NCC boss says process to hike network call rates begins

By Abimbola Fashakin, Lagos

The Nigerian Communications Commission, NCC, has stated that it has commenced the process for the review of mobile voice termination rates for telecommunication industries in the country.

Its Executive Vice Chairman, Professor Umar Garba Danbatta, said at the Stakeholders’ Forum on the Cost Based Study for the Determination of Mobile Voice Termination Rate for telecom industry that the review has become imperative due to changes in the industry since the last exercise in 2013.

He told industrial players and other stakeholders who attended the Forum at the Commission’s Head Office in Abuja that the move would make the industry achieve full competition and effective regulation by providing a level playing ground for all participants.

Professor Danbatta said: “ Since the last determination, the Nigerian Communication Market has witnessed tremendous growth in both subscriber numbers as well as traffic volumes. Changes in available technologies, (2G, 2.5G, 3G and 4G) and other network elements, including global financial markets which have an impact such as the cost of capital.

“The scale of changes will inevitably affect the unit cost of providing services including interconnection and may lead to differences between regulated interconnection rates and underlying costs which in turn may result in differences between on-net and off-net retail tariffs.

“It is very important that we ensure that interconnection services are not only fairly priced and non-discriminative but should reflect the cost of providing such services in the market.

“It is in this regard that the Commission has decided to review the rates set in 2013 Determination in the light of the current market realities”.

Consistent with the Commission’s principle of ensuring participatory regulation, this initial Stakeholders Forum is held not only to formally introduce the project consultant to the industry stakeholders, but also to kick—start the project, Professor Danbatta added.

He emphasized that “the supply of industry statistical data is most crucial to the success of determining appropriate interconnection termination rates for the telecommunications industry.”

He said NCC has the obligation to create a level playing field for all operators, noting that “in line with international practices, the commission shall ensure that interconnect rates reflect the cost of termination on the networks.”

Justifying the review, professor Danbatta further argued that “the study provides the opportunity to thoroughly examine the emergence of grey market activities in the telecommunication industry in Nigeria such as call refilling, call masking and sim-box fraud as a result of the introduction of an interim International Termination Rate (ITR) for inbound international traffic.”

He said the Commission has engaged Messrs PricewaterhouseCoopers LLP (Pwc) to among other things carry out an impact assessment on the subsisting interconnect regime; identify shortfalls on the subsisting interconnection rate regime and provide workable solutions.

Others are to determine if there is need to have different termination rate for national/domestic and international traffic; determine the mobile termination rate for voice services using appropriate cost modelling techniques for new entrant(s)/ small operators and existing/big operators.

And also to determine the appropriate basis for glide path if necessary; develop a suitable definition of a new entrant(s)/ small operator to enjoy the benefits of asymmetric rates; determine the cost per minute session for the use of unstructured supplementary service data.

Professor Danbatta further added that the job of the accounting firm would include to review ITR in other jurisdiction with similar socio-economic environment with Nigeria and its implication for the determination of ITR in Nigeria.

And to determine if necessary the inbound international termination rate taking into consideration relevant socio-economic and technical factors using appropriate cost modelling techniques and develop measures to reduce or eliminate grey markets in the telecommunications industry in Nigeria.

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