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Charges to carriers for using the networks of others -otherwise known as interconnect - is a challenge for many African operators. Not a week passes without some African interconnect issues being in the news. This week it’s the NCC’s Ndukwe lashing NITEL for its failure to install equipment to make it happen. Complete interconnection between networks has to be the absolute cornerstone a competitive environment. The problem is two-fold: firstly. a regulatory issue, usually about the level of interconnect costs and a practical issue of installing equipment for allowing interconnect and billing for this traffic. Christian Cuipek, INTEC’s Regional Director in Africa looks at the issues.

One example is the recent difficulties faced in Mali by Soltema, the incumbent telco. Soltema’s wireless wing Malitel is dealing with competition for the first time with the launch of rival mobile operator Inkatel SA. Since going live in January 2003, Ikatel SA has attracted over 50,000 users in Mali for its GSM services. Unfortunately Interconnectivity has not been achieved between Ikatel and SOTELMA, leaving mobile users unable to make calls outside their own network. At the moment, both companies are trying to work out an effective interconnect agreement to overcome the challenges preventing the support of incoming calls. One of the main problems is Ikatel’s use of the pre-fix number "4" in front of each GSM user number, instead of the pre-fix number "6", which is the standard imposed by the country’s committee for telecommunications regulations (CRT). Soltema’s network application does not have the flexibility to identify and rate Ikatel’s calls so they are barred from entry. The company also lacks the technology to gather network usage data to bill for interconnect services.

Operators in countries such as Nigeria have also faced interconnection issues since the launch of rival GSM services. Part of the problem is the cost of the actual interconnection charges, which has a profound effect on the development of wholesale or retail markets in Nigeria, as well as on decisions to invest in infrastructure. Companies such as NITEL have argued that their GSM tariff of N21 per minute can barely support the prevailing interconnect tariff of N18. Furthermore, most companies do not have the network technology to ensure that their future inter-carrier partners are not going to overcharge for their services.

In February 2003, Nigeria’s Communications Commission (NCC) met with operators to smooth out this and other interconnection disputes between NITEL, the National carrier and GSM operators. The NCC warned operators that 60 days after physical interconnection, an agreement would have be executed by the parties to the interconnect. Otherwise, the NCC would step in to enforce the new policy.

NCC’s pressure has yielded some results. In May 2003, MTN Nigeria Communication Limited signed an interconnect agreement with the second national operator and fourth GSM operator, Globacom. This leaves M-Tel Limited (Nitel GSM) as the only mobile operator with whom MTN has no agreement on interconnectivity. The next step is going live with services. Before this can be achieved, however, operators must ensure they have the right Operations Support Systems (OSS) to support the interconnect agreements.

OSS is as vital to network interconnectivity as the agreements themselves. It is the glue that holds the network together, an investment that can be costly upfront but provides long-term benefits that are too great for Africa’s operators to ignore. Of particular importance is a flexible interconnect billing application. Interconnection fees already provide a vital source of revenue for operators in Africa, especially for international calls. Approximately 4 billion dollars (US) are generated each year as a result of interconnection agreements in Africa. Installing a flexible platform can allow companies to increase this revenue stream by 30 per cent. This adds up to an extra billion dollars worth of income that African countries can reinvest into their infrastructure.

The good news is that now is the right time for Nitel, Sotelma and other African operators to buy their software. The overall slowdown of the global telecoms market has meant that OSS vendors have had to slash their prices in a bid to win customers. Many software companies increased product costs in the late 1990s to take advantage of the amount of money carriers had at that time. According to the industry association Telemanagement Forum, today’s prices have fallen so much that OSS vendors are even losing money just to win business. Margins have been cut slim, and some vendors are selling at below cost. Ten years ago carriers were spending anything up to $20 million on massive systems, but now prices around $1 million, and even below that, are common.

Before investing in interconnect billing applications operators must know what to look for when selecting a system. This can seem daunting when one considers there are hundreds of vendors offering various solutions. The first thing to remember, however, is that most carriers have similar billing requirements even if their network priorities are different. To start with, operators want a system that is easy to install and requires the least amount of effort to generate the bill. It should make billing uncomplicated and support other operational support systems such as revenue assurance and fraud management. Scalability to manage growing call volumes is critical, as is flexibility to support new services on any type of network, especially when one considers the competitive advantages of fast time to market. Most importantly, operators need a system that meets its business needs anytime, whether its today or tomorrow - a platform that can be supported for as long as a user plans on running it.

A typical interconnect system collects and provides access to information that is used to produce and verify invoices from other operators, based upon products and services terminating on or originating from the operator’s own network. A flexible interconnect system provides the capability to report on all interconnection activities, such as standard telephony based charging and origin based charging. It also offers the necessary information to support production of revenue and cost reports by operator, product and service as required by middle east or international interconnect agreements.

