A new interconnect rate to be released by the Nigerian Communications Commission (NCC) in a few days will lead to dramatic reduction in telecommunications tariffs but miffed services’ providers fear it will further shrink their revenue bases, Nigeria CommunicationsWeek can now reveal.
This followed the submission of the report by Detecon International and PriceWaterHouseCoopers employed in March by the NCC as consultants and advisors to review the current interconnection rates among the Nigerian telecom service providers.
The interconnect rate is the benchmark with which service providers pay to each other for terminating calls on their fixed or mobile networks and is the singular most influential factor of determining how much subscribers pay for a call.
If however, the new regime favours the operators, subscribers will pay more for making calls.
An interconnect regime in favour of the nearly 70 million telecom subscribers in Nigeria will be early Christmas gift. Under the new rate, a minute call on GSM network can be as low as about N14 per minute on-net (same network) and N18 for outside the network.
The introductory tariff was high at N50 per minute by the start of digital mobile services in 2001.
Nigeria CommunicationsWeek gathered that the new interconnect rate is a most eagerly awaited development that will shape the growth and direction of the telecom industry.
NCC however blamed the delay of the review on the operators, who failed to give adequate data on time but added that consultants had now collected necessary data that would aid the review.
Mr. Steven Bello, NCC’s executive commissioner in charge of licensing and consumer affairs recently stated that “We are sure we will use correct data to come out with a reasonable interconnect rate.”
To maintain the delicate balance in the tripod that make up the telecom industry; government, consumer and the service providers, NCC has consistently intervened in determining interconnect rates for the industry. This is instead of intervention in retail call rates.
The combined effect of the two interconnect rate determinations by the NCC in 2004 and 2006 was a reduction of the mobile termination rate from N18.00 per minute to N11.40 per minute.
This has enabled the fixed operators to reduce their retail tariffs for calls to mobile networks to as low as N20.00 per minute.
But as subscribers claim early victory, telecom operators are hoping the review may give them nod to increase tariffs in view of the tough operating environment including the epileptic power supply, theft and vandalization of their equipment.
The immediate spin off of the challenges is the declining average revenue per user (ARPU), a powerful and extremely useful indicator which measures the average revenue generated per customer of an operator or service provider.
Nigeria CommunicationsWeek gathered that elsewhere, groups of telecom consumers have organized themselves to protest any form of increase by service providers.
National Association of Telecommunications Subscribers (Natcoms) said it will resist increase call rates.
Prof. Dora Akunyili, minister of information and communications is one of the most vocal critics of the present tariff regime insisting that GSM tariffs in the country could be lower even with the dearth of basic infrastructure.
She is also convinced that the network operators are not investing enough of the bumper profit in their business in Nigeria.
