11 December 2012

Nigerian Phone Subscribers Set for Lower Call Rates

Nigerian telecommunications subscribers are set to benefit from a new interconnect rates popularly called Mobile Termination Rates (MTRs) which would lower cost of phone tariffs charged by operators with the current rates expected to end by the end by December 31, 2012.

The new rates take effect from January 1, 2013, and determine what operators would charge each other for terminating voice and short message service (SMS) traffic on their network over the next three years. Experts say a new study conducted by the regulator was expected to save subscribers money and lower further the cost charged by operators.

A source at the Nigerian Communications Commission (NCC), said; "Before the expiration of the current MTRs, a discussion on future termination rates will be made known by the telecom regulator." In 2006, NCC set MTRs at N11.25kobo across board. However, on December 31, 2010, NCC came up with MTRs called Asymmetric Rate which favored new entrants ahead of old operators.

"I cannot say whether the interconnect rates will come down, only the study will determine. There is the issue of the amortisation of the equipment running on the network. There is an ongoing study called Cost-Based Study which will reveal whether interconnect rates will come down. This new study will replace the current Asymmetrical Rate that will elapse after three years. For instance, the study will find out the age of the equipment operators are using.

He said: "If Glo say their own cost is N9, MTN say theirs is N8.50, Etisalat say theirs is N8.20k and so on, the study will find out who is saying the truth, compare the age of the equipment and look at other facts before determining what should be the new rate. The asymmetric rate presented many features that represent improvement in the earlier interconnect rates determinations by the NCC."

Asymmetric MTRs ensured new mobile operators (such as Etisalat Nigeria) enjoy higher termination rates than the older operators, as a result of the study that showed such operators expended higher cost of termination in their networks.

Asymmetrical MTRs on new entrants' networks graduated from N10.12 from December 31, 2009 to N8.20 in 2012 while call terminations on older operator's networks is fixed at N8.20 over the same period.

On the SMS, new entrants enjoy interconnection rates starting from N1.94 from December 31, 2009 to N1.02 in 2012. The other (older) mobile operators stayed on a fixed N1.02 bar over the same period. In the past, interconnect rates for fixed and mobile networks were different but the asymmetrical rates are uniform across board because of the unified access licences that were unfolded in 2007.

Many operators now offer mobiles irrespective of the technology - Global System of Mobile communications (GSM) or Code Division Multiple Access (CDMA). The asymmetrical rates cut telephone tariffs by as much as N4 per minute. The NCC had engaged PricewaterhouseCoopers (PwC) and Detecon Consulting to undertake in-depth cost studies of the voice and SMS interconnection rates, respectively.

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