Nigeria: Regulator plans to reduce interconnection fees which should result in lower charges for consumers

[business day] Nigerians will be paying less for telephone calls and text messages before the end of this year, Ernest Ndukwe, executive vice chairman of the Nigerian Communications Commission (NCC), said Monday, in Lagos.

This follows the report of consultants hired to review interconnect rates in the nation’s telecom sector.

Interconnect rates are the charges which telecom operators pay for terminating calls on each others’ (fixed or mobile) networks. The said rates are among the key factors which determine telecom tariffs because tariffs for cross-network calls cannot be lower than the interconnect rate if the operators are to remain viable.

The NCC had in March, this year, appointed the firms, Detecon International and PricewaterhouseCoopers, as consultants and advisors to help it review current interconnection rates which formed the basis for the current tariff charged among the Nigerian telecom service providers.

BusinessDay sources said the consultants after monitoring the current dynamics of the nation’s telecom industry and discussing with stakeholders, recommended that the rates be reviewed downwards.

Speaking on Monday at the Computers, Telecoms and Office Equipment (CTO) fair, hosted by the US Commercial Service in Nigeria, Ndukwe said: “As the operators continue building and expanding their networks, I have no doubt in my mind that before the end of this year, Nigerian subscribers would see a remarkable reduction in the price of calls they make on their networks”.

He added: “This would happen for two reasons. First of all, we are reviewing the interconnect rates in the telecom industry and we hope that by the reduction of rates which people pay to each other, that would also force the operators to reduce the rates that they charge subscribers at the end of the day.

“For those who use SMS, recently, we have also reduced the rates for SMS, from what it used to be, from about N7 to about N3. And by the time we finish the study we are conducting, it is actually going to reduce further and I suspect, to an acceptable level that will make SMS in Nigeria no longer N15 or N17 as the case may be, but something much lower so that you can use SMS as heavily as possible.”
The brief of the two consulting firms that reviewed the interconnect rates was to conduct cost study as well as international benchmarking studies as a follow up to that conducted in Nigeria in 2006 which led to the enactment of the existing fixed and mobile termination rates in the country.

The consultants had sessions with the operating companies during the months of March and April 2009, while their reports were submitted last week of April.
The NCC said that with the growth of the nation’s subscriber base, and changes experienced in the operating environment, it had become necessary to review the interconnect rates so as to be in tune with current realities.


Telephone tariffs to fall before December, says Ndukwe