Telecommunication companies and interconnect clearing houses are at loggerheads over N30 billion interconnect indebtedness in the industry. Interconnect Houses see the telecom operators as big sharks in deep ocean that swallow smaller fishes while the operators see them as business entities with poor corporate governance practices fueling interconnect indebtedness in the industry.
Sources privy to the dispute say clearing houses are accusing the operators of not using them enough to terminate calls originating from other networks thus making it very difficult for them to recover these interconnect debts from defaulting networks.
But the network operators accuse the clearing houses of not even remitting the little they collect, noting that the clearing houses do not have enough capacity to carry their traffic. They claim that if they even give 10 percent of their traffic to these clearing houses, it would crash their network.
Interconnect fee is the charge paid by telecom companies to each other for terminating voice, data or other services over or across each other’s network. Some operators accuse their fellow defaulting operators of insincerity and unfaithfulness, wonder why such operators who pay roaming charges as well as honour other obligations to international operators would not honour their interconnect obligations freely entered into by them simply because they know that the law protects them under the NCC Act 2003 which makes it an offence to disconnect offending operators without approval from the NCC.
Mrs. Abimbola Akeredolu, partner, Banwo & Ighodalo at a forum organised by the NCC, proffered solution to interconnect indebtedness in the industry, advocating the establishment of a credible Interconnect Clearing Houses that will help to streamline and harmonize the business relationship between telecommunication operators that partner amongst themselves, thus ensuring a smooth and efficient delivery of services to the customers.
“It should be pointed out, however, that honesty and resilience and determination to ensure that the Nigerian telecoms industry grows in leaps and bounds is also needed to solve the issue of interconnection indebtedness and problems in the telecom sector,” she said. She also advocated the establishment of an Asset Management Company which will solve the problem by buying up the debts of any telecom operator that is not able to pay or refuses to pay its debts to other interconnection partners. Akeredolu urged speeding up the process of disconnecting defaulting companies.
“It is common knowledge that sometimes a measure of force and strict compliance requisites are necessary to put individuals (and businesses) in line. It is suggested that in order to reduce the emergence and continuation of interconnection indebtedness in Nigeria, networks should be given free rein to disconnect any partner network operator that refuses or fails to pay their usage charges. “This will keep other networks on their toes. Failure to pay interconnection usage charges will mean that their customers will be unable to connect to other networks, which will cause a disruption in their communication services,” she said.
These debts in the industry, according to industry experts, are threatening the stability of the telecoms industry, if the consequences of not settling the debts are not effectively managed. Concerns over this huge debt profile and its implications on business activities in the sector came to the fore when Minister of Communications, Mr. Adebayo Shittu, recently paid an official visit to some telecom companies in Lagos where he promised government would look into the matter. It is sad that the interconnect debt being owed in the industry is due majorly to the debts being owed by the Code Division Multiple Access (CDMA), fixed line networks operators as well as Internet Service Providers (ISPs) that have gone under. Already, about 14 licensed telecoms operators that are among the debtors of interconnect charges have been declared inactive by the Nigerian Communications Commission (NCC).
Some of these operators 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, among others. Bearing the highest consequences of the interconnectivity debt is MTN Nigeria being owed over N13.6 billion. This amount owed MTN represents about 40 percent of the total debts as the largest operator with 63 million subscribers and as such, often have more calls terminated on its network.
Oyeronke Oyetunde, General Manager, Regulatory Affairs, MTN Nigeria, lamented that “the issue of the rising profile of interconnectivity debt is something we need to discuss in the industry. Otherwise, it may affect the stability of the industry”. Charles Ike Nnamani, Managing Director, Medallion Communications, an Interconnect Clearing House, blamed the situation on the lack of clear settlement mechanism in the industry. According to him, one of the core functions of a clearing house is billing and settlement among operators but some service providers used to handle traffic exchange directly. He said interconnect debts are a major factor against quality of service as some operators deliberately deny competitors access to their networks if they owed terminating charge.
Nnamani stressed the need for a clear interconnectivity settlement scheme in the industry to address the problem. He said, “The truth is that at the moment because of the way the major dominant operators have handled interconnectivity, there is no clear settlement in the industry and that is one of the things we are working at creating. Within the next few months we hope to have a proper settlement scheme for the telecom industry in Nigeria. There is a lot of debt out there among the operators”. Other industry analysts expressed concern that while the government intervention may signal a possible resolution to this problem, it remains to be seen how a company like MTN and others being owed will recover their money from debtor organisations that have gone under.
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