THE Nigerian Communications Commission (NCC) has increased International Termination Rate (ITR) from N3.90 per minute to N24.40 per minute, a 525 per cent increase.
ITR is an interconnection charge set by mobile traffic carriers on calls originating from other networks. Though the regulator did not give reasons for the hike, the notice it issued, dated October 5, reads: “The Nigerian Communications Commission, on September 16, 2016 reviewed the termination rate for international inbound traffic from N3.90/min (about $0.013 today) to N24.40/min. The interim rate will subsist pending the conclusion of the study of the Determination of Cost Based Pricing for Mobile Voice Termination Rates.”
The over 525 per cent increase in the ITR could be traced to a recommendation in an analysis prepared by its Policy, Competition & Economic Analysis Department last year.
In an assessment of international voice traffic termination rates, NCC noted that while regulatory authorities tend to protect service providers and consumers, telcos and the government would prefer higher rates that bring in hard currency and can fund investment, expand domestic network, fund innovation and improve quality of service (QoS).
It also notes that revenues from international calls are seen as means of cross-subsidising domestic calls. This is tagged to a symmetrical system that shows money flows from developed to developing countries as most traffic originates from rich countries and high settlement rates favour the recipient countries.
Based on the assessment, NCC stated: “In comparison with other African countries ITR, Nigeria termination rate at $0.03 relatively too low and this will likely impact negatively on the inflow of revenue to the Nigerian economy.
“Consistent with the above, we recommend that upward reviews of international termination rate should be settled through negotiation and commercial agreement between the domestic service providers and international traffic carriers provided that the rate would not lead to decrease in inbound traffic to the country.”
Citing the case of Ghana’s termination rate increase in 2009 from $0.10 to $0.19/min which it says was problematic and Uganda’s enactment of a legislation in 2013 imposing a tax of $0.09 on inbound international calls that substantially increases ITR, NCC compares outcomes of termination rates with other 53 African countries to indicate that only South Africa shares the same ITR with Nigeria. Others range from $0.09 (Egypt) to as high as $0.70 (Gambia).
The reviewed ITR increase could seem to be NCC’s response to the telecom industry which has been feeling the pinch of its current economic woes of late, according to ITWeb Africa.
After industry experts decried harsh operating environment which has cost telecom companies about N660 billion this year, NCC says it will work on strategies including revised/updated Nigerian Telecom Policy, spectrum availability and other national resources, to yield gross domestic product (GDP) growth and create business/investment opportunities in the country.