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Hope rises on lower telephone tariffs as new interconnect regime takes effect January 1

By The Citizen
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The current interconnect rates regime set by the Nigerian Communications Commission for telephony operators in the country will expire by December 31,2012,  The CITIZEN can authoritatively report.

The extant rates, which gave concessions to new entrants, will give way to unified rates for all operators, the Head of Media and Public Relations for the commission, Mr. Reuben Mouka, told THE CITIZEN on phone.

Under the current regime, which kicked in December 31, 2009, interconnection rates for mobile voice termination provided by new entrants (defined by the commission as companies which have been operating for less than four years) irrespective of originating network, were set at NGN10.12.

The rates were programmed to fall progressively to NGN9.48 on December 31,2010; NGN8.84 on  December 31, 2011 and NGN8.20 on  December 31, 2012 (from which date all termination rates will be symmetric).

The NCC adopted this measure with the hope that the revised interconnection rates would  encourage new entrants in the sector to offer services at more affordable rates to subscribers.

Operators not defined as new entrants were required to set a mobile voice termination rate of NGN8.20 from 31 December 2009. Fixed voice termination rates were set at NGN10.12 from December 31, 2009; NGN9.48 from December 31, 2010; NGN8.84 from  December 31, 2011 and NGN8.20 from 31 December 2012.

The SMS termination rate of new entrants started at NGN1.94 from December 31, 2009 and fall gradually to NGN1.02 from December 31, 2012. Other mobile operators were required under the extant regime to charge NGN1.02 from the start of 2010.

Lower interconnect rates offer operators the wiggle room to offer consumers cheaper  and affordable rates, as the rates serve as a restraining bar to any plans for any operator to adopt cheap rates for their network users.

Before the current regime which comes up for review this December (that is 2006 interconnect regime), the rates favoured the GSM operators who took N11.52 from fixed networks for any call originating from the networks and terminating on the GSM network. If the calls were originated by the GSM operator and it terminated on the fixed network, the former only needed to pay the latter N5.52. When these rates were first decreed by the NCC, the GSM operators contested them at the courts and lost.

It is not clear which direction the new interconnect rates regime will go, but a groundswell of opinions by both operators and analysts point to a high possibility of further crash in the rates.

Both Glo and Airtel have indicated that the interconnect rates at an average of about N9 was too high for the industry and would want the NCC to review the interconnect downwards. Group Chief Operating Officer (GCOO), Mr. Mohamed Jameel said recently that if conscious steps are not taken to save the medium and small players in the GSM category, their fate may soon follow the trends in the CDMA category who have been sapped dry due to heavy and unbearable interconnect charges paid to the dominant player.

In the same vein, Group Director for Corporate Affairs at Bharti Airtel, Marender Gupta stressed that at NGN 9, the nation’s interconnect rate was too high. In India, which is the operational base for Airtel, effective call rates are said to be as low as N5 per minute.

An Industry analysts said that the recent promotion blitz by virtually all the GSM operators offering huge bonuses for on-net calls  is an indication of their abilities to cut down on their call rates.