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ALTON Raises Alarm, Says Telcos Face Difficulty in Traffic Obligations

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Association of Licensed Telecommunication Operators of Nigeria (ALTON) has raised alarm over upheaval task and frustrations faced by the members to settle their international call termination charges.

Addressing a group of Nigeria Information Technology Reporters Association (NITRA) at the quarterly training in Lagos recently, Engineer Gbenga Adebayo, ALTON President, said that the operators have continued to compete in an unhealthy environment, making it difficult to meet financial obligations or remain stable.

He said that is further compounded by Central Bank of Nigeria (CBN) maintaining the status quo on the inclusion of telecoms equipment in the 41 items excluded from accessing forex

He said that, despite the CBN's interventions to 'save' the Naira from free-fall in the foreign exchange market, the members are yet to feel the impact, as they have continued to source the essential 'commodity' through the 'black' market.

Engr. Adebayo said, "In the absence of local substitutes for its plant and machinery, the Telecommunications Service Providers are constrained to source FX from interbank market at higher rates compared to other sectors such as Manufacturing, Aviation and Agriculture accorded priority in FX allocation at reduced rates by the CBN.

"That means, if I have traffic obligation to settle at five Cents, I can’t source it, rather I have to buy the equivalent from the ‘Black market’. That means, in actually fact, my settlement rate could be higher than it should be.

"So, why would the telecoms would not been accorded forex priority? Owing to the prevailing economic situation in the country, ALTON members cannot transfer the increased cost burden to the consumers, thereby contracting profitability and ability to make further investment to drive growth in the industry.

"You can only invest in the network if you have extras. What this is telling us is that the rate of transfer to settle foreign obligations, as we have to procure from the open market, is higher than the cost and profit. In other words, you will not have anything left.

"They continued to compete in a very difficult market; purchasing equipment at ‘black market’ rates, can’t honour obligations as due, we have to deal with these things. Like I said earlier, there is no service provider in this country that has headrow to accommodate the overflow if one network operator is out of service, no matter what is the capacity. Even an operator with five million subscribers goes off I do not see any operator to accommodate that".

According to the International Telecommunications Union (ITU), there there are three main ways in which operators pay interconnection charges for carrying each other’s traffic:

Calling party network pays (CPNP) — the originating operator pays a per-minute charge to the operator that terminates the traffic being exchanged. It is the most common interconnection regime.

Bill and keep (BAK) — under this system (sometimes called “sender keeps all”), each operator agrees to terminate calls from another network at no charge (usually on condition that traffic is roughly balanced in each direction).

Receiving party network pays (RPNP) — an operator receiving a call pays a per-minute charge to the originating operator. Less common than CPNP, this system is used in North America and Japan.

Operators generally seek to recover their net costs through charging consumers of their services. There are two main ways to do this:

Calling party pays (CPP) —the person who makes the call pays for the entire cost of that call, but nothing for calls received. This system usually coexists with CPNP interconnection charges for operators.

Receiving party pays (RPP) — the person receiving a call pays all or most of the cost. In the mobile sector, this refers to payment of the “airtime charge” for termination on the recipient’s handset, while the originator too might still pay for a local call. This retail charging system usually coexists with RPNP.

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