Business

Ending anti-growth policies in telecoms sector

The last year witnessed a flurry of policies in the telecoms sector, most of which have done more damage than good to the perennial growth that the sector is known for. According to stakeholders, most of these policies are antithesis to the growth sustainability plan being implemented by the telecoms regulator. SAMSON AKINTARO examines the effects of these policies on the sector

The Gross Domestic Product (GDP) statistics for the first quarter of 2021, which was recently released by the National Bureau of Statistics (NBS), indicated a decline in telecommunications’ contribution to the country’s economy. From 8.53 per cent recorded in Q4’20, telecoms’ contribution to the GDP in Q1’21 plunged to 7.51 per cent. This, however, did not come as a surprise because the sector was practically shut down during the period as a result of the ban on new SIM registration by the Minister of Communications and Digital Economy, Dr. Isa Pantami. The ban, which took effect from December 2020 to April 2021, dragged back the sector and halted its steady growth. For the first time in the 20- year history of mobile telecommunications in Nigeria, active mobile users declined steadily for four months. According to the industry statistics released by the Nigerian Communications Commission (NCC), the four GSM operators in the country lost a total of 15.4 million subscriptions between December 2020 and March this year.

Broadband penetration decline

While the telecoms regulator, NCC, had successfully implemented the National Broadband Plan 2013-2018 in such a way that the 30 per cent target was surpassed by December 2018, stakeholders said Pantami’s recent interventions in the sector was casting a shadow of doubt over the current plan, NBP 2020- 2025, in which government sets a 70 per cent penetration target. Contrary to the plan, since November last year, the country had consistently recorded a decrease in the number of broadband users. According to the industry data, between November 2020 and March 2021, the telecom operators lost a total of 9.06 million broadband subscribers. The data showed that the number of broadband users in the country declined from 87.7 million in October 2020 to 78.6 million in March 2021. With this, the broadband penetration level in the country, which had hit 45.93 per cent in October 2020, plunged to 41.18 per cent. In November 2020, broadband penetration had declined by 1.6 million, breaking 10 months of consistent monthly growth. By December, it went down further as the number of broadband subscriptions stood at 85.9 million, compared with 86 million in the preceding month, while the penetration level went down to 45.02 per cent from 45.07 per cent recorded in the preceding month. January 2021 saw the number of broadband users in the country decline by four million from 85.9 million in Debase penetration level to 42.93. And in February, it went further down again to 79.9 million users. Between January and October 2020, broadband connectivity in the country had increased by 15.5 million. On average, the country had been recording a one per cent increase each month, as the mobile network operators continued to push for deployment of 4G service across the country. Industry analysts blamed the consistent decline on the suspension of SIM sales for almost four months. According to them, it may be difficult for the country to recover the lost grounds in the NBP implementation due to the unfriendly SIM policy.

Grounds for the ban

According to the minister, the ban was necessitated by the need to conduct another audit of the subscriber registration database. He added that the objective of the audit exercise was to verify and ensure compliance by mobile network operators with the set quality standards and requirements of SIM card registration as issued by the Federal Ministry of Communications and Digital Economy. Industry experts, however, argued that the audit, which NCC had done seamlessly before, could have been done without banning the registration of new SIMs. According to Mr. Adewale Adeoye, a telecoms analyst, “what the minister had done with the ban was just to set the industry backward. The telecoms regulator had carried out audits of the registration Debase before without stopping the registration of new SIMs.” “What then made the one ordered by the minister special that they had to stop selling SIMs and in the process caused a lot of disruption in the industry,?” he queried.

USSD impasse

For many stakeholders in the telecoms sector, what Pantami had done in the recent disagreement between telecom operators and commercial banks was an example of how not to mix policy with regulatory issues. While NCC had come up with a determination on Unstructured Supplementary Service Data (USSD) pricing to address the perennial issue between banks and the telcos, the recent intervention of the minister is said to have worsened the situation. According to a telecom official, who would not want to be named, the disagreement between the telcos and the banks is a regulatory issue, which could have been addressed by NCC and the Central Bank of Nigeria. “Before coming up with determination of USSD pricing, NCC had carried out a study through an independent audit firm. “The telcos were to charge a maximum of N4.89k and a minimum of N1.63k for a USSD session and the bank had not disputed this, but demanded that the cost be passed to the customers, which is still the bone of contention. “Unfortunately, the minister had, by fiat, fixed a flat rate of N6.98k per USSD transaction, which, rather than solve the problem, has complicated it. Today, the banks are owing the telecom operators over N42 billion and there seems to be no solution in sight despite the minister’s intervention,” he said. A meeting held at the instance of the minister and chaired by him was said to have come up with resolutions that would “settle the dispute” between banks and the telcos. According to a statement issued after the meeting, “effective March 16, 2021, USSD services for financial transactions conducted at DMBs and all CBN – licensed institutions will be charged at a flat fee of N6.98k per transaction. “This replaces the current per session billing structure, ensuring a much cheaper average cost for customers to enhance financial inclusion. This approach is transparent and will ensure the amount remains the same, regardless of the number of sessions per transaction.” The statement added that the MNOs and DMBs were to discuss and agree on the operational modalities for the implementation of the new USSD pricing framework, including sharing of Application Programme Interface (APIs) to enable seamless, direct and transparent customer billing. However, according to the telecom operators, nothing has happened after the meeting and the USSD debt has continued to pile up.

DMS as a policy

Again, the inclusion of the Device Management System (DMS) into the Revised National Identity Policy for SIM Card Registration launched by the Minister of Communications and Digital Economy came as another unnecessary meddling in a pure regulatory issue. The fact that the policy categorically stated that telecom subscribers would be required to submit their International Mobile Equipment Identity (IMEI) shows a lack of understanding of the regulatory initiative, thus throwing Nigerians into an unnecessary frenzy. The planned deployment of DMS has been an initiative of the telecoms regulator, which is aimed at protecting the telecom consumer. According to stakeholders, the smuggling of DMS into the revised SIM registration policy by the minister gave room for the outcry over an idea that is being methodically implemented by the telecoms regulator. This created the impression that after being made to link their National Identification Number with their SIMs, government also wanted them to submit their phone IMEIs to be monitoring all citizens. From NCC’s perspective of the initiative as announced by the regulator in 2019, the DMS system is designed in such a way that phone users do not need to register or submit their IMEI to anybody. Rather, it provides another layer for the Commission on its type-approval of mobile devices process, whereby phone manufacturers/ importers and dealers are, at the point of entry, able to submit all the IMEIs of their devices for the regulator to ascertain that they conform to ITU specifications and prescribed standards. This process, according to NCC, will ensure that phones being sold to Nigerians are not substandard or fake.

Last line

The actions of the minister under the guise of policy statements and pronouncements are hurting the sector and indirectly discouraging potential investors from coming into the industry. Overriding regulatory efforts with ministerial declarations is counter-productive to the digital economy, which the minister claims to be driving. While not forgetting the supervisory role of the minister, agencies under the ministry should be allowed to operate independently in order to deliver on their mandates.

 

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