Nigeria’s NITEL set to cut international call rates in half
NITEL looks set to cut its international call charges by 50%, according to Rein Zwolsman, its CEO at the Chief Executive Forum of the 2nd Nigerian Telecoms Summit. At the same forum the Chief Executive of the NCC emphasised that VOIP technology was completely legal provided the operator had a licence from the NCC. Whatever the considerable problems the country has, Nigeria seems to be leading the way on the continent towards fully liberalised telecoms markets. Shina Baduru and Russell Southwood pick over the messages coming out of the forum.
The meeting gave CEOs from Nigerian communications companies the opportunity to "rub minds" on a range of telecoms issues. Many of the "movers and shakers" in the industry were at the event including: Minister of Communications, Chief Cornelius Adebayo; NITEL CEO Rein Zwolsman; former Minister of Communications, Chief Olawale Ige, now President of the Association of Telecommunications Companies of Nigeria; and Charles Joseph of the Association of Licensed Telecommunications Operators of Nigeria.
The meeting discussed four issues of key importance for the development of the Nigerian market: international call tariffs; VOIP, national infrastructure and interconnection.
NITEL has lost USDF136 million revenue from its international traffic services in the last two years. Rein Zwolsman, Chief Executive Officer said that from an average annual income of USD80 million from international traffic in the past, the company now barely got USD million a year, in the last two years. He attributed the decline to competition from other networks that use cheaper channel such as Voice Over Internet Protocol to carry international traffic.
To reverse the trend, Zwolsman indicated that the company may reduce tariff on international calls by 50 percent. NITEL is determined to take advantage of its investment in the SAT3 cable to reduce tariff for international calls.
These cuts reflect the overall reduction in international wholesale prices that have been taking place across the whole of West Africa in the past year. For example, Mali’s SOTELMA made a similar rate cut in its retail prices earlier this year (see issue 170). Also with the announced entry of the SNO Globacom into the fixed line market rates were bound to go down sooner or later. The issue for Globacom will be whether it can get access to pool capacity on the SAT3 undersea fibre cable at the right price.
It shows that NITEL’s new managers Pentascope are pursuing an aggressive business strategy in Nigeria’s comparatively liberalised market rather than simply trying to defend artificial levels of revenue. Its international pricing relates directly to the issue of VOIP. NITEL has chosen to cut its tariff to make the VOIP calling market less profitable for "illegal operators" like cyber-cafes.
Both the regulator and NITEL’s CEO made clear that they had no problem with people using VOIP technology provided they had a licence to do so. Ndukwe said:"NCC does not oppose VOIP because there is no way you can stop it and it’s a technology that’s here to stay." He advised big operators to explore technology and ways to reduce long distance call costs otherwise,"they will not get the support of NCC and government to stop (illegal use of) the technology in Nigeria." Nitel CEO Rein Zwolsman said that the new thinking in the company was that there was no problems with companies using VOIP and that "we will interconnect you as long as you have the proper licence from the NCC because we all want to develop communications." The point being made was that provided you have a licence for international calling (retail or wholesale) you will find no barrier to using VOIP.
Bourdex Telecoms Chairman Chief David Onuoha told the Forum that some alleged "illegal operators" operating in the eastern part of the country were underming NITEL "by retailing calls as low as N20 per minute on long distance routes."(NITEL international rates are set to go from an average of N100 to N50 per minute) Citing the need for NCC to protect licensed operators, he appealed to the regulator to check the activities of these illegal operators. But Disc Communications CEO Engr Banjo countered this by saying:"Do you know how many people that these cyber cafes allow people to make international calls to send Western Union here for their survival?"
If Nigeria is to make use of SAT3 it will need a fibre infrastructure and need it fast. NCC stressed that NITEL would not be the only organization providing it. Whenever there was an infrastructure vacuum NCC would license complement NITEL’s planned expansion of transmission links. But there were complaints about whether there was a level playing field. FWA operator Rainbownet which has deployed in eastern Nigeria said:"Why did we pay so much for our licence if NITEL will deploy in the east?"
On interconnection, Ndukwe promised that there would be subsidiary regulation from the NCC on interconnection. Maybe once that is in place the mobile companies will finally agree on interconnection rates.
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