Telecoms operators to begin new voice termination rate March 1

A new termination rate for telephony services for the voice segment of Nigeria’s telecommunication sector is expected to take effect from March 1.This was disclosed, at the weekend in Lagos, by the Executive Commissioner, Stakeholders Management at the Nigerian Communications Commission (NCC), Sunday Dare, who represented the Executive Vice Chairman, Prof. Umar Danbatta, at a Stakeholders’ Forum on the Cost Based Study for the Determination of Mobile Voice Termination Rate for the Nigerian Telecommunications Industry.

What is not yet known is whether the rate will be reviewed upward or slashed. However, Dare, at a post-event interview, informed that the new rate regime would depend on the recommendations of the Consultant to the project, PricewaterhouseCooper (PWC), UK, subject to ratification by other stakeholders.Currently, local termination rate is pegged at N3.90k per minute, while an interim inbound international traffic cost N24.40 kobo.Termination or interconnection rate is the amount or fee, which one telecommunications operator charges another for terminating call(s) on its network.

Recall that as at 2015, the mobile network operators were seriously embroiled in a N30 billion interconnect debts, with MTN claiming to be owed the highest, which was around N13 billion.Danbatta noted that interconnection is critical to the growth and development of the sector, stressing that without it, it would be difficult, if not impossible, for subscribers on one network to call subscribers of other networks.

The EVC noted that a key component  of the commercial aspects of interconnection is the determination of interconnection rate amongst network service providers. According to him, apart from the first interconnection rate, which was based on negotiation between the incumbent operator (NITEL) and other operators,  all other determinations have been handled by the commission due largely to two reasons, firstly, the negotiated  interconnection rate was fraught with many controversies, secondly, and more importantly, there was a need to ensure interconnection rates are cost-oriented in line with international best practice.

He revealed that till date, there have been four interconnect cost determination regimes (2003, 2006 2009 and 2013 respectively). Danbatta disclosed that the 2003 regime was determined via a benchmarking exercise, while the 2006, 2009 and 2013 regime were cost based and a glide path asymmetric regime was adopted in 2009 and 2013 respectively, with the 2013 regime expected to expire in 2016.

“However, economic factors such as the rapid  devaluation of the Naira in 2016 and the fact that Nigerian network service providers became perpetual net payers to their overseas interconnecting partners, led to the commission setting an interim rate of N24.40 per minute  for inbound international traffic after carrying out a benchmarking exercise with other jurisdictions.” and this rate will subsist until a cost-oriented rate is determined by the commission.

“Further to the above and the expiration of the 2013 interconnect region in 2016, the commission engage the services of the consultant PWC, UK  to review and update the existing model taking into account the changes that have occurred over time and produce an interconnection cause model that is more in line with the current realities in Nigeria,” Danbatta stated.

The EVC disclosed that this project formerly kicked-off with the initial stakeholders forum held on February 15, 2017 with the primary aim of introducing the consultant to the industry, informing operators of the objectives of the study, and seeking their active participation by way of providing the requisite data and order Information for the study.

He informed that this was immediately followed by one-on-one meeting with operators and subsequent visits to the offices of some operators for data collection and re-validation during the course of the study.

Danbatta reiterated that the commission has an obligation to create a level playing field for all operators and ensuring the continuous growth of the industry as such, NCC shall ensure the determination of a mobile voice termination rates that truly really relate the cause of deploying the service and interconnection of networks in Nigeria.