Atcon Points On Issues To Be Addressed By Ncc At The Nigeria Leadership Summit 2022

ATCON POINTS ON ISSUES TO BE ADDRESSED BY NCC AT THE NIGERIA LEADERSHIP SUMMIT 2022

  • Introduction 

We are pleased to have received an invitation from Prof. Umar Garba Danbatta, FNSE, FRAES, FAEng. FNIEEE, the Executive Vice Chairman, Nigerian Communications Commission (NCC) to the 2022 edition of the Nigeria Leadership Summit. We hereby articulate issues in the industry and make recommendation for the Nigerian Communication Commission’s consideration.

  • Issue 1: Operators are over burdened with high RoW cost, multiples levies, multiple taxes, huge debt service due to high interest rates, unrealistic demands for bank guarantees for interconnect voice services by the major GSM Operators, lack of access to intervention funds.

ATCON opines that Small indigenous Operators experience anticompetitive behaviors from the major Operators in the Voice segment such as more than one-year delays in interconnection and constriction of circuits in contravention of the Communications Act 2003 and Interconnect Regulations 2007 which states that upon request Operators should be connected within twenty-one (21) days. In addition to this all over the world homes and businesses have fixed and mobile lines. Fixed lines are practically nonexistent in Nigeria. This requires urgent intervention by NCC including the lifting of restriction on the issuance of PNL licenses to enable small indigenous Operators to provide fixed line voice services and ensure better quality of service for Nigerians.

Additionally, vandalization and destruction of telecom infrastructure due to road construction, non-compensation of Operators by State Governments for destruction of Cables by their Road Contractors, vandalization and obstruction of Network installations by Area Boys, disruption of service due to lockups and seal-ups by multiple regulators – Local, State and Federal Governments. Lack of active infrastructure sharing, anti-competitive behavior and lack of collaboration between Operators are the other issues affecting the continuous existence of indigenous players.

Recommendations:

We hereby recommend that:

  • NCC, CBN and ATCON should engage, collaborate and come up with a policy regulation to set up a low interest rate, long tenured Intervention fund for the industry. The terms of credit should be realistic and less stringent, these should include attention to bank guarantees and collaterals. Similar interventions have been provided by CBN to other sectors such as Agriculture, Manufacturing, Construction, Exports, Movies, Music, Fashion etc. It is well documented that Telecom is an enabler for all those sectors that have received intervention funds.
  • NCC should make a representation to CBN to allow the telecom sector to participate in the 5% interest rate 2years moratorium SMEs intervention fund.
  • USPF should be restructure to allow ISPs and small operators access to the fund for the purpose of expansion across the federation.
  • NCC should lift the ban on licenses that have viable business cases which would improve the profitability of local operators, particularly the smaller operators. Example non-mobile network operators should be allowed to obtain PNL licenses to improve quality of service.
  • To address multiple taxes, levies and right of way NCC in collaboration with ATCON should visit the National Economic Council and the Governors’ Forum to make a detailed presentation on the economic benefits of the Telecom sector to the States Internally Generated Revenue (IGR) and as an enabler for the achievement of the UN Sustainable Development Goals (SDGs).
  • NCC should engage OSNA and other relevant agencies to declare telecom infrastructure as critical national infrastructure and compensation for destruction of infrastructure/disruption of service.
  • Issue 2: The debts in the industry are largely in the colocation and towers fees, interconnect and carriers/leased line fees, banks and the big operators are the major culprits. The banks are both the major financers and customers to the small operators. 

While the banks give loans at high interest rates, they in turn dictate the price at which the operators provide service to them and usually pay the Operators late thereby making it difficult for operators to meet up with their payment obligations. This is a deliberate practice by the banks to make their books look good. While the small operators have legitimate debts claims, the big operators on their parts, are using call masking as an excuse to push assumed debts to the small operators.

