The Nigerian telecommunications sector, a dynamic landscape driven by innovation and increasing connectivity, stands out as a high-performing industry within the country. It is, however, not without its share of challenges. The perennial issues around ‘right of way’, multiple taxation and absence of power persist. A new one is emerging in the realm of interconnection agreement settlements.
An interconnect agreement, according to Wikipedia, is a business contract between telecommunications organisations to interconnect their networks and exchange telecommunications traffic. It invariably involves settlement fees based on call source and destination, connection times and duration, when these fees do not cancel out between operators.
Typically, interconnection agreements and the settlement are business-to-business (B2B) issue that would have little or nothing to do with the subscribers. But in extraordinary circumstances, it can involve the subscriber. The recent threat by the Nigeria Communications Commission (NCC) to permit one telecom operator to disconnect subscribers from another player brought the issue home to the subscribers. Thankfully it did NOT happen.
But it important, in light of recent events, to shed light on regulatory intricacies, financial uncertainties, and technical hurdles that encumber or else aid the interconnection agreement settlement.
The challenges in settling interconnection charges stem from many things including the complex regulatory frameworks that oversee the Nigerian telecommunications sector. Despite the progress made in creating regulations to support interconnection agreements, enforcing these agreements faces obstacles. Stakeholders are contending with challenges related to compliance, interpretation, and the efficacy of the regulatory body in ensuring adherence to established guidelines.
The NCC harps constantly on the importance of adhering to the terms and conditions outlined in interconnection agreements, urging Mobile Network Operators (MNOs) and telecom industry licensees to uphold these standards. Whether the operators listen is another matter entirely.
Interconnection agreements, while crucial for fostering collaboration among telecom operators, can become breeding grounds for disputes. Disagreements over tariff structures, traffic volumes, and other terms often lead to protracted negotiations. Resolving these disputes promptly is imperative for maintaining a healthy telecommunications ecosystem, yet the complexities involved can impede swift settlements.
The long-term contention between Glo and MTN over interconnection fees confirms this point. It has sparked considerable debate and requiring regulatory intervention to settle. The clash reached its zenith when the NCC threatened disconnection, forcing both telecom giants to the negotiation table.
Glo’s interconnection charge settlement dispute came to the forefront when it was revealed that, under the looming threat of disconnection, the company reluctantly paid N1.6 billion to MTN. However, this payment was only a temporary resolution, as the underlying issues persisted. The subsequent reconciliation and negotiation process saw MTN accepting N2 billion as a compound interest dating back to 2009, a compromise from the initial demand of N3 billion.
A critical standpoint emerged from the observation that celebrating the payment of N2 billion in compound interest seems counterintuitive. Glo’s contention that it is only celebrating a reduced payment raises questions about the company’s adherence to timely payments and proper financial processes. The argument is that if Glo had fulfilled its interconnect obligations promptly, the accrual of interest could have been avoided altogether.
One intriguing aspect of the dispute lies in the Value Added Tax (VAT) payments made on behalf of Glo, which are slated for recovery through engagement with the Federal Inland Revenue Service (FIRS). This adds a layer of complexity to the financial intricacies surrounding the interconnection fees.
It’s imperative to note that the regulatory authority, the NCC, played a pivotal role in the disconnection process. MTN, unable to independently enforce disconnection, sought the intervention of the NCC, which was approved in December 2023 after reviewing the case. This underscores the regulator’s role in ensuring fair practices and resolving disputes within the telecom sector.
News reports indicate that the genesis of the conflict dates back to November 2022, when the process for disconnection was initiated due to an accumulated debt owed by Glo to MTN. Glo’s strategy, as revealed, involves paying a sum significantly less than the due amount after an agreed timeframe, leading to a continuous increase in the total debt and interest.
The telecom subscribers dodged a bullet. The underlying issues must now be resolved to prevent a reoccurrence.
The truth is that inaccuracies in billing systems and delayed invoicing equally pose significant obstacles to the seamless settlement of interconnection charges. The precision and efficiency of billing mechanisms are paramount, requiring continuous improvement and oversight. Operators must navigate through the intricacies of call data records, ensuring accuracy and transparency in financial transactions. The interconnection clearing houses must step up to the plate here and play their role.
The telecoms clearinghouse refers to central exchanges where calls from different Mobile Network Operators are interconnected, billing and reconciliation are carried out and Call Data Records are produced. The key players in this space are Medallion Communications Limited and Interconnect Clearinghouse Nigeria Limited. One wonders what role they played in this Glo /MTN imbroglio.
Furthermore, the long-drawn settlement challenge makes one question the financial stability of operators in the industry. The financial stability of telecom operators plays a pivotal role in the timely settlement of interconnection charges. So, we must ask, who checks the financial health of these telecom behemoths? How much can the NCC do in this space?
Some argue that technical challenges, including discrepancies in call data records and interoperability issues, contribute to the complexity of interconnection charge settlements. But this is precisely what the interconnect clearinghouses are meant to do. Their robust technical infrastructure and standardized protocols are supposed to facilitate a seamless exchange of information between networks. The service level agreements (SLAs) should ensure minimal network disruptions and technical discrepancies that can lead to delays in reconciliation and settlement processes.
The NCC needs to do more. And it certainly needs to do, whatever it does much faster. Imagine if the NCC had stepped in decisively in this Glo/MTN controversy a decade ago. Precisely. It won’t have dragged this long. Interconnection charges should be settled within an established time frame, say the end of a calendar year. This will help reduce ambiguity, curb bad blood and lead to speedy resolutions.
Addressing the interconnection charge settlement challenges in the Nigerian telecommunications sector calls for a holistic approach. Stakeholders, including the regulator, operators, and industry experts, must collaborate to streamline the regulatory frameworks, enhance dispute resolution mechanisms, and fortify financial and technical foundations. Only through concerted efforts can the sector overcome these challenges and continue its journey towards a more interconnected and resilient future.
Eromosele, a corporate communication professional and public affairs analyst, wrote via: elviseroms@gmail.com
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