Rising interconnect debts harm telcos service quality

The recent upsurge in the volume of interconnect indebtedness amongst mobile telephony operators, made worse by unsavoury industry practices, is undermining service quality in Nigeria’s telecommunications market.

There are widespread and ongoing complaints of poor Quality of Service (QoS) being delivered by virtually all the operators, in the shape of drop calls, incorhorent transmission and undelivered text messages in an industry with a 146 million active lines.

Industry observers told our correspondent yesterday that the latest wave of poor service delivery can be linked to the interconnect debt overhang. According to them, some mobile operators are already denying debtor service providers access to their networks, particularly by blocking voice calls originating from them. 

This development, industry observers say had become necessary due to heated commercial disputes amongst telecoms operators, arising from failure to meet specific interconnect obligations.

An interconnection charge is a fee levied by a network operator on another service provider for terminating voice calls on its network.

Industry observers however are of the view that the sharp rise in interconnect debt totalling over N30 billion is rather alarming, and perharps the first smoke sign of distress in the telecommunications industry.

Ikechukwu Nnamani, chief executive officer of Medallion Communications, has called for the creation of an interconnect settlement scheme to speedily address the challenges of delays in payment of interconnect charges.

“The biggest problem we have seen in terms of quality of service is when operators deny access to their network and drop calls because of commercial reasons; when that happens, the subscriber is the one that suffers”, said Nnamani in an interview. According to him, the subscriber bears the brunt because telecoms consumers pay their bills before making calls.

“So for whatever reason the operator is blocking their circuit or dropping calls, the subscriber is the one suffering. We have always been of the opinion that the last resort should be dropping of calls because there should be other ways to resolve it”, he explained.

Only recently, the Nigerian Communications Commission (NCC) okayed regulatory guidelines for disconnecting mobile networks that default in meeting their interconnect payment obligations, as part of new measures to ensure sustainable development in the nation’s telecoms sector. 

The guidelines however provide that where a Mobile Network Operator (MNO) has fully exhausted all the options contained in their Interconnection Agreement for resolving Interconnect disputes, an aggrieved telecoms provider may apply to the commission for disconnection of the services of the debtor operator.  According to the Guidelines on Procedure for Granting Approval to Disconnect Telecoms Operators, “every operator (hereinafter referred to as ‘Applicant’) has a right to apply to the Commission for approval to disconnect an interconnected operator (hereinafter referred to as ‘Respondent’) where the respondent fails to settle its interconnect indebtedness after it becomes due”.

In considering a request for approval to disconnect an operator for interconnection indebtedness, the regulator should take into account that the debt must have been outstanding for 60 days inclusive of the period agreed between the parties in their agreement.

Despite the regulatory measures put in place by the NCC to guide and ensure seamless interconnection in the Nigerian telecoms industry, operators reckon that the issue remains a major source of conflict, especially in the wake of rising indebtedness in the sector.

“The procedure for granting approval for disconnection is still too cumbersome, little wonder no telecom provider has been disconnected in recent times on account of default in paying outstanding interconnect debts”, said Emmanuel Ekpenyong, senior associate in litigation at Strachan Partners, a commercial law firm based in Lagos and Abuja.

MTN, the country’s largest mobile operator with 60 million subscribers, says it is being owed a cumulative figure of N13.6 billion. “We believe that for the industry to remain sustainable, stable and profitable, all operators must adhere and comply fully to industry rules and regulations. 

“Operators must also abide by agreed contractual obligations”, said Funmi Onajide, general manager, corporate affairs at MTN Nigeria. Financial analysts have also confirmed that the rising cost of capital, along with the tough economic climate and the dynamics of market forces have made it imperative that prudent businesses manage all cash flow expectations. “It is not good governance for operators to owe, more so in a predominantly pre-paid market, where revenues are collected upfront from the subscribers”, Onajide said in an interview.

Ben Uzor