" ITREALMS: CTOs: Killing them by the day

Thursday, March 16, 2006

CTOs: Killing them by the day

Features of the week:

Recent increases in the Global System for Mobile communications (GSM) operators’ tariffs for the Commercial Telephone Operators (CTOs), is forcing some to close shop, reports REMMY NWEKE.

From salon to call operator
As a barber for over five years, Mr. Aye Ogun, in his 30s, early in December 2005 took a decision to diversify into call center business to optimize the barber’s shop he uses at Oshodi in Lagos State.
Initially he closed his savings account with a bank in which he had about N30,000, with the hope of re-opening it as soon as business starts to boom.
He used the money to buy a GSM phone, Subscriber Identification Module (SIM) and a wireless fixed line for a start in addition to a table and chair to go with.
Three months later, Mr. Ogun was having accounting difficulties with the call operator, hence he sacked him. Then the few customers he had disappeared because he insisted on calling at a higher tariff, owing to a sudden hike in tariffs across the network he was hooked on; that is, N30 per minute, while his neighbours were charging N20 or even less.

Small scale business
Investment in the telecommunications sector in Nigeria has risen from $50 million in 1999 to over $10 billion as at December 2005. As said by the Communications Minister, Chief Cornelius Adebayo recently in Lagos, the average growth rate of telephone lines in the country is about four million per annum.

Although the teledensity has grown to over 20 million by December 2005, at approximated rate of 14 per cent from 0.4 per cent as at May 1999, most CTOs use, at least, one phone from each of the four GSM operators.

These include the GSM arms of the first and second national carriers, MTel, and Glo Mobile as well as MTN and Vmobile, in addition to having at least, one fixed wireless telephone line so as to remain in business.

Investigations conducted by ITRealms Online among CTOs revealed that at the beginning, every CTO operator starts with one line but due to arbitrary increases in call tariffs across networks, it becomes imperative for CTOs to have at least, two of the ‘happening networks’ of the moment available.

Another reason given is the reliability ratio on one network, which is still at a low rate and the low tariffs charged within. Most CTOs were made to buy these lines due to various promotions mapped out for them from one teleco to another.

For instance, while Glo dangles the monthly rental under its ProfitMax Plus, Vmobile has the Bumpa in three series, MTN showcases Booster series and MTel’s PowerTalk is not left out.
One unique feature about these offers targeted at CTOs is that the higher the denomination, the lower the tariff. Such that N9,000 monthly Vmobile Bumpa value card afforded users to pay about 20 kobo per second (PS) within the network and others 40 kobo (PS) which amounts to N24 per minute.

For Glo Profit Max it is N21 flat per minute for all networks in the country. And for the Profit Max Plus with N5,000 rental, calls cost 18 kobo Glo to Glo, while 28 kobo to other networks.
Also before now, MTN’s Super Booster was about N15 within and about N24 across networks.

Rise in tariffs
In the last few months, business has not been the same again for most CTOs, because of the unprecedented increases in tariffs across networks, which most of them described as a means of literally eliminating them from call center business.

Currently, Vmobile and MTN charge N18 within networks which amount to 30 kobo per second and others 50 kobo respectively. Whereas Glo to Glo on ProfitMax Plus is 28 kobo, about N16.80, Glo to other networks cost 40k that is N24 per minute.

Fears and take over …
There are palpable fears that since GSM operators have found their battle ground on CTOs, definitely they, like the proverbial grass would suffer as the contest continues.

And as this ‘war’ on increased tariffs unfold in the GSM platform, Fixed Wireless Access (FWAs) like RelTel and Starcomms are on the verge of taking over as they have succeeded in slashing cost of calls to the GSM networks.

According to the newly appointed Chief Marketing Officer at RelTel, Mr. Kierian Enechi, RelTel’s Bonus card until few months ago was N15 to all GSM networks per minute until the operator came up with 30 kobo per second billing system and increased the bonus availability to N7,000 monthly, even as it now has weekly bonus of N2,000.

Starcomms’ Super Turbo seems static but still worth better than most GSM offering for CTOs according to them, as the network offers N17 on GSM calls.

One of the CTOs, who identified himself as Alhaji Amid in a Lagos suburb of Mafoluku, simply said that GSM operators have ganged up against call center operators, hence they “want to kill us” confessing that some, especially new comers into the business are finding it extremely hard to understand the modules of frequent changes in call tariffs and instead of downwards, it is going up.

This, he said, has led to sacking of two school-leavers in his employ in the last two months, who manage the call centers at different locations around the vicinity, even as he is contemplating relieving another until situation improves, because “the profits are dwindling by the day”.

Another CTO, located on Victoria Island, Mrs. Constance Chukwuneke, said the stress was becoming too much and the profit not forthcoming to sustain the business, even the wage of the call operators, since the constant change in tariffs across networks, which means buying almost all the offers for CTOs in the market, especially by GSM operators.

However, major reason for the recent call for a one-day switch off campaign championed by the National Telecom Subscribers Association of Nigeria (NATCOMS) led by Chief Deolu Ogunbanjo, was the need to reduce call tariffs.

Chief Ogunbanjo said that it is “only in Nigeria that you see GSM services getting worse with the kind of growth in number of subscribers recorded in recent times”. Noting that they, telecos, keep giving excuses of high cost of infrastructure and laying the same to provide services.

For him, what the group wants include reduced tariffs, free weekend calls and Short Messaging Service (SMS), 75 per cent reduced intra-network and off peak calls and SMS rates, just as they demanded efficient service delivery.

“To say the least, the tariff has been deliberately exploitative and this has been further characterized by poor systems responsiveness, low call set-up, poor call voice quality, high call failure rate, inaccurate billings, low recharge call success rate and poor staff as well as customer-care responsiveness,” he asserted.

Salvaging CTOs
The Nigerian Communications Commission (NCC) has to wake up in this area of tariff structure, especially for CTOs who depend on call revenues for livelihood and provision of employment for others, of which many of the people employed at this level constitute mostly post-primary school leavers.

It was also gathered that most times telecom operators do not give CTOs ample time to exhaust what they have loaded before the tariff rises, thereby short-changing them.

Focus, therefore on consumer needs is very essential in business and consideration should be given to those who have loaded these offerings to ensure they all have the basic values as well as removal of unfair tariffs.

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