Juwah: The Consumer-centric Regulator

31 Mar 2013

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By Ken Ugbechie

When he was appointed in July 2010 as the head of the Nigerian Communications Commission (NCC), Eugene Juwah perhaps knew he was up against a strong wall. He came at a time the issue of Quality of Service (QoS) in the telecoms sector was utterly vexatious. Consumer confidence in the sector was fast ebbing. Worse yet, the operators seemed to have formed a confederacy against the consumers.

For a country rated as the fastest growing mobile market in Africa, nay in the world for five consecutive years, this was not a pleasant picture. Juwah quickly rolled up his sleeves. He reeled out a six-point agenda that would index his tenure. This, he said, would help him sustain the momentum of the revolution. They are: Consolidation and Integration of mobile Wireless Services; Fixed Line and Broadband Deployment for National Development; Enhanced Competitive Market, Enhanced Choice for the Consumer; Vigorous Compliance Monitoring and Enforcement of Regulations and Directions; National Connectivity for Accelerated Growth; and Enhanced International Relations.

To the layman, all of this may sound double Dutch, some technical jargon meant only for the geeks. But within these six areas lies the redemption and sustainability of the only sector that has brought international honour to the country. All six points could be summed up in just one phrase: how to ensure consumer satisfaction and investment sustainability in the entire telecoms value chain. It means protecting both the consumer and the investors. In an environment where the consumer feels hard done by and the investor feels a sense of vulnerability, this will surely require great art and well-thought through tact.

Juwah himself acknowledged early in the day that the consumer is not getting enough value for his money, yet he sympathises with operators for having to cope with decadent infrastructure including a huge national power deficit and insecurity. But in his sympathy for operators, he strongly empathises with the consumers for having to go through harrowing times. Since his appointment, Juwah has remained consummately consumer-centric, applying himself on the side of the consumer while still stamping his feet to protect the integrity of investments in telecoms.

Three things have stood him out in this regard: the banning of promotions and lotteries by operators; slashing tariff on text messages from about N10 to N4 and recently, the slashing of interconnection rates among operators, which has a direct implication of reducing tariff on voice calls. These three bold moves, taking in context, have the capacity of improving quality of service, cutting the budget of consumers on both voice calls and text messages as well as improving the throughput of operators. In a nutshell, it is a win-win both for the consumer and service providers.

Some persons, including the Nigerian Consumer Protection Council, kicked against the banning of promos and lotteries by Juwah’s NCC. Their argument was that such promos and lotteries help to compensate consumers by giving them back through bonus airtime and sundry rewards.  However, such argument loses its logic when weighed against the backdrop that most of the promos and lotteries are dubious and only end up sucking the pockets of consumers while enriching the operators. In the course of a promo, more consumers are tempted to make more calls thereby choking up the already congested networks.

The net effect of such surge in voice calls is poor quality of service manifesting in drop calls, repeated but unsuccessful dialing and poor voice quality. In some cases, consumers are not given what they were promised or as it is now evident, some of the rewards for participation in the promos were exaggerated and only used as baits to win subscribers. Therefore, banning such promos and lotteries just to free up the network makes both economic and moral sense. Besides, it confers technical integrity on the networks.

Another consumer-friendly gesture from Juwah was the slashing of cost of short message services (SMS) from about N10 to N4. This alone has saved a princely N1.6 billion for subscribers going by volume of SMS that stream through the networks. Beyond this, it has since the introduction of the new tariff encouraged more subscribers to send a text rather than make the call. Again, this has marginally helped to reduce voice traffic on the networks. Slashing tariff on SMS has achieved two major things: helped the consumer to save money as well as helped to improve call completion rate.

Yet, the icing on the cake remains the recent cut in the cost of mobile termination rates (MTRs) also known as interconnect rates. This takes effect from April 1, 2013. The current rate, which is asymmetrical to all operators irrespective of size or number of years of operation, is N8.20.

According to the regulator, under the new asymmetrical rate, which favours the new entrants and small operators irrespective of the originating network, the charge shall be N6.40k from April 1, 2013; N5.20k from April 1, 2014 and N3.90k from April 1, 2015.

The termination rates for voice services provided by other operators irrespective of the originating network shall be N4.90 k from 1st of April, 2013; N4.40k from 1st of April, 2014; and N3.90k from 1st of April 2015. This is revolutionary. Some analysts have argued that the regulator should resist the temptation of fixing prices but rather allow market forces to do same. Again, such argument, germane within the context of classical economics, does not cut any ice with both legal and ethical realities.

For the avoidance of doubt, the Commission’s functions and duties are set out in the Nigerian Communications Act 2003 (the “Act”). Section 4 of the Act lists the Commission’s functions, which include the facilitation of investments in and entry into the Nigerian market for the provision and supply of communications services, equipment and facilities. It permits the NCC to ensure the protection and promotion of the interests of consumers against unfair practices including but not limited to matters relating to tariffs and charges and the availability and quality of communications services, equipment and facilities. The section also encourages the regulator to pursue the promotion of fair competition in the communications industry and protection of communications services and facilities providers from the misuse of market power or anticompetitive and unfair practices by other service or facilities providers.

The last review of the interconnection rate was in 2009. Between then and now, a lot has happened in the sector including quantum growth in network throughput. Currently, Nigeria has over 113 million telephone lines. This has engendered more competition among operators but pricing of tariff still remains comparatively high. The action of the regulator aside enjoying legal backing was not arbitrary.

It was the culmination of concerted inputs, debates and deliberations among the diverse stakeholders in the industry. In June 2012, the NCC appointed PriceWaterhouseCoopers LLP (PWC) to undertake a cost study for voice interconnection. In line with its commitment to a policy of openness, transparency, fairness, and participatory regulation, the commission informed stakeholders in July 2012 of its engagement of PWC to advise on the review of interconnection rates for mobile and fixed telephony services.

Early this year, PWC released its report upon which the NCC convoked a meeting of stakeholders where issues emanating from the report including interconnection rate were discussed. While some operators favoured symmetrical rate, others rooted for asymmetrical. At the end, the NCC retained the asymmetrical rate, which has the overall effect of encouraging more entrants into the marketplace. This is seen as the game-changer in the on-going drive to provoke another telecom revolution, this time within the milieu of a broadband ecosystem.

The implication of this is that from April this year, telecom consumers in the country would begin to experience a rash of tariff cuts from operators as they reel out a regime of marketing tools to stay afloat in the market. And if you throw into this menu of tariff slash the commencement of Mobile Number Portability (MNP) in the coming weeks, what you get is a highly competitive marketplace where the customer would truly be king.

Juwah recognizes that consumers make the network. In a recent media interview, he said: “At NCC, we realise that without the consumers, there would be no networks or service providers and without the service providers, the regulator has no job; so we will do all that is possible within the law to protect the consumer. Everything we do is geared towards the protection of the consumer but in doing so, we will also give room for the investors to grow their businesses”.

No doubt, Juwah may have taken up the job as a telecom regulator at a time quality of service was a red button issue, but he has manifested traits that clearly place him on the pedestal as a regulator who loves to fight on the side of the consumer. He has imposed fines on operators, he has closed the shops of dubious telcos who will not play by the rules and now, he is slashing tariffs all for the sake of the consumer. He must not relent for in due time, history would remember him kindly as the regulator who did not only sustain a telecom revolution but one who also gave a humane veneer to an otherwise fiercely competitive market.

Tags: Business, Featured, Umeh, NCC, MNP

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