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Wednesday, July 12, 2006

Good rates’ll boost telecom service – Ndukwe

Executive Vice Chairman (EVC), Nigerian Communications Commission (NCC), Dr Ernest Ndukwe, speaks on the recently introduced interconnect rate for the industry and sundry issues in this interview with some journalists in Lagos. Remmy Nweke was there.

New Interconnect Rates

You recall that in 2003 December, we introduced new interconnect rates for the industry which was supposed to be operational from April 1, 2004.

It was to last for eighteen months, and we had promised at that time that we will come out with another one based on a cost study of the operating companies. That does not mean that what was introduced at that time was not based on cost but this time around we have to carry out a detailed cost study based on international benchmarks which we now adapt to the local environment with local figures which were produced by the operating companies.

We commissioned the Pricewater House Cooper to help us conduct a cost study. This they did over the past six months or so gathering information from operating companies and imputing this data they collected into some formula that they used in determining the cost. Of course all of you are aware of the different disputes that have been going on between various types of operating companies. The fixed mobiles were not agreed on what the interconnect rate should be and in fact just like before 2003 people had approached NCC to come out with a rate that should be acceptable to the industry and that’s why we decided to do that in the first place, but it must be said also that the law setting up the commission even allows us to intervene even without being invited, if we see that there are issues that require us to come in. but this time all operators or rather most operators including NITEL, MTN, many of the PTOs were anxious for us to come out with a rate that is acceptable to the industry based on costs. So that’s exactly where we came in.

Reaction to the new rate

The announcement was only done very recently. And so far we’ve not received any negative report about it, and really the change has not been that drastic. The mobile interconnect rate is still almost like what it used to be, the major adjustment was in the fixed termination rate and this time we took time to introduce near-end and far-end termination rates in order to encourage operators to carry a traffic to as close to the subscribe as possible.

I recognise that when you do that you earn a bit more money. That was also a small change in the interconnect rate but after all said and done, we think it’s a good rate, a good set of rates for the industry and hopefully should do the industry good.

The aim of NCC is not to empower any particular group of operators but to say things the way they are. Of course every network has its own evolutionary path. The way it was two, three years ago is not the way it is today.

With Unified Licensing all the operators can benefit from both mobile and fixed which ever direction they go. So, we are not trying to empower anybody, what we are trying to do is come out with a rate that is acceptable to everybody.

Effect on tariff

I am not expecting that in terms of hiking tariff we are not expecting that all but again, it might be true that, especially for fixed services there might be that kind of speculation which might not be far fetched.

We don’t expect that in the mobile arena which is where most subscribers are in, but everything would depend on what the operators are interested in doing. Remember that within their own network they actually also lower rates, that is, for intra-network traffic we will just take it as it comes.

Near-end and far-end

What we mean by near-end and far-end is that. I think it can only be explained by a simple illustration. Let’s say a Vmobile subscriber originates a call in Lagos and this call is for a NITEL subscriber in Port-Harcourt. Vmobile has the option of handing over the call to NITEL in Lagos, where the call originates from or hand it over in Port-Harcourt which is near to the end user in NITEL.

So, what we are saying is that if Vmobile hands over the call in Lagos, it will earn less money than if it hands over in Port Harcourt. Therefore, if Vmobile wants to earn that extra N1, it will now handover in Port Harcourt; and because there has been so many arguments about dumping calls at somewhere and then somebody has to take the responsibilities of taking it over.

On the other hand, if NITEL now takes the responsibility of taking it over from Lagos to Port Harcourt then it doesn’t pay Vmobile that extra N1, you know, that it should have paid. That is why we think that it would now encourage those who have network facilities because if Vmobile has a transmission infrastructure to Port Harcourt it doesn’t really have any incentive to carry it all the way to Port Harcourt, he might as well just dump it for the man in Lagos. But now he has incentive because he will earn more money by taking it to Port Harcourt so it will lead to, maybe, more effective routing of calls and carrying of calls and also giving credit to whoever is doing that. Of course, you earn more money so you are encouraged to build that capacity because you earn more money by so doing. So all these company’s that now have invested in long distance infrastructure, they are not going to earn money just doing it by the local loop services they do, they can also earn money by carrying traffic to destinations where they are using their own network facilities.

3G Licensing

Yes almost all the mobile operators have approached us on 3-G licensing. I think what we are doing now is to finalise how the spectrum will be allocated. They even approached us for demonstration frequencies. But we decided to give the demonstration frequencies to the equipment vendors because if you give it to the operating companies they might start rolling out the service, so we decided that it was safer to give it to the equipment vendors for a limited period of time.

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