NCC to review international termination rate for voice services

*Commission will be able to balance competing objectives of economic efficiency and allow operators the latitude to generate reasonable revenue through new ITR pricing ─Prof. Umar Danbatta, Executive Vice-Chairman/Chief Executive

Isola Moses | ConsumerConnect

In a move to align the country’s telecoms ecosystem with market dynamics and as part of efforts at finding an optimum price for the termination of international voice services, the Nigerian Communications Commission (NCC) has embarked on a cost-based study to set the new pricing regime for mobile international termination rate (ITR) for inbound international voice calls in the country.

The ITR is the rate paid to local operators by international operators to terminate calls in Nigeria.

ConsumerConnect reports Dr. Ikechukwu Adinde, Director of Public Affairs at NCC, in a statement Monday, September 21, 2020, said that as part of the process for the rate determination, the NCC had organised a virtual stakeholder engagement forum with relevant industry stakeholders to intimate them with the ongoing cost-based study and the need to cooperate with Messer’s Payday Advance and Support Services Limited, the consultants engaged to carry out the study.

Prof. Umar Danbatta, Executive Vice-Chairman (EVC)/Chief Executive of NCC, at a recent stakeholders’ forum in Abuja, FCT, said that the study had become imperative in view of the various implementation constraints arising from contending industry and market dynamics that met previous efforts at finding an optimum price for the termination of international voice services in Nigeria.

Adeleke Adewolu, Executive Commissioner, Stakeholder Management at NCC, who represented Prof. Danbatta on the occasion, noted that through the new ITR pricing, the Commission would be able to balance the competing objectives of economic efficiency and allowing operators the latitude to generate reasonable revenue.

The EVC, however, explained that in 2013, the Commission had issued a determination stating that mobile termination rate (MTR) rates were the same irrespective of where the call originated.

He stated that the clause was largely misconstrued by operators at the time to mean that ITR should be the same rate as the MTR.

The development led to operators’ ignoring the international cost portion, where ITRs were agreed at MTR level without a positive residual to cover the costs of the international leg for local operators, said Danbatta.

He stated: “As a result of this, the ITRs continued to decline, in line with the MTR glide path and as the ITR was set in Naira, it suffered a further downward slide in dollar terms following the currency devaluation.

“Ironically, the Nigerian operators paid the international operators in dollars to deliver international calls which created an imbalance of payments as the ITR in Nigeria declined.”

According to the EVC/CEO of the Commission, the Nigerian operators’ profitability and commercial results were negatively affected, putting Nigeria’s ITR below that of most countries with which it makes and receives the most calls, thereby making Nigerian operators perpetual net payers.

Danbatta further stated “this has, therefore, led to undue pressure on the nation’s foreign reserves, which continue to get depleted by associated net transfers to foreign operators on account of this lop-sidedness, hence the need for Nigeria, with volatile currencies, to regulate the ITR to prevent or mitigate the imbalance of payments with international operators.”

Where ITR is not properly regulated, it tends to have a negative effect on a market like Nigeria with major supply-side challenges and associated socio-economic implications, he noted.

“So, setting a rate substantially above the MTR has resulted in a number of repercussions.

“One of such is the consumer shift to online channels as calls are increasingly made through Internet Protocol (IP)-based technologies such as Skype and WhatsApp because of high international call prices.

“To this end, an economically-efficient ITR that is cost-based will maximise economic benefits to all stakeholders,” Danbatta informed the stakeholders.

Earlier, Ms. Yetunde Akinloye, Director of Policy, Competition & Economic Analysis, had stated that the forum was aimed at formally engaging with and sharing the perspectives and insights of industry stakeholders and ultimately enlisting their collective support in relation to the inputs and requirements towards the determination of a mutually-realistic ITR in the country.

According to Akinloye, the project had commenced March 10, 2020, with a kick-off meeting, but was stalled by the challenges associated with the COVID-19 pandemic, which necessitated the need to explore emerging channels of engagement to move forward and ensure the completion of the project.

She reiterated the Commission’s commitment to continuously provide a conducive environment and level-playing field for the effective interplay of factors that would sustain market development and growth;

The Director of Policy, Competition & Economic Analysis also assured the stakeholders of the Commission’s provision of qualitative and efficient telecommunications regulatory services for the benefit of consumers and licencees.