Telecoms operators may reject new interconnect rates

There are indications that telecommunication operators may reject the new set of interconnection rates released by the Nigerian Communications Commission last week. The new interconnection rates for voice services are targeted at bringing down call tariffs. The operators are of the view that the asymmetric model adopted by the NCC to arrive at the figures was not competitive. In telecommunications, the term asymmetric (non-symmetrical) refers to any system in which the data speed or quantity differs in one direction as compared with the other direction, averaged over time. This results in varied determination rates for different operators in the market on the basis of specified parameters. But the NCC said the review, which would start from April 1, 2013, was agreed on after consultations with various stakeholders. According to NCC, the termination rates for voice services provided by new entrants and small operators, irrespective of the originating network, shall be: N6.40 from April 1, 2013; N5.20 from April 1, 2014; and N3.90 from April 1, 2015. The termination rates for voice services provided by other operators in Nigeria, irrespective of the originating network, shall be: N4.90 from April 1, 2013; N4.40 from April 1, 2014; and N3.90 from April 1, 2015. The current rate which is symmetric to all operators, is N8.2. The Corporate Services Executive, MTN Nigeria, Mr. Akinwale Goodluck, in a telephone interview with our correspondent, said, “We are studying the determination. The determination is asymmetric. There is still a window for this. I think the ideal thing is for NCC to abolish the asymmetric model.” The Director, Regulatory and Government Affairs, Airtel Nigeria, Mr. Osondu Nwokolo, who also spoke to our correspondent, said Airtel was still studying the review to know how it works. “We are still studying it to know how it works. The rates still retain the asymmetric model. There should be a single determination. The market has ‘evened’ out because some of the new entrants have been here for awhile,” he said The spokesperson for another operator, who asked not to be quoted, said they expected the NCC to develop a flat determination rate for all operators. He said his company had yet to decide on the next line of action. But the NCC had said the new determination rates, which significantly reviewed prices downwards were informed by the depth of competition in the industry while taking into consideration the position of new entrants and small operators. For new entrants and small operators, the tariff drop will be by 21.95 per cent come April 1 this year, while for other operators, the drop will be 40.2 per cent, following the new rates. “This determination shall take effect from April 1, 2013, and remain valid and binding on licensees for the next three years until further reviewed by the Commission,” the NCC had maintained. According to the NCC, a new entrant is a newly licensed operator entering an existing or new market within zero to three years, while a small operator, for the purpose of the determination, is an existing operator with a market share of zero to 7.5 per cent in terms of subscriber base. The current interconnection rate regulation was implemented through the commission’s Interconnection Rate Determination issued on December 21, 2009. Since then, the Nigerian communications market has seen tremendous growth in subscriber numbers as well as traffic volumes and available technologies. In June 2012, the commission appointed PricewaterhouseCoopers LLP to undertake a cost study for voice interconnection.     [Punch]