14 December 2012

Nigeria: Telecoms' Interconnectivity Debt Hits N20 Billion

Interconnect rates between telecommunication operators have reached N20 billion since the inception of Global System for Mobile Communications (GSM), 11 years ago.

This was revealed in Lagos on Thursday at a regulatory forum on interconnection indebtedness in the telecommunications industry organised by the Nigerian Communications Commission (NCC), the industry regulatory body.

According to the revelation, 60 per cent of the amount was in dispute, as some operators blamed it on poor billing system among some telecoms operators.

According to NCC, the forum became necessary in order to address the issue, which it said, was becoming unhealthy for the industry.

Some of the telecoms operators present at the forum, blamed the challenge on the disparity on interconnect rates between the GSM operators and the Code Division Multiple Access (CDMA) operators.

While the CDMA operators were calling for a uniform interconnect rates, the GSM operators blamed the issue on Interconnect Clearing Houses for their inability to pay settlement bills on time on one hand, and the weak financial status of smaller operators to pay interconnect rates to the clearing houses on the other hand.

Addressing the growing concerns on interconnect indebtedness, Executive Vice Chairman of NCC, Dr. Eugene Juwah said: "In recognition of the importance of seamless interconnection to the telecoms industry, the commission put in place, regulatory measures to guide the process.

The commission has however observed that some operators take advantage of the provisions of the guidelines on procedure for

granting of approval to disconnect telecommunication operators by deliberately refusing to promptly discharge their financial obligations towards their interconnect partners."

He said the commission noted that the challenge continued to escalate, and that the current accumulative debt profile in the industry was becoming worrisome.

In technical parlance, interconnection is the physical link of networks through a channel, where traffic generated from one network is terminated on another network at a determined rate. The revenue sharing rate differs from between the ratio of N14:N6 and N12:N8.

While the CDMA operators pay GSM operators N14 for every call generated from CDMA network and terminates on the GSM network, the GSM operators pay N6 to CDMA operators for every call generated on the GSM network and terminates on the CDMA network. The disparity in the billing system is being contested by CDMA operators, who are calling for a uniform interconnect billing rate.

Other reasons for the huge interconnect indebtedness, as raised by the forum, were delay by the Interconnect Clearing Houses in settling interconnect rates, and refusal by some operators to pay their interconnect bills.

Proffering solution to the challenge, the forum called for the strengthening of the role of NCC in regulating the telecoms industry; the establishment of Asset Management Company that could bailout defaulting operators who could not pay their bill, by either buying into such telecoms company or take over its management until a time they are financially balanced to perform their financial obligations.

Other solutions were the establishment of mediation and arbitration panel that will handle debt settlement among telecoms operators, and given network operators the authority to disconnect operators who are heavily indebted and are not making efforts to pay up their bills.

They argued that if operators could pay roaming interconnect rates to international carriers, there was no reason for refusing to pay the interconnect rates to domestic carriers within the country. Some however argued that disconnection of indebted operators should be the last resort in solving the challenge.

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