Nigerian Communications Commission Also to review interconnection rates for voice services

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

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

“Identify shortfalls on the subsisting
interconnection rate regime and provide workable
“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
“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. 

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