A consistent breakdown of communication between Globacom subscribers and customers on the MTN network had left tongues wagging as to what could have created the emergency logjam in the nation’s telecommunications system ..
But while the customers carried the burden and discomfort associated with the challenge, a deeper inquiry, revealed that the problem was linked to a huge interconnect dispute bothering on an estimated N4.4billion interconnect debt between the two giants telecommunication companies.
Although, the companies later sorted themselves out with the intervention of the Nigerian Communications Commission (NCC), the effects of that challenge left a sour taste in the mouth of telecommunications subscribers in the sector.
With a backlog of problems hindering quality of service, the reality of it all point to the fact that unless urgent steps are taken to permanently solve these problems, Nigeria’s telecoms sector may be finally knocked down by the huge interconnect debt profile currently growing in leaps and bounds.
Interconnect debt is a cost incurred by network operators during the termination of services rendered to one by another operator in the industry.
Interconnection enables a user to experience the smoothness of a connected network, hence, a subscriber does not need to know whether the person at the other end of the network subscribes to another network operator.
As at last year, the interconnect debt in Nigeria’s telecom sector was put at N60 billion but the NCC recently revealed that operators owe each other a whopping sum of N165 billion in interconnect debt.
This shows that the interconnect debt profile of the operators is rising daily as subscribers make calls or use data.
According to Stephen Bello, a former Acting Executive Vice Chairman of NCC, the high rate of indebtedness in the telecoms industry can be attributed to poor corporate management; diversion of telecoms revenue to private investments in other sectors and poorly drafted interconnection agreement between operators.
He added that interconnection indebtedness was likely to slow down government’s socio-economic agenda on network expansion and quality of service for subscribers, adding that all hands must be on deck to reposition the sector to avoid imminent collapse.
His words, “This interconnect indebtedness has the effect of introducing inefficiency into the telecoms industry and the economy, as unfair treatment of interconnecting partners will prevent subscribers from having value for their money.”
For his part, Mr. Ikechukwu Nnamani, in a presentation at the Nigeria ICT Impact CEO forum, in Lagos recently said the absence of an Interconnect settlement scheme, lack of monitoring mechanism for traffic exchange by operators and the fact that there is no service fee for clearinghouse services, have been partly responsible for the rising interconnect debts of N165 billion in Nigeria’s telecom space.
According to him, a situation where there is no Interconnect settlement scheme to clearly define how traffic can be interconnected, leaves the telecom operators who are presently exchanging 95 percent traffic peer-to-peer in deciding what goes to the Clearing Houses.
Nnamani, the Chief Executive officer of Medallion Communications Limited, one of the Interconnect Clearing Houses argued that leaving 95 percent of interconnect traffic to the operators has undermined the essence of the Interconnect Exchange license, which were issued by the Nigerian Communications Commission 15 years. This, he believes, has led to increasing Interconnect debt/dispute, network congestion and poor quality of service.
In the same vein, Chairman of the Board of the NCC, Senator Olabiyi Durojaiye, expressed displeasure at the high incidence of unpaid interconnect debt.
According to him, the problem is one of the issues that the regulatory agency sought to address through its recent Corporate Governance Code, which the Commission articulated for the industry.
But Daily Sun investigation showed that the interconnect debt profile increase was also largely attributable to inactive status of majority of the debtors, particularly in the Code Division Multiple Access (CDMA), fixed line networks operators, as well as, Internet Service Providers (ISPs).
Already, about 21 licensed telecoms operators, which are among the debtors of interconnect charges have been declared inactive by NCC.
Some of these operators, which had gone moribund, include Starcomms, Reliance Telecoms (operating as Zoom), Intercellular Nigeria, MTS First Communications, Disc Communications, WiTel, O’Net (Odua Telecom), Rainbownet, Monarch Communications, XS Broadband, Webcom and IPNX.
Bearing the highest consequences of this interconnectivity debt is MTN Nigeria with over 64 million subscribers. The operator receives more terminations on its network due to more unsettled interconnect rates from other players.
