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HOW TELECOMS OPERATORS FLEECED NIGERIA OF BILLIONS OF DOLLARS.......

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Public Hearing on the Need to Stop Planned Liquidation Of Nigerian Telecommunications Limited (NITEL) And Mobile Telecommunications Limited (M-Tel)

Date: 17th – 18th July, 2012
Memorandum submitted by Engineer Solomon O. Ogundele, Former General Manager (Operations), NITEL

To
The House of Representatives Joint Committee on Privatization, Commercialization, Finance, Public Procurement, Communications and Information Technology

1. Please permit me to appreciate and thank the leadership of the House of Representatives, the Hon members of the House of Representatives, the Chairman and Members of the ad hoc Committee for mandating and organizing this public hearing on the “Need to Stop the Liquidation of NITEL/M-Tel”. In my view, this hearing is long overdue but it is better late than never.

2. It is, however, disheartening and regrettable that the executive branch of Government is reported to have decided on the liquidation of NITEL/M-Tel, guided or otherwise, based solely on the advice of the BPE without any apparent attempt to investigate the circumstances that bred the present parlous state of NITEL/M-TEL by giving the stake holders a voice.

3. The current and intractable challenge facing NITEL is how to recover revenues estimated at more than One trillion Naira for indisputable services rendered but which officers of the Nigerian Communications Commission (NCC) have over the years denied NITEL through flagrant abuse of office, deliberate disregard for the laws of the Nation and malicious intent against NITEL.

4. This presentation will show convincingly that NITEL is not insolvent as BPE or the undiscerning Nigerian public is made to believe. NITEL is financially very buoyant provided it is EMPOWERED and SUPPORTED by the authorities to recover its revenues for UNDISPUTED services rendered to Nigerians through the Private Telecommunications Operators. NITEL has so far been denied revenues from services INDISPUTABLY rendered because of a fraudulent contract called Interconnect Agreement, imposed by unpatriotic NCC officials, which patently and flagrantly VIOLATE EXTANT LAWS OF NIGERIA ON INTERCONNECTION. While I am not a lawyer it is accepted that no contract, based on fraud and which clearly violates extant laws can stand. This obvious fraud has so far made NITEL lose a lot in excess of one trillion Naira.

5. The predominantly uninformed Nigerian mass media on telecommunications technicallities orchestrate and celebrate the cliché “GSM revolution” during the past eleven years. In their ignorance, they fail to realize, appreciate, recognize and give credit to NITEL for making the GSM revolution possible with its in situ infrastructure. The celebrated GSM Operators at inception installed only patchy, stand alone equipment that cannot be called networks. It was NITEL infrastructure that made them acquire the forms and functions of a network. All the intra and inter network traffic among all operators including NITEL were handled by NITEL. For all the resources and manpower deployed by NITEL to make success of telecommunications deregulation, NCC engaged in the most corrupt abuse of office to ensure that NITEL was not paid commensurate revenues by the Private telecommunications Operators, especially the GSM operators.

6. In 1997, after three years of negotiations and arbitration, the Federal Government Approved the Interconnect Agreement between NITEL and other telecoms operators based on international best practices and in strict compliance with sections 15 (j) (i) – (iv) of Decree 75 of 1992 which deals with Interconnection. For clarity, Section 15 (j) (i) of Decree 75 of 1992 states

15.(J) Determine in writing, principles which shall apply in agreeing terms and conditions about charges payable between licences or between licensees and other carriers for:

i. Interconnection of facilities to networks of other parties

ii. Carriage of communications across such networks, or

iii. The supply of facilities for the purpose of such interconnection or carriage

iv. Matters related to interconnection of communications generally

7. The NCC with a deliberate intent of bankrupting NITEL in late 1999/early 2000, appointed a questionable consultant who recommended “termination”, not mentioned or specified in the relevant law, as the main criterion for Interconnection. The so called consultant was reportedly paid ten million Naira; for a report not worthy of a first year student of telecommunications. This fraudulent “termination only” Interconnect Agreement was imposed on NITEL in 2001 just before the commencement of GSM operations in Nigeria and abandoned the 1997 agreement approved by the Federal Government. This opened virtually the entire services and Network of NITEL for free use by the private operators.

8. While the law relating to Interconnection expects negotiation between the two parties to the Agreement, NCC “legislates” a single agreement to which all parties needing or requiring Interconnection must comply to satisfy its known agenda of laundering NITEL revenues to favoured operators, instead of regarding its regulation as a framework to guide parties needing Interconnection.

