The Nigerian Communications Commission (NCC) recently embarked on a cost-based study in setting up the new pricing regime for mobile international termination rate (ITR) for inbound international voice calls in Nigeria.
The ITR is the rate paid to local operators by international operators to terminate calls in Nigeria.
The NCC as part of the process for determining the rate has set up a virtual stakeholder engagement forum with important industry stakeholders to intimate them with the ongoing cost-based study and the necessity in cooperating with Messrs Payday Advance and Support Services Limited, the consultants engaged by the Commission to execute the study.
Prof. Umar Danbatta, the Executive Vice Chairman of BBC, while addressing the stakeholders in Abuja, said the study has become necessary following the various implementation constraints coming from contending industry and changes in the market structure that met previous efforts at finding an optimum price for terminating international voice services in the country.
Represented by Adeleke Adewolu, the Executive Commissioner, Stakeholder Management, NCC, Danbatta, said through the new ITR pricing, the NCC will be able to balance the competing objectives of economic efficiency and enabling operators to generate significant revenue.
Prof. Danbatta, however, that as far back as 2013, the NCC had issued a determination that stated that mobile termination rate (MTR) rates remain the same irrespective of where the call originated.
This he explained was largely misconstrued by operators at that time to mean that ITR should bear the same rate as the MTR.
The EVC said this has 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,” Danbatta said.
Due to this, the EVC commented that the pŕofitability of and commercial results of Nigerian operators were negatively affected by placing Nigeria’s ITR below that of most countries with which it exchanges the most calls, thus subjecting Nigerian operators as perpetual net payers.
“This has, therefore, led to undue pressure on the nation’s foreign reserves, which continue to get depleted by associated net transfers to foreign operators on account of this lop-sidedness.
Hence the need for Nigeria, with volatile currencies, to regulate the ITR to prevent or mitigate the imbalance of payments with international operators,” Prof.Danbatta stressed.
According to the EVC, in cases where ITR isn’t regulated properly, there is a tendency for a significant effect on a market like Nigeria having 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,” said the EVC
Yetunde Akinloye, Director, Policy, Competition & Economic Analysis, in her earlier remarks said the forum aims at formally engaging with and sharing the perspectives and insights of industry stakeholders, while ultimately enlisting their collective support in relation to the inputs and requirements towards the determination of a mutually- realistic ITR in Nigeria.
Akinloye noted that the project started on Tuesday, March 10, 2020, with a meeting but was halted by the COVID-19 pandemic challenges, which necessitated the need to explore emerging channels of engagement in moving forward and ensuring the completion of the project.
She reiterated the NCC’s commitment in continuously providing a conducive environment and level-playing ground for the effective interplay of factors that would meep up market development and growth, while ensuring the provision of qualitative and efficient telecommunications regulatory services for the benefit of consumers and licensees.
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