In an effort to allay concerns between international carriers, mobile network operators (MNOs), and international data access operators (IDA), the Nigerian Communications Commission (NCC) has increased the international termination rate (ITR), which was previously set at $0.045 to $0.10 per minute.
The requirement for a fixed rate to guarantee that the interests of all parties are taken into account has raised worries among the participants.
To that end, starting tomorrow, September 1, the new termination charge of $0.10 per minute will be in place.
ITR is the fee that foreign operators pay to local operators in Nigeria to end calls.
The NCC asserts that a set rate will enhance the Commission’s efforts to oversee compliance by all operators and provide price transparency for all parties.
In order to make this happen, representatives of MNOs and IDAs had initially asked the commission to take into account a fixed ITR of $0.08 and $0.15, respectively. However, following a careful review, the commission decided to set the rate at $0.10.
IDAs had earlier in the year expressed concern that the $0.045, which was to be transferred in dollars, would cripple their operations and reduce them to being just MNO laborers.
The IDAs owed telecoms operators nearly $8 million in the first half of the year after the $0.045 termination fee went into effect, an official of one of the MNOs admitted to The Guardian last month.
However, in a new document issued yesterday and signed by Prof. Umar Danbatta, Executive Vice Chairman of the NCC, titled “Determination of Mobile (Voice) International Termination Rate (As Amended) Issued by the NCC and dated August 25, 2022,” the commission acknowledged that there were post-implementation issues and that further discussions with pertinent stakeholders were required.
The House Committee on Communications of the National Assembly held a public hearing on March 17 where it was decided that the commission should continue working with the IDAs and the MNOs to better understand their respective concerns as a foundation for a just and amicable resolution of the issues.
As a result, NCC claimed in the 16-page paper that it met with IDAs and MNOs on multiple occasions, especially on April 6 and June 21, 2022.
From the meetings, NCC accused MNOs of discriminatory pricing. “While the Determination had set a floor price of $0.045 and gave the MNOs room to negotiate on commercial terms with carriers, there were related indications that MNOs took advantage of this latitude to engage partners to the detriment of the Nigerian transit/IDA operators.”
“To check the incidence of such anti-competitive disposition, it was agreed by all parties at the meetings that a fixed rate should be adopted by the Commission, in place of the floor rate, which had provided a platform for negotiations with various carriers at a rate above the floor. It was further agreed that the present Determination should be amended to include this new fixed rate. The position was further underscored by the fact that the floor price of $0.045, while being the lowest rate in Africa, does not support predictability and monitoring, with a little positive impact on a healthy national balance of payment position,” NCC added.
The document also stated that the meeting took into account how the current tax structure affected the relative price offers made by the MNOs, other international carriers, and the IDAs.
According to the paper, other foreign carriers enjoy a relative price advantage over IDAs since they are not required to pay the same Value Added Tax (VAT) rate of 7.5% that is included on bills sent to IDAs.
As such, “it was the consensus of all that taxes and other costs borne exclusively by the IDAs be taken into consideration in arriving at the rate of terminating international in-bound traffic by them. The pricing asymmetry on the ITR will allow local IDA players to accommodate taxes and other related costs in a way that guarantees their competitiveness within the international carrier market and aligns with the subsisting principle and policy on local content.”
To put this into action, it was unanimously decided, according to the document, that the NCC adopt the same asymmetrical corridor as the 2018 MTR Determination, which has big operators terminating at N4.70 in the networks of small operators and small operators terminating at N3.90 in the networks of big operators. This discrepancy, which equals a discount of 21%, should apply to all terminations of inbound foreign traffic for IDA operators.
In order to implement this new decision, NCC claimed that on June 29, it met with the Central Bank of Nigeria and shared information with the apex bank about the difficulties associated with foreign exchange remittances, value chains, and international traffic flows.
While this was going on, insiders within the IDAs praised the NCC and NASS for attending to their requests and taking the appropriate action.
According to a source, the NCC, IDAs, and MNOs held extensive consultations while taking the interests of the country into account.
