February 15, 2017

NCC to review interconnection rates for voice services

The NCC, Telcos and the Tariff discourse

The NCC, Telcos and the Tariff discourse

The Nigerian Communications Commission (NCC) is set to review the interconnection rates for voice services fixed in 2013 in light of current market realities.

The Executive Vice Chairman of NCC, Prof. Umar Danbatta said this on Wednesday in Abuja at a “Stakeholder’s Forum on Cost Based Study’’ for the determination of mobile voice termination rate.

Danbatta was represented by Mrs Josephine Amuwa, the Director, Policy Competition and Economic Analysis.

He said that the commission had 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.

According to him, since the last determination, the country’s communication market has witnessed tremendous growth in both subscriber numbers as well as traffic volumes.

“The sector has witnessed changes in available technologies and other network elements, including global financial markets which have an impact over inputs such as 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.

“This 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 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, ” he said.

According to him, the study provides the opportunity to thoroughly examine the emergence of grey market activities in the telecoms 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 for Inbound International traffic.’’

To this end, the commission carried out a thorough selection process and appointed Messrs’ Price ewaterhouseCoopers 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 modeling 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.’’

Danbatta said that in line with the commission’s principle of ensuring participatory regulation, the stakeholders’ forum is held not only to formally introduce the project consultant to the industry stakeholders, but also to begin 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 telecommunication industry.

“Therefore, your prompt response in providing accurate date will be invaluable.

“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.