Addressing Interconnect Indebtedness In ICT Sector

In recent times, there has been a growing increase in licensees’ failure to settle interconnect indebtedness arising from termination of traffic, despite collection of the interconnect revenue from their respective carriers.

Recall that Section 72(1) of the Nigerian Communications Act (NCA), empowers the Nigerian Communications Commission (NCC) to review, modify, vary or repeal its regulatory instruments as at when necessary.

The Commission has therefore deemed it necessary to review the Guidelines on Procedure for Granting Approval to Disconnect Communications Operators (draft Guidelines). The objective of the Guidelines is to curtail and end interconnect indebtedness in the Industry, by amending the disconnection process to make it more effective. The Guidelines will also discourage unfair practices, thereby making the Industry attractive and friendly for licensees as well as investors.

Public inquiry

To ensure that all critical stakeholders made meaningful comments, the commission scheduled a public inquiry on May 22, 2024, at the Conference Room of the Commission. Staff of the Commission, operators, and interested stakeholders attended both physically and virtually.

The Commission received five submissions from stakeholders including ATC Nigeria Wireless Infrastructure Limited (ATC); IHS Nigeria Limited (IHS); MTN Nigeria Communications Plc. (MTN); Airtel Networks Limited (Airtel) and Emerging Markets Telecommunication Services Limited (Trading as 9Mobile)

The Executive Commissioner, Stakeholder Management (ECSM), NCC, Ms. Rimini Makama, who was represented by the Director, Compliance Monitoring and Enforcement (DCME) Department, NCC, Mr. Efosa Idehen, welcomed everyone to the Forum, while noting that the Public Inquiry is a testament to the Commission’s dedication to transparency and inclusivity, ensuring that the voices of all stakeholders are heard and considered.

Makama highlighted that regulatory instruments have played vital roles in shaping the country’s communications landscape, and it is essential that they are revisited and refined to address emerging challenges, trends, and opportunities.

She explained that as the Industry continues to evolve, there may be instances where disconnections of operators become necessary and the Guidelines lays out the procedure, through which such approvals are granted, ensuring that they are carried out in a transparent and accountable manner.
ECSM therefore enjoined all participants to freely make contributions and send in feedbacks that would assist the Commission in developing the Guidelines.

Stakeholders’ inputs

Paragraphs that were deliberated upon, were Paragraph 1 (4) that addresses the issue of tariffs paid by consumers to Operators; Paragraph 2(1) (c) that addresses the issue of dispute resolution and Paragraph 2 (2) that addresses that issue of granting approval for the disconnection, among others. The Commission noted the response of stakeholders, while assuring to consider some of them.

For instance, Paragraph 1 (4) of the guidelines stated that Tariffs paid by customers to Operators are inclusive of the interconnection charge, and an Operator shall upon receipt of such tariffs ensure that it deducts and sets aside all interconnection fees payable to its interconnecting counterpart in a separate account in line with the Accounting Separation Framework of the Commission. The operator shall effect payment thereof in accordance with the terms of duly executed interconnection agreements.

In its reaction to the above guideline, ATC recommended that an upfront payment of an amount (caution deposit), adequate to cover the cost of minimum of one month service being provided, paid into a designated interest-yielding account, that can be used to off-set debt owed the Network Facilities Providers (NFPs) by any debtor customer; and the right to disconnect a defaulting debtor, is automatically invoked upon a request by an NFP to access the warehoused caution deposit, evidenced by proof of an unpaid invoice of a preceding month.

ATC further recommended that the definition of interconnection include infrastructure sharing and collocation service, to bring it in tandem with the peculiarities of NFPs’ operations.
MTN also recommended that licensees be required to adhere to the provisions of the Accounting Separation Framework (ASF) by submitting their regulatory financial statements. This will ensure compliance with the ASF without singling out specific obligations from the Framework.
Paragraph 2(1) (c) stated that parties must have fully exhausted all the dispute resolution options contained in their interconnection agreements for resolving dispute, billing issue or other interconnect debt issues in question.

In its response to paragraph 2 (1) (c), MTN is of the opinion that this inclusion of this Paragraph increases technicalities in the process and may hamper the disconnection process as indebted parties are prone to abuse the requirement for dispute resolution. In some instances, indebted licensees resort to raising disputes on undisputed transactions in a bid to delay the process of disconnection, it added.
“Furthermore, the Commission as the regulator is in a quasi-judicial function and has the duty to protect all parties’ interests by hearing all requests for approval to disconnect. Thus, in line with the ethos of the Constitution of the Federal Republic of Nigeria and decided cases, justice and not technicalities should be the target.

“Accordingly, the Commission must ensure that the rights of parties to approach the Commission for a resolution, as guaranteed under Section 73 of the NCA 2003, is not frustrated. The Commission should also note that in several instances, indebted licensees have only met their obligations upon the intervention of the Commission, despite several entreaties from owed licensees.

“If this Paragraph had been enforced, such cases would have remained unresolved today, as the defaulting party can use the provision as a defense to frustrate the dispute resolution process. Where the Commission is inclined to encourage parties to resolve the issues before making a request for dissolution, the Commission should be mindful of the fact that it has prevented licensees from including credit management clauses as well as intervening in commercial agreements.

“This has inadvertently caused the issue of indebtedness, which the Commission expects parties to resolve, and is unfair to the claimant. Thus to ensure the principles of justice and speedy dispute resolution are not diminished, the Commission should not restrict licensee’s right to approach it for dispute resolution. As such, the Paragraph should be removed or replaced with a Paragraph that does not make exhaustion of dispute resolution a condition precedent,” MTN further advised.

Paragraph 10(1) stated that in any event where approval for partial disconnection is granted, if the Commission is not satisfied with remedial efforts made by the Respondent subsequent to the approval, the Commission may take any or all of the under listed steps: (a) Direct the migration of such operators to interconnect through a licensed Interconnect Exchange; (b) Decline any request for regulatory services or assistance and upon such conditions as the Commission may specify; (c) Publish names of operators with record of indebtedness in the newspapers and (d) Direct interconnect exchange licensee to disconnect the Operator.

Regarding Paragraph (10) (1) (d), EMTS (9mobile) said disconnection from Clearing House Partners is a total shutdown of the indebted partners operational activities which does not foster business continuity, adding that this should not be an option to be considered in the Guidelines as the implication is that any opportunity to pay its debt will be totally forestalled for that already struggling Operator.
Paragraph 5 – Conditions for the Grant of Approval to Disconnect for Indebtedness: 1 (c) & (d) – Exchange of Call Data Records (CDRs), reconciliations and confirmation of outstanding amount by the parties.

In line with international best practice, Airtel averred that an exchange of CDRs is conditional on either of the parties raising a dispute. “To avert unnecessary delays in the settlement of overdue interconnect obligations, it is recommended that the exchange of CDRs is subject to a dispute, otherwise, it is not applicable. Consequently, please modify the item 1(c) thus: “That the Applicant had prior to the request for approval to disconnect exchanged Call Data Records (CDRs) with the Respondent if there is a dispute on the debt.”

Paragraph 5(5) stated that for the purposes connected with the determination of ……….., where an Operator fails to exchange reliable CDRs after fifteen (15) calendar days, ………
In response, Airtel stated that, “Given the determination of the NCC to frontally address interconnect indebtedness in the Industry, it is recommended that the timeline for the parties to provide CDRs be reduced from fifteen (15) to ten (10) calendar days.”