VMOBILE'S PLANNING TO USE INTERCONNECT CLEARINGHOUSES
Pioneer cellular telephone operator deploying a modern 2.5G network across the country, Vmobile, during the week disclosed that it is concluding arrangements to use an interconnect clearinghouse in transiting its traffic to at least one GSM operator.
In response to questions from This Day, Vmobile's Head of Division, Interconnect, Mr. Otu Etuk said "We are finalizing arrangements with Mtel to exchange traffic through a clearing house. This was at the Request of Mtel."
Although it would now use an interconnect clearinghouse, the operator said that it was not an economic decision but it just had to abide by the request of another operator, Mtel.
According to Etuk, the volume of traffic between GSM operators and some PTOs is so large that transiting through a clearing house will only amount to duplication of resources and cost since these operators have invested huge sums in interconnect infrastructure.
What's more according to him, "Interconnect(ing) through clearinghouse will only be affected on the request of a licensed operator who desires such connectivity. This is because as mentioned above, VNL has made huge investments in Interconnect infrastructure such as billing, mediation and other systems. Those operators who do not have these infrastructure in place can approach a clearinghouse and be solely responsible for paying for its clearing house services."
It was not clear whether the PTOs had not followed this procedure. But the Vmobile official insisted, "The concept of clearinghouse should be a business decision which each operator needs to take. If it is made subject of regulatory intervention, it will increase the cost of doing business which may be passed on to the subscriber."
He also stressed that the obligation to interconnect should be between operators for the benefit of subscribers and not clearinghouses who are service providers.
"If MTN and VNL are forced to go to (a) clearinghouse to exchange traffic, for example, it will amount to needless and expensive duplication since the operators have invested in interconnect systems. This will increase the cost of interconnection," Etuk emphasized.
He agreed that clearinghouses serve certain advantages as it may not be economical for a large carrier to connect directly to a small carrier for reasons of economies of scale. Such traffic is better passed through the clearinghouses. But even at that, as the small operator's traffic grows, it could be migrated to a direct connectivity route.
There are yet other strong points for the existence of clearinghouse as Etuk further pointed out, "If the Clearinghouses can ensure and assure prompt collection of interconnect charges and provide security against bad debt, GSM operators will be willing to exchange PTO traffic through clearing houses."
Clearing houses could also provide reconciliation and mediation facilities to Private Telecom Operators who do not have same. This will eliminate delays in payments due to protracted reconciliation.
The above advantages notwithstanding, Etuk would advise that the business case of clearing houses should also be examined viz: the fact that over 90 percent of voice traffic is GSM to GSM while the remaining is PTO - GSM traffic. Only about 50 percent of this PTO traffic constitutes traffic from healthy PTOs who incidentally are the ones with proper networks. The rest, he pointed out, are PTOs who have no network, and/or next to zero subscribers.
In his words, a"These operators send calls to VNL subscribers and yet their subscribers receive no calls from VNL or other GSM networks, where then do they get their traffic from?
"Though they are domestic operators who should use their interconnection to service their domestic subscribers, these operators having no subscribers illegally terminate international traffic arbitraging on the difference between the PTO interconnect rate and the international termination rates."
Accordingly, he said: "We are of the opinion that such PTOs have no business being operators and should not be entitled to interconnection."
Any time from now, the ruling of the Nigerian Communications Commission in the matter of use of interconnect clearinghouse between MTN Nigeria and Interconnect Clearinghouse Nigeria Limited would be delivered.