Nigeria Saves N2bn Annually for Routing Data Traffic Locally

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Emma Okonji
The Nigerian Communications Commission (NCC), the telecoms industry regulator, has revealed that Nigeria is saving as much as N2 billion annually for ensuring that internet service providers route their data traffic locally, through the Internet Exchange Point of Nigeria (IXPN).

The Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, who made the disclosure at the Telecoms Executive and Regulator’s Forum (TERF) organised by the Association of Telecoms Companies of Nigeria (ATCON) in Lagos, yesterday said since the establishment of IXPN, most Internet Service Providers (ISPs) now route their traffic locally through the exchange, instead of routing data traffic through servers hosted outside the country, thereby saving cost for themselves and the country.

According to Danbatta, “It is estimated that IXPN saves the nation above N2 billion annually, which would have been paid out to international carriers in US dollars if this facility was not available in Nigeria. It also reduces the delays associated with routing local traffic internationally; this drop in latency increases speed and better quality of service to end users.”

“For every internet content hosted locally it saves us foreign exchange which would have been paid to foreign companies, this ensures that local data centres flourishes, hence creating more jobs and increase technical competency for our engineers,” Danbatta said.

Internet Exchange Point of Nigeria is an initiative of the NCC that enables internet service providers, telcos, content providers and educational institutions to exchange internet traffic locally within Nigeria.

The NCC also provided the seed funding that set up IXPN as a not-for-profit organisation with the key objective of improving the ICT ecosystem.

The Nigerian IXP is now the second largest IXP in Africa, and it has become a very critical national resource that has made it possible for Nigeria to host critical internet resources such as the E-Root, F-Root and J-Root Domain Name Servers (DNS).

Meanwhile, operators of interconnect clearing houses and value added services in the telecoms industry have decried the huge debt being owed by industry operators, which according to them, would continue to cripple businesses if not addressed.

Both the clearing houses and VAS operators complained of heavy indebtedness in their businesses and called on the industry regulator, the NCC, to come up with policies that would address the issue.

While the interconnect clearing houses accused dominant telecom operators of not passing enough traffic through their interconnect clearing exchanges, and for also owing them huge sums of money, the VAS operators accused telecoms operators for owing them huge amount of money from the money generated from services rendered, through content provisioning.

While blaming the heavy indebtedness on the sharing formula for revenue generated through the services rendered by VAS operators, which stands at 70:30 per cent ratio, and most times 85:15 per cent ratio with telecoms operators having the lion share, the VAS operators said the sharing formula was putting them out of business. “Aside the small amount given to us by telecoms operators, they also delay payment for as long as two years running even when they have collected the money from customers who pay for the services rendered by VAS operators, using the platform of telecoms operators. They called on NCC to go beyond intervention in handling the matter and suggested better policy formulation and implementation to actually address the issue.

Responding, Danbatta said: “Our approach to interconnect and VAS debts in the telecom industry is persuasive. The regulator is not interested in micro managing financial and relationships between, and among service providers, that have been substantially protected by subsisting commercial agreements.

Interconnect debts have not been really a big issue in the industry except in cases of disputes. But there have been cases of interconnect fees disputes between service providers. In such cases, the regulator has intervened.

Danbatta said in the past one year, such intervention has resulted in payments of about N10.5 billion from about reported N17 billion disputed interconnect debts. Agreements have also been reached for the settlement of outstanding debts, he added.

The President of ATCON, Olusola Teniola, explained that the purpose of the forum was specifically to create a veritable opportunity for key industry players to interact with the industry regulator, with the aim of building a continual good working relationship between industry players and the regulator.
It is also aimed at creating a platform for the regulator to update the industry on the regulatory direction and plans for the industry in the coming years, Teniola said.