As the stakeholders’ meeting on the determination of the Mobile Termination Rate (MTR) was holding in Lagos last week, there were some unpleasant developments happening across some telecommunications networks which, at once, underlined one of the major reasons for such a meeting. Engr. Gbenga Adebayo, ALTON President, told this writer that that very morning of June 16 he had received several messages on a WhatsApp platform concerning vandalisation of telecommunications facilities across the country. Another source, who confirmed the ugly occurrence, said he shared the same platform, and there is vandalisation on the networks or theft of one item or the other every hour, a development that is alarming and needs to be given urgent attention.
Adebayo said the MTR meeting was urgently needed to address developments in the industry, some of them residual and others quite fresh, all combining to put pressure on the industry including some latent disfunctions that some people could normalise ignorantly. The Mobile Termination Rate (MTR) is the wholesale charge one network pays another when its customer places a call that is received on a different network. It is the underlying pricing mechanism that connects every Nigerian mobile subscriber — regardless of their network — with every other. The current rate stands at N3.90/N4.70 per minute. The rate remains in the public domain to help those in the ecosystem — operators and subscribers — understand their commitment to each other. Quite understandably, there was a buzz following the meeting that the regulator was about to increase telecom tariffs. This is to be expected because in a country where truth has fallen victim to politricks, cynicism becomes the cheapest product in the open space. MTR determination goes beyond pricing; it is a consideration of so many intervening variables and elements to arrive at a determination that is fair to all in the ecosystem.
The stakeholder meeting was a demonstration of sincerity and intentionality on the part of the Nigerian Communications Commission (NCC), which would not take certain sensitive decisions without getting the relevant stakeholders involved in the process. The last MTR happened in 2018. Since then so much water has passed under the bridge, as we say in the local parlance. 5G and emerging technologies have appeared on the scene to assume a life of their own and complicate how telecom business is transacted; the Naira has been devalued and inflation ran rampant before finding stability; Over-the-Top (OTT) players are eating into the operators’ market very significantly; MNOs are adding new layers of services to their operations; and there are new MVNO models that are hitting the ecosystem. Consumer demands, expectations and connectivity have also shifted, placing a new set of demands on the operators whose networks must be resilient enough to accommodate every fresh development.
Omotayo Mohammed, who is head of the Competition and Tariff Unit in the Policy, Competition, and Economic Analysis Department, said, “the years since our 2018 determination have been marked by unprecedented and rapid change. The Nigerian telecommunications market has undergone considerable transformation, reflected in swift expansion, shifting market dynamics, the commercial deployment of advanced technologies, such as 5G, and the emergence of new ecosystem players, including Mobile Virtual Network Operators.” Consultant on the project, KPMG, said it will work with the regulator, the industry and other relevant stakeholders to present an evidence-based study that will be fair and beneficial to all. The scope of the study will include: Mobile Termination Rate (MTR), Application-to-Person (A2P) SMS, MVNO interconnection framework, International Termination Rate, USSD services, and retail price regulation. KPMG is optimistic that the study will be valuable to the various stakeholders — consumers as well as operators — and promote competition and investment. While for the consumers the study will stimulate improved access to digital financial and value-added services through a clearer USSD and A2P framework, it will equally encourage transparent pricing mechanisms that support retail affordability.
The Stakeholder Consultative Forum provided the consultant with a much-needed opportunity to furnish the gathering with the templates and schedule of work, while pledging that the study will be transparent and predictable, which are essential conditions needed to attract both domestic and foreign investment. One hundred and fifty participants sat through the meeting, a development Nnena Ukoha, Director, Public Affairs at NCC, interpreted as a validation of the Nigerian Communications Commission’s conviction that the consultative forum remains one of its most critical public-facing engagements. “The importance of this forum cannot be overstated, as it addresses a subject that sits at the very heart of the telecommunications ecosystem, an issue that directly impacts all stakeholders across the value chain,” she noted. She therefore appealed to stakeholders to take full advantage of the opportunities provided to submit further inputs, data, and perspectives that will enrich the decision-making process. Such submissions, she explained, are to ensure that the eventual outcomes are balanced, forward-looking, and capable of strengthening the long-term sustainability and competitiveness of the industry.
Around the table where I was seated, an operator grumbled, asking why KPMG should be benchmarking our industry with other jurisdictions when operational challenges are totally different. However, Engr. Adebayo responded to this in our discussion, explaining that prevailing circumstances in the industry make it compelling for the regulator to benchmark with other markets in order to achieve international best practices. “That is the very reason benchmarking is important; so that we can price right. It is good for us to have that comparison. We can’t do everything based on assumption,” he said. But while commending the regulator for sticking with Section 108, sub-section 1(d), which charges the NCC to set regulation or guidelines, including that “tariff rates shall be structured and levels set to attract investments into the communications industry,” Dr Chidi Ibisi of ATCON listed some of the challenges that distinguish the Nigerian market from the rest.
They include: high interest rates of over 33 per cent; high foreign exchange rates; high rate of inflation; high cost of imported network equipment; high cost of diesel, transportation, and local inputs and services; high cost of repair of damaged fibre optic cables due to road construction and vandalism; high cost of replacement of stolen generators, batteries and other vital base station equipment at tower sites; and high cost of RoW and multiple taxation in several states. In spite of the very obvious challenges, Adebayo stated that the industry is doing well and should therefore be encouraged, protected and prepared for greater performance for it to continue to provide the pillars for the nation’s economy. “We are doing very well because no service today provides the kind of availability we have. Whether it is aviation, power, security, among others; no other sector like telecommunications. We have availability at all times.”
He appealed, however, that the sector should be supported to increase that availability and make its points of presence much stronger. MTR is much more than pricing. It provides the bedrock for a comprehensive review of pricing of services in the industry. And because the regulator cannot fix prices, like they do for bread, garri, a bag of rice, petrol, kerosene and even air tickets, it must work in deference to the provisions of the Act and invite stakeholders to participate in the decision-making process. MTR is not only about pricing but a needed and deserved opportunity to contribute to the pricing process. It is an opportunity for everybody’s voice to be heard on a critical issue.