Giving a background to the issue of interconnection debt of networks, NCC’s Executive Commissioner for Stakeholder Management and now minister designate, Mr. Sunday Dare, earlier stated that “over the years, the industry has been plagued with the very serious problem of interconnect and facility indebtedness.
According to him, “some operators have racked up huge debts to others and have simply refused to pay. Now, we understand that there are ecosystem issues affecting all operators and we are daily working with all stakeholders to resolve these issues, but the level of indebtedness in the industry is at an embarrassingly high level, and the whole telecoms industry is at risk of failure if we do not act”.
He stated further “this kind of problem should ideally not occur in an industry where over 90 per cent of consumers are pre-paid. We had held several meetings with the parties and given several deadlines for the debtors to pay, to no avail. The Nigerian Communications Act of 2003 contains very strict consumer protection measures which we have continued to uphold, such as the requirement that no operator can disconnect another operator without the written approval of the NCC. But it appears that some operators were taken unfair advantage of this provision by racking up millions, sometimes billions of naira in debts to other operators, denying their creditors of funds to expand their networks and putting the industry in peril. Having done everything we could, including holding many meetings with the parties and brokering several payments plans to no avail, NCC has little choice in the matter but to grant the persistent requests of the creditor organisations to disconnect the chronic debtors in accordance with the Nigerian Communications Act and our Disconnection Regulations”, he said.
Meanwhile the Executive Vice Chairman of the NCC, Prof. Umar Danbatta, had explained that as a consumer-centric telecoms regulatory authority, the Commission was keen on ensuring that the consumers continue to enjoy uninterrupted service while efforts are being made to address the issue of indebtedness in the industry.
Danbatta stated that the issue of interconnection is a matter that the Commission is handling delicately within the purview of the regulatory provisions to protect consumers by ensuring that their quality of experience (QoE) is not acutely affected.
The EVC said while regulatory approval on permission for disconnection was granted to creditor networks late last year, as a last resort towards resolving the huge interconnection debts threatening the health and sustainability of the industry, the Commission is ensuring that no telecoms subscriber is disconnected.
However, stakeholders have called for urgent and pragmatic approach to the matter.
For instance, Nnamani advocated that the patronage of an independent Clearing House by the telecom operators is a standard approach that would ultimately address the persistent interconnect debt imbroglio in the Nigeria’s telecom space.
He argued that an Interconnect Clearing House brings network simplicity, optimisation of the number of Interconnect links and saving in network deployment and maintenance costs, which many industry experts have seen as the issues leading to the Interconnect debts.
“For me, the best way out of the Interconnect indebtedness is for the industry to have a structured settlement scheme that will coerce the telecom operators to pass their traffic through a licensed Interconnect Clearing House,” he said.
He stated that the Clearing Houses bring in efficient handling of new and traditional interconnects, independent data for call reconciliations, timely settlement of interconnect charges, fewer disputes and interconnect agreements and most importantly more points of interconnect.
He suggested the introduction of Nigeria Interconnect Settlement Scheme (NISS), which he said, would reduce the accumulated debt profile and improve cash flow among operators.
The NISS platform, he added, would offer a high degree of accuracy in the settlement of interconnect bills.
The call records from interconnect exchange operators, will be used to process the invoices and confirm payments due to each operator.
For operators that decide to present traffic that has been exchanged directly, the processing at NISS will be used as the invoice amount and payment will be made based on this, he said.
He added that NISS would become as effective as the Nigeria Inter Bank Settlement System (NIBSS) in the banking sector, if well implemented.
“The NISS will also offer real-time visibility of the net cash positions and obligations of operators on a daily basis.
This will enable the operators and their partner banks to plan ahead and ensure there is cash availability to meet their obligations when it becomes due, unlike the current situation where invoices are sent several months down the road and the obligation becomes too large to handle from the operators angle, resulting in disputes and inability to pay,” Nnamani said.
For the President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, the industry requires an automated interconnection settlement payment scheme to be introduced to prevent future accumulation of this type of debt, especially as the industry operates a predominant prepayment charging tariff system, hence the collection of the interconnection fee where it applies, is already available to be deducted and paid to the terminating network at the point of the call being made.