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New interconnect rates and subscribers expectation in 2010

By Prince Osuagwu
THE Nigerian Communi cations Commission last week in Abuja issued new set of Interconnect rates for the telecom industry, to take effect from Wednesday, December 31, 2009.

In the new rates, which replace the earlier ones issued by the Commission in September 2006, Etisalat and about 12 other CDMA operators were described as new entrants and made to pay lower interconnect rates to the other players.

New entrants according to NCC, are described as “operators providing a termination service provided under a licence allocated after 1st January 2006 and less than 4 years old”, explaining that the Asymmetric Interconnect rate method which it applied in determining the new rates, favoured these set of operators because it discovered that such operators expend higher cost of termination in their networks.

With this development, call terminations on new entrants’ networks are graduated from N10.12 from December 31, 2009 to N8.20 in 2012 while call terminations on older operator’s networks is fixed at N8.20 over the same period.

Another major feature of the new rates is the determination of Interconnect Rates for Short Messaging Services, SMS, for the first time in the country.

The SMS interconnection rates also featured a glide path whereby, the new entrants enjoy interconnection rates starting from N1.94 from December 31, 2009 to N1.02 in 2012. The other older mobile operators will stay on a fixed N1.02 bar over the same period.

The Commission said it had to do this, after discovering that International benchmarks show that the main users of SMS services are young subscribers between ages 12 and 24 years who are characterised by much lower income than the average levels, and therefore more attracted to the benefits related to the lock-in effect.

The new rates according to the Commission, is expected to impact positively on the retail tariffs which the operators will offer its customers after its commencement as the rates are below the prevailing interconnection rates in the market.

Already, subscribers are beginning to celebrate the development and apparently spoiling for war, should operators fail to make the new development count for lower call tariffs and other service offerings.

Many subscribers who spoke to Mobile Week, at the weekend, said the operators, particularly the new entrants, do not have any more excuses against making their call tariffs low from 2010 since NCC has decided to lower interconnect rates.

“NCC has set a good stage for operators to reduce their tariffs. That is what we have been saying, if you want the operators to reduce tariff, try to also give something that would benefit their business.

Now that the Commission has reduced the interconnect rate, and the power problem is gradually being given attention, I don’t think any operator can stand to tell subscribers that reduction of call tariff is impossible”. This is the way a mobile phone subscriber who identified himself as Okechukwu Robinson saw it.

For Robinson, “any operator who tries to undermine the benefit of the new interconnect rates, would face the wrath of subscribers”.

Another subscriber, Miss Janeth Olalekan, subscribed to tariff reduction but put a caveat to the expectation.

“Even as a student I know that all it takes for an operator to reduce tariff is not just a little adjustment on the interconnect rate. But I should expect them to make the interconnect rate adjustment count because for the past 8 years or so, tariff has officially remained high except for some kind of promos they introduce.

But we all know that promo reduction is not a total reduction. Subscribers need reduction that would benefit all without conditions attached. Having said this, I think we subscribers should also allow the operators to breath a new life from the interconnect rate adjustment before belabouring them on reduction” she added.

The details of the new rates signed by the Chief Executive Officer of the Commission, Engr. Ernest Ndukwe and released by the commission’s Head, Media & Public Relations, Mr Reuben Muoka, states that: a.

The interconnection rate for mobile (voice) termination provided by new entrants in Nigeria irrespective of the originating network shall be: i) N 10.12 (Ten Naira Twelve Kobo) from 31.12.2009;ii. N 9.48 (Nine Naira Forty Eight Kobo) from 31.12.2010;iii. N 8.84 (Eight Naira Eighty Four Kobo) from 31.12.2011; andiv. N8.20 (Eight Naira Twenty Kobo) from the 31.12.2012.b. ~
The interconnection rate for mobile (voice) termination provided by other operators in Nigeria irrespective of the originating network shall be:i. N8.20 (Eight Naira Twenty Kobo) from the 31.12.2009.c.

The interconnection rate for fixed (voice) termination in Nigeria irrespective of the originating network shall be:i. N 10.12 (Ten Naira Twelve Kobo) from 31.12.2009;ii. N 9.48 (Nine Naira Forty Eight Kobo) from 31.12.2010;iii. N 8.84 (Eight Naira Eighty Four Kobo) from 31.12.2011; andiv. N8.20 (Eight Naira Twenty Kobo) from the 31.12.2012.d.

The interconnection rate for SMS termination provided by new entrants in Nigeria irrespective of the originating network shall be:i. N1.94 (One Naira Ninety Four Kobo) from the 31.12.2009;ii. N1.63 (One Naira Sixty Three Kobo) from the 31.12.2010;iii. N1.32 (One Naira Thirty Two Kobo) from the 31.12.2011; andiv. N.1.02 (One Naira Two Kobo) from the 31.12.2012.e.

The interconnection rate for SMS termination provided by other operators in Nigeria irrespective of the originating network shall be:i. N1.02 (One Naira two kobo) from the 31st of December 2009.


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