Vanguard (Lagos)

6 June 2012

Nigeria: Telecom Operators Must Pay N1.17 Billion Fines, Or - NCC

interview

EARLY last month, the four top telecoms firms in the country – MTN, Airtel, Etisalat and Globacom were fined a total N1.17 bn by the industry regulator, the Nigerian Communications Commission, NCC, for not meeting stipulated quality of service benchmarks called key performance indicators.

A deadline by which the fines must be paid was set, which expired last May 25th, with a default fine of N2.5m per day until the fines are paid. The telcos, in moves that suggest unwillingness to pay the fines fought back, and in several advertorials listed their ordeals, chief of which include self-generated electricity and damage to business infrastructure which they said is militating against attainment of stipulated KPIs. Observers have keenly watched developments, especially since expiration f the May 25 deadline by which none of the telcos have paid.

Instead, chief executives of the telcos and some of their top brass sought and secured a meeting with NCC, which held in Abuja last week. At the meeting the NCC reiterated its position on quality of service, and insisted that the telcos must first pay the fines and the default penalties before discussions can proceed on any other issue.

Speaking through its Director of Public Affairs, Mr Tony Ojobo, NCC disclosed that as a regulator, there are several options open to it in enforcing payment of the fines, including withdrawal of regulatory services to service providers. Excerpts:

We had a meeting with the sanctioned service providers. Initially the position of the Commission was that we were not going to have any discussion with the service providers until the penalties had been paid but on second thought management felt that there was need to listen to them to see if there were new issues to be raised regarding sanctions.

The CEO's were all in attendance with some of their staff. They indicated that they wanted to see if the NCC would review its position on the sanctions and probably see whether there can be some form of reprieve for them, considering the challenging circumstances in the environment which have contributed to the poor quality of service. They mentioned the issues of power, cable cuts and multiple taxation and all of that.

These challenges are not new to the commission. They have been on and the issue of quality of service has been in discussion for six years until last January when the Quality of Service guidelines were gazetted and then there was need for the Commission to apply sanctions to service providers that did not meet key performance indicators (KPIs) as indicated in the guidelines.

Meeting

Before then there was a meeting between the service providers and the commission where they had made commitments that by March this year we were going to see noticeable improvements in the quality of service offered. As at March we still didn't see any noticeable improvements; rather we observed very poor quality of service on all the networks.

The Commission was of the view that there was no need to review the sanctions in the sense that these key performance indicators have not been met; but at the end of the meeting the position of NCC still stands; the sanctions and penalties will have to be paid.

What if it is not paid?

The point is that there are specifications in the guidelines that after the deadline for the sanctions there is going to be N2.5 million for each day of default and we are already in the default period and it is expected that the sanction as well as the default penalties will have to be paid.

There are options open to the regulator in the event where the service provider is not ready to obey. The regulator has the choice of withdrawing regulatory services such as the issuing of new numbers or entertaining any request whatsoever from the service provider. There is no way a service provider can do without the regulator; there are so many things a service provider cannot do without approval of the regulator. The regulator has a number of regulatory tools to get the service provider to conform or obey the regulatory rules.

The deadline given was on the 25th of May; why did you decide to give them ears even after the deadline elapsed?

As a responsible regulator as much as possible we provide listening ears to the industry and the most important thing is that the Commission was not ready to shift grounds; it was also important that we re-emphasize that we are maintaining our stand on the payment of sanctions.

Nothing is waived, either the original sanction or the default period penalty. At the time of payment all of that has to be paid. We entered the default period from the 26th of May, counting from the 26th of May to anytime payment is made, it is N2.5 million per day.

The funds you are charging them are they going to be paid to the consumers or to government through the NCC?

For the purpose of emphasis, we have to make a distinction between compensation and fine. A sanction is a fine. Fines are paid to government and compensation is paid to subscribers. What the guideline specified is fine and that fine is paid to government through the Commission.We are not shifting any ground on this matter.

We have the backing of the law on this matter and we want to reemphasize that the purpose of the sanctions is not a rent seeking thing. We are not looking for avenues to generate revenue but as a deterrent. We want a situation that there is something that is acting as a check for which the service providers will constantly make sure there is improvement in the quality of service on their networks.

When are you moving to check quality of service again?

It was important to draw the attention of service providers that quality of service is still poor and there is a need for them to address it squarely. They also wondered if this sanction was going to be a continuous sanction. The position of the Commission is that we are not going to discuss any further until this sanction is complied with. We will not discuss further actions or entertain any further meeting on this matter until sanctions are complied with.

The measurement for quality of service is quarterly. The months we are talking about is for March and April. March is the last month in the first quarter and April is the first month in the second quarter. The issue of drive test is continuous. Our engineers will still conduct drive tests and if we observe that there is very remarkable degradation of QoS the attention of the service providers will have to be drawn.

Will that attract sanction?

When we get to the bridge we cross it.

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