The Nigerian Communications Commission (NCC) has concluded the process for determining the cost-based price of Mobile International Termination Rate (ITR) and may soon approve increase in ITR for telecom operators in the country, senior officials of the commission have said.
The Executive Vice Chairman of NCC, Prof Umar Danbatta said at the final Stakeholders’ Forum for the presentation of the study on cost-based pricing of mobile ITR in Abuja that the current international rates did not favour Nigerian telecom operators and the country.
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“Arising from these is the persistent fact that Nigeria’s ITR is below that of most countries with which it makes and receives the most calls, making Nigerian operators perpetual net payers. The obvious implication of this is seen in the attendant undue pressure on the nation’s foreign reserves, which continue to get depleted by associated net transfers to foreign operators on account of this lopsidedness,” Danbatta said in a statement on Thursday.
The NCC boss further stated that regulating the ITR is imperative for developing countries, such as Nigeria, with volatile currencies in order to prevent or mitigate the imbalance of payments with international operators.
He also said the commission was faced with the challenge of arriving at a rate that will balance the competing objectives of economic efficiency while, at the same time, allowing operators the latitude to generate reasonable revenues.
– Consequences –
He informed the forum that “where ITR is not regulated, it tends to converge to the Mobile Termination Rates (MTR) and for a market like Nigeria with major supply side challenges, the socio-economic implications and attendant backlash can only be imagined.”
Danbatta said that the “overriding need for regulatory options and intervention in relation to the international termination rate in the voice market segment is predicated on some intractable challenges, most common with economies with severe macroeconomic volatility such as ours.”
Going down memory lane with respect to MTR determination in the Nigeria’s telecom industry, the EVC said, in 2013, the Commission issued a Determination stating that Mobile Termination Rates (MTR) are the same irrespective of where the call originated.
He, however, stated that this was misconstrued by operators at that time to mean that ITR should be the same rate as the MTR, consequently ignoring the international cost portion.
In her comments, the Director, Policy, Competition and Economic Analysis, NCC, Yetunde Akinloye, corroborated the EVC, noting that the ITR previously determined was based on actual benchmarking with countries of similar characteristics to Nigeria.
But, she said, the findings from that study were faced by major national macroeconomic management challenges, ultimately pointing to the need for an ITR that is cost-based, consistent with the MTR.
ITR is the rate paid to local operators by international operators to terminate calls in Nigeria as contrasted with MTR, which is the rate local operators pay to another local operator to terminate calls within the country.
The forum was convened by the NCC to formally present the findings from the study, which commenced in March, 2020, to industry stakeholders and to solicit further perspectives, insights and other input on the findings towards a mutually realistic termination rate for international voice traffic in Nigeria.