Recommendations:

We hereby recommend that:

  • NCC should continue to intervene in the issue of debt with respect to Colocation/Tower fees and interconnect debt between Operators especially the disputed assumed debt that accumulates interest and compounds the debt situation of the small operators.
  • NCC in collaboration with ATCON should address the issue of anticompetitive behavior in the interconnect space perpetrated by the big and dominant operators against smaller operators, interconnect operators and IDAs operators. Examples are; the continued unilateral demand for bank guarantees against the existing NCC policy, denial of adequate capacity for interconnection and predatory pricing practice, etc.
  • NCC should as a matter of urgency engage the CBN to help rescue small operators from the aforementioned predatory practice by the Banks
  • NCC should come up with a policy regulation for calls to be routed through a single international gateway and automated debt settlement scheme
  • Issue 3: There is an unhealthy competition and predatory pricing at both the ISP wholesale and retail segment of the industry. On the wholesale segment, the crash of wholesale price to the detriment of operators who have invested infrastructure, is mainly caused by external operators’ who dump their excess capacity into our markets. These foreign operators have no investments or infrastructure cost in Nigeria. Please note that wholesale prices (clear channel or with IP) also include intercity trunks and these trunks between Operators are very expensive. 

On the enterprise segment, the banks are notorious for dictating the prices at which they would buy services, and these prices are below cost and unprofitable. ATCON feels that if ISPs can have agreed selling prices per bandwidth and not bend individually to pressure from the banks, then the banks will stop playing them against each other. The idea here is that whichever ISPs the banks turn to, will give the same price. 

On unlicensed operators, ATCON noted that even NCC has acknowledged that Banks use unlicensed Operators. Hence, there is an urgent need for licensed ISPs to be self-regulated (under ATCON) and agree on a price-based structure for both the wholesale and retail segments to protect the consumers from excess charges and protect the operators from predatory pricing.

Recommendations:

We hereby recommend that:

  • NCC should advertise the list of licensed operators on national dailies.
  • NCC should advice stakeholders that in their best interest, they should only patronize Licensed Operators to ensure they receive quality services in compliance with NCC QoS standards.
  • ATCON and NCC should engage the enterprise market, particularly the Banks to patronize only licensed operators advertised on NCC Website.
  • CBN should equally be encouraged to penalize Banks who use unlicensed telecommunication service Providers.
  • To address unhealthy pricing at the wholesale and retail segments, NCC should collaborate with ATCON for policy regulation on wholesale and retail pricing floors as agreed by the industry.
  • NCC should understand the dynamics of capacity dumping and to block any regulatory loopholes that allow for this practice.
  • NCC should not issue additional cable landing licenses, because this would create a capacity glut in a market that already has about 90% un-utilized international bandwidth sitting idle at the shores. Additional capacity would result in further crash of wholesale pricing to the detriment of existing investors who are yet to recoup their investments.
  • NCC should conclude work on the comprehensive wholesale Leased Line pricing that includes wholesale metro, wholesale intercity, wholesale IP services and enterprise Leased Lines.
  • NCC should as a matter of urgency, state its position on the study of the Cost Based Pricing for Retail Broadband and Data Services and the Comprehensive Study on the Structure and Level of Competition in the Telecom Industry.
  • Issue 4: The practice where by NCC recruits foreign firms with no local knowledge to carry out studies for the industry should be discouraged as there have been instances where NCC was unable to implement the recommendations from such studies due largely to the fact that the peculiarities of our operating environment were not taken into consideration despite the huge money expended on such studies.

The Local Content Guideline document drafted by the Local Content Committee in which ATCON was a member is too rich and holistic for it to be left unattended. NCC can also make policy regulations for the implementation of a number of items on the document prior to its enactment.

Recommendations:

We hereby recommend that:

  • NCC should push for the speedy enactment of the local content guidelines for the telecom industry.
  • NCC should engage the industry for policy regulation that compels big operators to use the services of local operators.
  • NCC should engage the services of experts with in-depth local knowledge in carrying out studies for the industry.
  • Conclusion

The NCC is responsible for creating an enabling environment for competition among operators in the industry as well as ensuring the provision of qualitative and efficient telecommunications services throughout the country. Therefore, it has become imperative for NCC to collaborate and work closely with ATCON towards removing all impediments stifling the growth of all operators within the industry.

We thank NCC for the opportunity to articulate our opinion. We would like to reiterate that the recommendations made herein are very important and hope that the Commission gives the implementation of these recommendations the urgency it deserves.