Determining Mobile Voice Termination Rate for Nigerian Telecommunications Industry

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Professor Umaru Danbatta, executive vice chairman, Nigeria Communications Commission speaks on determination of Mobile Voice Termination Rate for Nigerian Telecommunications Industry

|  By Prof. Umaru Danbatta  |

IT is my pleasure to welcome you all to this very important Stakeholders’ Forum on Cost Based Study for the Determination Mobile Voice Termination Rate for Nigerian Telecommunication Industry.

A sound and functional interconnection regime is an essential step in the process of fine tuning the regulatory regime and leading the Nigerian Telecommunications market towards full competition and effective regulation. This is recognised in the Nigerian Communications Act 2003, which requires network facilities and services providers to provide other licensees with interconnection on request at any technically feasible location.

You will recall the Commission carried out an in-depth cost study and made a Determination on the Interconnection Rates for Voice Services which took effect from April 1, 2013.

Since the last Determination, the Nigerian Communications 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 over inputs 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 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 its 2013 Determination in the light of current market realities.

Furthermore, this study provides the opportunity to thoroughly examine the emergence of grey market activities in the telecoms industry in Nigeria such as call refiling, call masking, and sim-box fraud as a result of the introduction of an interim International Termination Rate (ITR) for inbound international traffic.

To this end, the Commission, carried out a thorough selection process and appointed 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;
  • 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;
  • 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;
  • Review ITR in other jurisdictions with similar socio-economic environment with Nigeria and its implication for the determination of ITR in Nigeria;
  • To determine (if necessary) the In-bound International Termination Rate taking into consideration relevant socio-economic and technical factors using appropriate cost modelling techniques;
  • Develop measures to reduce or eliminate grey markets in the Telecommunications industry in Nigeria;
  • Determine the necessity of a tiered asymmetric interconnection rate; and
  • Determine the cost per minute session for the use of Unstructured Supplementary Service Data (USSD).

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.  You will agree with me that the supply of industry statistical data is most critical to the success of determining appropriate interconnection termination rates for the Telecommunications Industry. Therefore, your prompt response in providing accurate data will be invaluable.

Ladies and gentlemen, let me reiterate once again that the Commission has an obligation to create a level playing field for all operators, and in line with international standard practice, NCC shall ensure that interconnect rates reflect the cost of termination on the networks.

I am convinced that this cost study is not only timely but very necessary. Therefore, I solicit your assistance, your understanding and co-operation in providing relevant statistical data to help deliver on the expected objectives of this project.

Being Prof. Umaru Danbatta, executive vice chairman of Nigerian Communications Commission’s opening remarks delivered at the stakeholders forum on Cost Based Study for the Determination of Mobile Voice Termination Rate for Nigerian Telecommunications Industry  

—  Feb 16, 2017 @ 17:20 GMT

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