21 December 2013

Nigeria: GSM Companies Should Lower Tariff - Usoro

Though telecommunication tariff in Nigeria has fallen over 75 per cent since 2001, Nigerians are calling for more tariff reduction, for SMS and voice communication, a senior lawyer has said.

Call tariff in Nigeria fell from about N50 in 2001 to about N45 around 2005 and about N12 today, (for peak period). The tariff for SMS has also fallen from about N15 in 2001 to N9 around 2010 and about N4 in 2013. The cost of SIM pack has fallen from about N12, 000 in 2001 to about N5, 500 in 2004 and is now being given freely on the streets.

There are currently 121, 271, 218 active subscribers in Nigeria. There are 118,470,236 active GSM subscribers, 2,438,950 active CDMA users and 362,392 active Fixed Wired/Wireless subscribers. There are 171,961,525 connected lines. 158,239,230 connected GSM lines, 11,307,307 CDMA and for Fixed Wired/Wireless, 2,414,988, according to official statistics.

The call for lower tariff and better service quality was made at the 2013 Telecoms Stakeholders Summit which held this week.

Paul Usoro, a Senior Advocate of Nigeria, said the argument for a reduction is because over 50 per cent of Nigeria's population live in 'multi-dimensional poverty.'

"With a national minimum wage of N18, 000, 54.1 per cent of Nigeria's population live in multi-dimensional poverty, 17.8 per cent vulnerable to multiple deprivations," he said. "Preceding data means that more than 50 per cent of Nigerians are deemed to be technically poor while another 17 per cent are at risk of falling into the poverty trap."

He added that the intensity of deprivation in Nigeria is 57.3 per cent (i.e. technically poor people who do not have more than half of the basic amenities of education, health and general living standards).

He however said despite all these challenges, tariffs must capture all telecoms operational costs and also balance the need to provide quality services to consumers at affordable rates. According to him, parameters for tariff determination includes the Peak and off-peak periods (peak period calls are usually higher), on net and off-net call termination (call terminating on the same network are relatively lower), closed user group (usually charged at lower rates) among other factors.

"Tariffs are critical in NCC's determination of subscribers classified as "underserved group" and general implementation of the Universal Service Provision Policy of the NCC. This underscores the need for close monitoring and, regulatory supervision to ensure that a majority of the population is able to benefit from essential services," he said.

He said the government needs to work on energy and security and that a multi-sectoral approach is required.

"Efforts need to be stepped up in regard to naming of telecom infrastructure as national infrastructure and deserving of enhanced security" he said.

He added that multiple taxation needs to be decisively tackled. According to him, the Ministry of Communications Technology has floated the idea of having a unified body to look at question of multiple taxation. He recommended that the States and Local Government Councils must be actively involved.

He urged operators to take proper steps to mitigate losses leading to increased operational cost such as co-location and shared facilities.

The Nigerian Communications Act, CAP N92 Laws of the Federal Republic of Nigeria 2004, ("Act") made very elaborate provisions for tariff regulation. The Act forbids holders of individual licenses from imposing any tariff or charges for the provision of telecom services without a prior approval of the NCC.

Section 108(4) of the Act highlights the guiding principles for the establishment of tariff rates and these include: tariff rates shall be fair and not discriminatory, cost oriented and in general, cross-subsidies shall be eliminated, it shall not contain discounts that unreasonably prejudice competition, and that it shall take into account regulations and recommendations of international member organizations.

The Commission sometimes determines official tariff rate for telecoms services. According to Mr. Usoro, a notable directive was the NCC's reduction of tariff or off-net short messages from N10 to N4. The Commission's determination on the rate for interconnection in 2009 placed the cost of SMS interconnection at N1.02.

As at the commencement of GSM service provisioning, telecom tariffs were based on per minute billing system. GSM call rates were as high as N50 per minute for peak periods and N40 for off peak periods irrespective of terminating networks. The per second billing system was introduced by Globacom in August, 2003, and quickly followed by Econet (now Airtel Networks Limited), in November 2003 and then MTN in December 2003.

Acquisition of Zain by Bharti Airtel led to significant tariff reduction by operators. Call tariff fell from N35.00 to about N9.00 per minute. That marked the beginning of the Tariff Wars. Subsequently, operators introduced different customer-retention propositions and tariff e.g. Airtel's "2goodclassic" and "AirtelClub10" packages and Etisalat's "EasyNet" and "EastCliq" packages.

Eugene Juwah, Executive Vice Chairman, NCC, said as a regulator, NCC's common interest is to satisfy all the stakeholders.

"This arduous task puts us on a delicate balance," he said. "For a cross section of consumers, who are our primary stakeholders, they have had to contend with some complaints, especially on the issue of quality of service which has fluctuated over time. However, we hope to continue to address the challenges. We intend to engage the operators to live up to the expectations of the industry as indicated in the Key Performance Indicators which they have all agreed to abide by, to achieve acceptable quality of service levels. As the year comes to an end, we will be tackling the issue of quality of service with renewed vigour, and anticipated cooperation of the service providers".

He said the operating environment was beset by many challenges.

"The issue of vandalization of infrastructure, especially in the northern part of the country, took a tool on the networks. Issues of multiple regulation and taxation remained a constant threat. But again, government has taken a bold step through the efforts of the Minister of Communications Technology resulting in the resolution by the National Economic Council to resolve the issue of Right of Way," he said.

Mr. Juwah said the New Year will usher the auction of frequency in the 2.3GHz Band.

"We shall do this in our tradition of transparency and all those who have expressed interest will soon be invited. Next year will witness the bidding and issuance of licenses in the different layers as prescribed in the Open Access Model.

"This to say that 2014 would be a year of many additions to the industry, with more opportunities opening for investors, and services available to the consumers in line with governments aspirations," he said.

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