7 February 2013

Nigeria: Telcos Fret Over New Interconnect Rate Model

Fear of uncertainty has gripped telecoms operating companies over the planned adoption of new interconnect rate model for the telecoms industry, by the Nigerian Communications Commission, (NCC).

The operators who spoke at a recent stakeholders' forum organised by the NCC in Lagos, raised fears on the type of interconnect model that the commission might want to adopt for the industry.

While some were in support of the asymmetric model, a few others were pushing for the symmetric model, and another group of operators was calling for a third tier of model that would basically be in favour of Code Division Multiple Access (CDMA) operators.

In technical parlance, the asymmetric model allows operators to pay differential fees as interconnect rate for all terminated calls. The differential is determined by the volume of traffic, and in most cases, the bigger operators with the largest volume of traffic, pay higher interconnect rate, when calls from the bigger operator's network terminate on the network of a smaller operator.

The symmetric model allows for uniform interconnect rate between operators, irrespective of the volume of calls generated by each operator. The third model takes care of CDMA operators, with limited mobility traffic that is far less than that of the Global System for Mobile Communication (GSM) operator.

Chief Executive Officer of Etisalat, Mr. Steve Evans, who spoke in support of asymmetric model, said it remained a better way to maintain healthy competition in the industry, and called on NCC to consider it.

Not comfortable with the position of Etisalat, Director of Interconnect Network for Globacom, Mr. Aremu Olajide, said the asymmetric model was not a long-term rate, but a dynamic tool introduced by the NCC to protect smaller operators.

He said in 2009, Globacom was denied the privilege of enjoying asymmetric model, for the reason that it was already six years old in the industry as at then.

Olajide explained that no GSM operator was currently less than five year-old in the industry, and called on NCC not to consider years of operation in determining model for the new interconnect rate.

Senior Manager, Regulatory Affairs for MTN, Mrs. Oyeronke Oyetunde, maintained that the cost of doing telecoms business, remained the same across networks, be it big or small operator.

She called on NCC to be careful in determining the new interconnect rate, insisting that every operator that had benefitted from asymmetric model in the past, should be evaluated to find out the extent to which they have benefitted, before considering them for another asymmetric model.

She therefore called on the commission to give operators more time to brainstorm on the issue and make new inputs into the planned interconnect rate.

Head Regulatory Affairs for Airtel, Mr. Osondu Nwokoro, asked for more time to enable telecoms operators make meaningful inputs.

A director at Visafone, Mr. Issah Ojo, who spoke on behalf of CDMA operators, said the current interconnect rate of N8.20k did not in any way, reflect what Visafone and other CDMA operators have as interconnect cost.

"We the CDMA operators are marked out by large economics of scale in the telecoms industry, which puts us far apart from GSM operators, Ojo said."

Chief Executive Officer of NCC, Dr. Eugene Juwah, however made it clear that adoption of a particular model would largely depend on the state of the market in terms of competition, market growth, volume of traffic generated and the inputs from telecoms operators.

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