9. To ensure that the carrier network of any National carrier is not used free of charge or to cross-subsidize any other telecommunications operator, the law specifically regards “Carriage” as a separate cost-center or item in determining Interconnection as specified in section 15 (J) (ii) of Decree 75 of 1992 quoted above and banning of “cross subsidy as specified in the Communications Act 2003

10. It is carriage of telecommunications traffic that NCC and other countries technically refer to as SINGLE TANDEM or DOUBLE TANDEM.

11. NCC's own published analysis, as well as those of other countries show that the cost of SINGLE TANDEM or DOUBLE TANDEM handling of telecoms traffic is much more than the cost of TERMINATION

12. But NCC in its unabashed, fraudulent and criminal intention to bankrupt NITEL refused, unlike in other countries, to allocate any cost to SINGLE TANDEM and DOUBLE TANDEM handling of telecommunications traffic which for several years after deregulation was the sole responsibility of NITEL. Instead, NCC allocated disproportionate cost to call termination which was the main service the private operators were providing apart from Local Access to telecom service. This is how NCC robbed NITEL of more than One trillion Naira

13. For example, MTN is fully aware that it was paying separately and distinctly for carriage of traffic in its Interconnection Agreement with Telkom SA, the equivalent of NITEL in South Africa and it is fully aware that it should not be different in Nigeria but for its deliberate intentions to STEAL NITEL funds in Nigeria

14. The table below is a direct copy from the “Interconnection Rate Determination” issued by NCC on 2nd December 2003,Please see Annex 1

Cost of interconnection as a percentage of average cost of a call from anywhere to anywhere in the network

- Local
- Single Tandem
- Double Tandem



32%
51%
96%

15. Leaving the arithmetic to the NCC board that approved the paper, what is undisputable from the table is that NITEL that was responsible for the SINGLE TANDEM and DOUBLE TANDEM (i.e. Carriage of telecom traffic for ALL THE TELECOMMUNICATIONS OPERATORS IN NIGERIA) SHOULD HAVE, FOR THE SEVERAL YEARS IT DID SO, BEEN PAID 51% to 96% OF THE COST OF ALL THE GSM TRAFFIC IT CARRIED DURING THE PERIOD

16. But NCC, in the same analysis, concluded and insisted on only ONE COST: TERMINATION which is the LOCAL Cost and is the least Cost by its own analysis leaving NITEL to PROVIDE THE SINGLE and DOUBLE TANDEM SERVICE FREE FOR ALL OPERATORS!

17. Prince Olagunsoye Oyinlola Vs MTN litigation at an Abuja high court provided an opportunity to place the facts stated above on oath. It is noteworthy that MTN could not deny that the Interconnect Agreement is fraudulent.

18. To further confirm the malicious intent of the NCC officials against NITEL, NCC ordered that the Operators can bypass the Interconnection Switch, which cost NITEL millions of Naira to install, so that NITEL can capture records of the traffic transiting NITEL networks by other Operators. Because of this unreasonable and malicious directive by NCC, NITEL was no longer in a position to monitor the traffic passing through its network which could be used to verify and certify the claims other operators submitted to it for settlement. Knowing that NITEL could no longer monitor traffic or calls passing through its network, NCC again decreed, with NITEL as the target, that invoices submitted by one operator to another must be settled within a specified period of time whether the invoices can be verified or not. This has forced NITEL to settle several bills running into billions of Naira which could have been patently fictitious or fake since it had no means of verifying them with internal data. Many of these very questionable invoices form a major portion of the massive debt the BPE claims NITEL owes.

19. NCC deliberately and continually undermined the First National Carrier Licence NITEL paid for; to the extent that it is presently worthless contrary to the opinion of some so called experts. All in the deliberate and mischievous effort by NCC to further undermine the revenue base of NITEL and speed up its liquidation. The national telecommunications backbone or “carriage” infrastructure and International Gateways are the main preserve of National Carriers which are their main source of revenue and they also have SECURITY implications. These should have been the exclusive preserve of NITEL and GLO between 2002 and 2007 because of the EXCLUSIVITY period of the licences. As far back as 2002/2003, NCC, in flagrant disregard of the EXCLUSIVITY condition in NITEL and GLO licences, granted mere ADMINISTRATIVE APPROVAL; which reports say was not even approved by the NCC Board to MTN to engage in backbone infrastructure without paying a kobo! MTN admitted this much in the affidavit it deposed to in court in the Prince Olagunsoye Oyinlola Vs MTN/NCC case. But the same MTN, a South African Company after more than a decade of Operation in South Africa was not even approved as the 2nd National Carrier when South Africa issued its 2nd National Carrier Licence. There were also indiscriminate other licences all aimed at bankrupting NITEL while Nigerians were being deceived that it is to promote competition.

