The Nigerian Communications Commission (NCC) has completed the process of determining the cost-based price of mobile International Termination Rate (ITR) to ensure healthy competition in traffic handling for voice services in Nigeria.
The commission announced this at their Head Office in Abuja during the final stakeholders’ forum for the presentation of Messrs Payday Advance and Support Services Limited’s study on cost-based pricing of mobile ITR.
Prof. Umar Danbatta, NCC’s Executive Vice Chairman (EVC), said at the forum that the cost-based study was necessary after previous efforts to find an optimal price for terminating international voice services that would benefit all relevant industry stakeholders.
“The overarching need for regulatory options and intervention about the international termination rate in the voice market segment is predicated on some intractable challenges common in economies with severe macroeconomic volatility, such as ours,” Danbatta said.
The EVC recalled that the Commission issued a determination in 2013 stating that Mobile Termination Rates (MTR) are the same regardless of call origin. However, he stated that at the time, operators misinterpreted this to mean that the ITR should be the same rate as the MTR, thus ignoring the international cost portion.
“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 explained.
Danbatta also stated that regulating the ITR is critical for developing countries with volatile currencies, such as Nigeria, to avoid or mitigate payment imbalances with international operators. He also stated that the Commission was faced with the task of determining a rate that would balance the competing goals of economic efficiency and environmental protection.
“Where ITR is not regulated, it tends to converge to the MTR, and for a market like Nigeria with major supply-side challenges, the socio-economic implications and backlash can only be imagined,” he told the forum.
Yetunde Akinloye, NCC’s Director of Policy, Competition, and Economic Analysis, echoed the EVC, stating that the study was intended to complement and consolidate the Commission’s initial work, which culminated in the MTR Determination published in June 2018.
According to her, the previous ITR was based on actual benchmarking with countries with similar characteristics to Nigeria, but the findings from that study were hampered by major national macroeconomic management challenges, indicating the need for a cost-based, MTR-compliant ITR.
In contrast to MTR, which is the rate local operators pay to another local operator to terminate calls within the country, ITR is the rate paid by international operators to local operators to terminate calls in Nigeria.