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Still on high GSM tariff in Nigeria

The minister promised Nigerians that she would do everything within her powers to ensure that consumers enjoyed better services at good rates in no distant…

The minister promised Nigerians that she would do everything within her powers to ensure that consumers enjoyed better services at good rates in no distant time. She went further to demand for a commitment to reduce tariff from some of the telecoms CEOs who were present at that forum. Unfortunately, they were not prepared to bulge. Telephone tariff has become a major issue globally, considering the global economic meltdown. While in other parts of the world telephone charges are beginning to come down, that cannot be said of Nigeria, according to a recent World Bank report. Telephone charges are still very high in Nigeria compared to other Third World or developing countries.

According to a recent report by Nigerian Communication Commission (NCC) on the current retail tariff for GSM and fixed voice telephone, the average tariff of the GSM operators for peak period on-net is N32/minute while off-net is N40/minute. The same report shows that for international calls, GSM operators charge an average of N50/minute in both peak and off-peak periods.

On the other hand, records show that the tariffs for the Fixed Wireless Operators are slightly cheaper with an average of N13/ minute for both peak and off-peak national calls while calls to GSM networks stand at an average of N26/minute for both peak and off- peak periods.

The usual excuses have been security of installations and poor infrastructure, typified by epileptic public power supply. They claim that the poor power supply adds to high operational cost.  Nigeria stands out as a huge market considering its size and population. The business of telecommunications hinges on volume, that is the size of the market. Nigeria is the largest market in Africa, and she is comparable to India with a large population and attendant socio-economic problems. In the field of telecommunications, India appears to be doing better than Nigeria because the telecom operators there consider the plight of the consumers and ensure their services are affordable.

 A recent global industry publication quoted the Chief Executive Officer of Bharti Airtel, one of the leading GSM operators in India as saying that his company “offers world-class, innovative and the world’s most affordable tariffs at 1.5 cents/minute (equivalent to N2.35/minute); we have achieved more than 33% of the regular GSM market share in India”. The issue is that the more affordable the tariff is, the more competitive you are in the market and the more customers you attract.

India is known to be a Third World or developing country, like Nigeria, with all the attendant, socio-economic, human and infrastructural problems. Why is it that we cannot receive the same treatment from our telecom operators in Nigeria? Experts say the basic problem lies in our telecom policy, the regulatory framework and the manner the NCC is implementing them. For instance, one of the major factors that determine tariff structure is the “interconnect rate” among operators.

This is the amount paid by one operator to another when a call is terminated in a network other than his own. At present, the interconnect rate for a mobile call is N11.40 per minute, providing a margin of 33%; while fixed call termination (near end) is at N10.80 and fixed call termination (far end) is at N9.10. You will agree with me that with these interconnection rates, there is no way we can have the tariffs lower than N10.00/minute amongst telecom operators. This situation calls for urgent review by the minister. We have been told that regulatory practice all over the world does not encourage tariff reduction by fiat. But we also know that the ministry and the regulator can persuade the operators, through negotiations, to reduce tariffs, considering the plight of consumers of this country.

The other issues of quality of service – dropped calls, call connection rate, voice quality, interconnection and number portability are still outstanding. Rather than get better, dropped calls and call connection rates are getting worse every day, though the operators would want us to believe differently. It is expected that the regulator would put in place an appropriate mechanism to monitor and control these flaws. Madam minister, this is five months since you assumed duty. Nigerians are still expecting to see you deliver on your promise.

Jimmy Okwudili, Wuse II, Abuja, jimokwu@yahoo.com