Complementing any interconnect billing system is the mediation platform, which is the interface installed between the network and other operations support systems (OSS). Mediation allows operators to collect, process and deliver information on the traffic passing through their networks and can help operators support the growth of voice, IP and data for billing purposes without fear of losing vital information or duplicating call records.

African companies have already started to realise the benefits of interconnect, including Senegal’s Sonatel, South Africa’s Cell and Telecom Maroc. They have all recently purchased new systems in response to a growing volume of call traffic. Meanwhile, Egypt Telecom has recently installed new interconnect and mediation platforms to ease interconnect partnership agreements with content and Internet service providers. The company provides the infrastructure for 130 different ISP providers throughout the country and the billing system has helped to handle the growing volume of network traffic generated by these new content-oriented partnerships.

Installing better interconnect billing systems creates a new way for operators to generate money instead of alienating end users with higher tariffs for telephony services. Indeed, making telephony accessible is an imperative requirement for many countries in Africa where mobile and fixed-line services are already prohibitively costly for most subscribers. According to the African Telecommunications Indicators report, fixed line access in countries such as Nigeria, Chad and Ethiopia are among the lowest in the world due to cost, while 80% of African mobile users chose to use pre-paid phone cards, twice the world average, because people cannot afford more expensive contracts. Raising rates to support operational expenses will further prevent users from accessing many services, thereby undermining the success of Africa’s telecommunications industry.

Interconnect billing systems can also produce data information that will help identify losses related to fraud - a major problem for operators in Africa. The global telecommunications industry currently loses half a million dollars to common fraud schemes each day, and the numbers are increasing in areas such as Africa. Operators in South Africa, for example, have already experienced major setbacks to innovative services as a result of fraud. In 2001 half a million-fixed lines in South Africa were disconnected, many as a result of fraudulent activities. This caused the country to drop from third to fifth on the list of African countries with the highest level of tele-density. It also cast a shadow over the future growth of the computer and mobile Internet market in South Africa. North African countries such as Morocco, Tunisia, Egypt and Nigeria have also been identified as high-fraud areas for communications companies such as AT&T, which have lost millions to phone scams in the region. As a result, the US based company now offers restricted international calling cards that enable users to call anywhere in the world except these targeted countries.

Billing systems are important, but the role of government legislation is equally vital to ensure effective interconnect billing between partners in Africa. In many advanced telecoms markets, interconnect charges are regulated to encourage competition by making sure that the charge imposed on a carrier is the same as that used internally by the incumbent. Understandably, many PTTs are reluctant to push interconnect agreements that take away their revenue stronghold, but opening the African markets is a crucial requirement for advancing the telecoms industry and governments must be proactive to ensure that interconnect is adopted by all the carriers. Furthermore, the rise in joint ventures in the region is forcing companies to comply with international telecommunications union (ITU) regulations, which call for open markets and competitive interconnect agreements.

Among the countries pushing ahead with reform is Egypt. The government has drafted an important Telecoms Act that outlines the requirements for ensuring a strong and competitive market. Interconnect is one of the topics identified in the legislation as a precursor to developing a strong economy and the country’s leading telecoms operators are preparing for change by upgrading their billing platforms. The lack of telecoms competition in Egypt had kept consumer prices artificially high and subscriber numbers low. The Telecoms Act and a national regulatory body have quickly changed this reality. There are over 3 million mobile phone subscribers today, opposed to 900,000 last year, and over 7 million fixed line users, an increase of 30 percent since 2000.

The telecoms future in Africa looks promising. Foreign operators are continuing to invest including France Telecom, which maintains a strong presence on the continent with its subsidiaries Cote d’Ivoire Telecom, Sonatel in Senegal and Mauritius Telecom. Emerging markets such as Morocco and Nigeria are also moving ahead by adding new GSM operators to help heighten competition. Meanwhile, International IP Telephony wholesaler ITXC has seen an 1111% increase in voice traffic to and from Africa in the past year. The company, which enables operators to interconnect with its Internet-based global network to deliver and receive international traffic, currently has agreements with Zimbabwe PTC, Ghana Telecom, Senegal’s Sonatel, SotelTchad in Chad and Telekom South Africa. Through ITXC’s interconnection capabilities, operators are quickly gaining access to an international network, new revenue and very competitive outbound rates.

By investing in a solid network infrastructure, and by implementing good interconnect policies and the best billing systems, Africa’s carriers can have an opportunity to maximise their earning potential and to increase the continent’s low tele-density numbers. Billing operators have a responsibility to offer a higher level of technical and educational support with reference to the business benefits of the OSS solutions and other products that African operators purchase. There is a substantial knowledge gap between the West and Africa that must be filled and vendors should be willing to transcend the role of supplier to become a teacher as well. Information so gained by the operator, can help enhance overall network performance as well as improve communication with investors interested in new business ventures.

Christian Cuipek is Regional Director in Africa for INTEC
christian.ciupek @intec-telecom-systems.com