20. Competition could not have been the motive because the same principal officers of NCC cancelled the policy NCC Board already approved in 1995/1996 that would have promoted competition. In fact, NCC ruined competition. The Policy already adopted by the board of NCC in 1996 or thereabout was for Nigeria to have 12 GSM operators in Nigeria. Two licences per region of five regions i.e. ten and the National Carriers also. UK with a population of about 70 million people has about 18 cell phone operators at the last count. US with a population of 300 million have 26 cell phone operators. Engineer Iromantu who was the pioneer Executive Vice-Chairman of NCC and who originated the policy could be invited to confirm. The unpatriotic staff of the NCC changed this policy to ONLY TWO GSM Operators initially and the National Carriers, when the South Africans got at them and they still lie to Nigerians that they are promoting competition!

21. The motive, from my working experience, was a revenge mission by the Principal Officer of NCC who was a failed NITEL contractor and whose company seriously retarded telecommunications development in Northern Nigeria where they were awarded major contracts - with disappointing results.

22. Any other country would have considered the Principal Officers of NCC who initiated the Communications Act 2003 as foreign agents out to destabilize the nation. Section 147 of the Nigerian Communications Act 2003 states: “The Commission may determine that a licensee or class of licensee shall implement the capability to allow authorized interception of communications and such determination may specify the technical requirements for authorized interception capability.”

23. I am not aware of any country in the world where telecommunications operators are allowed, by law, to install equipments capable of INTERCEPTION OF COMMUNICATIONS. All telecom operators are allowed to do is Keep Call Logs or Call Data (Details) Records (CDR). With the authorization by law to INTERCEPT COMMUNICATION WITHOUT ANY PENALTY FOR UNAUTHORIZED USE, even the telephone communications of the President of the Federal Republic of Nigeria is exposed to INTERCEPTION at will by telecommunications Operator. What a chilling thought that Nigerians saddled with regulating communications could have misled the National Assembly to include such an obnoxious clause allowing the Privacy of ALL Nigerians to be infringed by telecoms Operators. When the security needs of the nation demands that the telephone communication of any citizen be intercepted, the security agencies possess the equipments for doing so.

24. Coupled with this, the refusal of NCC to enforce the publication of telephone directory mandated by the licences the same NCC gave to the Operators; despite the Inspector General of Police Mike Okiro disclosing in 2009 that absence of telephone directories is aiding and abetting criminal use of the telephone and hampering police investigations, shows the highly unpatriotic Nigerians entrusted with regulating telecommunications in Nigeria.

PRAYERS
From the foregoing, my prayes to the Hon members of the committee are:

a) Recommend to the Federal Executive Council, the termination of the fraudulent Interconnect Agreement NCC decreed since 2001; with meaningless amendments with the sole intent of diverting NITEL revenues to private telecommunications operators by denying NITEL the revenues it is entitled to for the undisputed and immense services rendered to the Private Operators

b) Approve the setting up of a forensic technical audit committee to Identify all NITEL equipments, network segments dedicated for the sole use of each private operator and cause same to be valued based on NITEL tariff plans, with a view to getting NITEL commensurately compensated

c) All switched calls which NITEL was prevented from adequately monitoring should be estimated from the inter-exchange traffic between all operators including NITEL for the years during which NITEL was the sole handler of transit switched traffic, valued and NITEL compensated appropriately.

CONCLUSION
All the revenues from a) to d) in the prayers to the committee will be put NITEL back in full operations and will also allow hungry and dying NITEL staff to receive their entitlements. It is very disgusting that the unpatriotic NCC staff who bankrupted NITEL are reported to be enjoying pension for working in the public service for only 10 years, while NITEL staff who dedicated the whole of their productive life of 30 to 35 years are dying of hunger because they have been denied their well earned pensions due to no fault of theirs.

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