NCC Set To Review Rates For International Voice Calls

Danbatta said that through the new ITR pricing, the Commission would be able to balance the competing objectives of economic efficiency and allowing operators the opportunity to generate reasonable revenue.

Executive Vice Chairman/CEO, Nigerian Communications Commission, Professor Umar Garba Danbatta / Photo credit: NCC
Executive Vice Chairman/CEO, Nigerian Communications Commission, Professor Umar Garba Danbatta / Photo credit: NCC

The Nigerian Communications Commission (NCC) will soon begin a cost-based review to determine new pricing regime for mobile International Termination Rate (ITR) for inbound international voice calls in the country.

This was disclosed on Monday by Dr. Ikechukwu Adinde, Director, Public Affairs of the agency.

According to Adinde, the Commission has already organised a virtual stakeholders’ engagement forum with relevant industry stakeholders as part of the process for the rate determination.

The ITR is the rate paid to local operators by international operators to terminate calls in Nigeria.

Adinde explained that forum was to apprise the stakeholders with the ongoing cost-based study and the need to cooperate with Messrs Payday Advance and Support Services Limited, the consultants engaged to carry out the study.

The NCC Executive Vice Chairman, Prof. Umar Danbatta, who addressed the stakeholders said the study had become imperative following the various implementation constraints arising from contending industry and market dynamics that met previous efforts at finding an optimum price for the termination of international voice services in Nigeria.

Danbatta said that through the new ITR pricing, the Commission would be able to balance the competing objectives of economic efficiency and allowing operators the opportunity to generate reasonable revenue.

He, however, explained that in 2013, the Commission issued a determination stating that Mobile Termination Rates (MTR) were the same irrespective of where the call originated from, adding that it was largely misconstrued by operators at that time that ITR should be the same rate as the MTR.

He said this led to operators ignoring the international cost portion, where ITRs were agreed at MTR level without a positive residual to cover the costs of the international leg for local operators.

“As a result of this, the ITRs continued to decline, in line with the MTR glide path and as the ITR was set in naira, it suffered a further downward slide in dollar terms following the currency devaluation.

“Ironically, the Nigerian operators paid the international operators in dollars to deliver international calls which created an imbalance of payments as the ITR in Nigeria declined,” he said.

Danbatta said Nigerian operators’ profitability and commercial results were negatively affected putting Nigeria’s ITR below that of most countries with which it made and received the most calls, thereby making Nigerian operators perpetual net payers.

“According to him, this has, therefore, led to undue pressure on the nation’s foreign reserves, which continued to get depleted by associated net transfers to foreign operators on account of this lop-sidedness.

“Hence the need for Nigeria, with volatile a currency to regulate the ITR to prevent or mitigate the imbalance of payments with international operators.

“Where ITR is not properly regulated, it tends to have negative effect on a market like Nigeria with major supply side challenges and associated socio-economic implications. So, setting a rate substantially above the MTR has resulted in a number of repercussions.

“One of such is the consumer shift to online channels as calls are increasingly made through Internet Protocol (IP)-based technologies such as Skype and WhatsApp because of high international call prices.

“To this end, an economically-efficient ITR that is cost-based will maximise economic benefits to all stakeholders,” he said.

Earlier in her remarks,NCC Director, Policy, Competition and Economic Analysis, Mrs. Yetunde Akinloye, said the forum was aimed at formally engaging with and sharing the perspectives and insights of industry stakeholders.

Akinloye said that it was also for ultimately enlisting their collective support in relation to the inputs and requirements towards the determination of a mutually- realistic ITR in Nigeria.

She noted that the project commenced on March 10, with a kick-off meeting but was stalled by the challenges associated with the COVID-19 pandemic, necessitating the need to explore emerging channels of engagement to move forward and ensure the completion of the project.

Akinloye reiterated the Commission’s commitment to continuously provide a conducive environment and level-playing field for the effective interplay of factors that would sustain market development and growth.

“This is addition to ensuring the provision of qualitative and efficient telecommunications regulatory services for the benefit of consumers and licensees,” she said.

Written by The Interview Editors

The Interview is a niche publication, targeting leaders and aspiring leaders in business, politics, entertainment, sports, arts, the professions and others within society’s upper middle class and high-end segment in Nigeria.

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