenyan government, which has one of the toughest anti-counterfeiting regimes in Africa.

Disabling phones with unrecognised IMEI numbers enforces Kenya’s anti-counterfeiting law in as visible a way as possible. For anti-counterfeiting investigators, it’s a small victory – but one that isn’t going to be popular among many Kenyans.

Historically, consumers often view cheap fakes as a benefit rather than a crime. The arguments that fakes destroy jobs or are dangerous have little credibility in countries where the jobs aren’t local, and there are far greater threats to health. Education about fakes is low: Nokia estimates that 40% of the handset users who were turned off had no idea they had even bought a fake.

So, with similar action planned for neighbouring Uganda and Tanzania, can counterfeiters be eradicated by these switch-offs? Not likely. Nokia also reports that street vendors are learning how to flash legit IMEI numbers on to fake phones to re-enable them.

And there is also expediency. In 2006 I interviewed the head of the World Customs Organisation, who pointed out that in Africa, customs duties are a proportionally much higher source of revenue for the government, and so officials have an incentive not to stop suspicious imports.

Also, counterfeiters have moved on from straight copies: they use their design freedom to innovate, albeit at a low quality. Handsets maybe don’t have developed-world features like Bluetooth or much expensive internal storage, but they may have dual SIM card slots – far more useful for a developing world customer. For innovation to really cut out the counterfeiter, it has to be in the phone’s software, and be supported by the operator.

There’s an alternative that has been practised by many other industries: turn a blind eye as long as the business keeps growing. But it’s decades since counterfeit customers were poor and easy to ignore.

Even in the US, Immigration and Customs Enforcement reports that consumer electronics is now the most frequent counterfeit commodity seized.

One third of the seizures in that category were fake mobile phones. Operators commonly worry about their network capacity; if Kenya’s switch-off were to be replicated globally tomorrow, many of those worries might disappear (literally) overnight.

Tim Phillips can be contacted at: tim@timphillips.co.uk