About a month ago, the Nigerian Communications Commission announced a temporal suspension of the issuance of Mobile Virtual Network Operator (MVNO), Interconnect Exchange Service (IES), and Value Added Service (VAS) Aggregator licenses, respectively.
But, Techeconomy investigations have revealed reasons the telecoms regulator took the cautious decision to temporarily suspend the licenses.
According to multiple sources at the Commission, with the suspension of MVNO, IES and VAS Aggregator licenses, the NCC aims;
“To ensure an effective ecosystem in the telecom industry. The suspension will also enable the Commission to conduct a thorough review of several key areas within these categories, and enhance the competitiveness of the industry for growth”.
Our correspondent sighted a document for the review of the VAS Aggregators licenses which shows that NCC wants the aggregators to scale to ensure all ‘VAS Operators (VAS Content Providers), regardless of size, can easily integrate into MNOs’.
“Currently, the Commission has issued a significant number of licences in this category of service, and there has arisen the need to review the market dynamics of this sub-segment to ensure effective competition”, a source familiar with the matter, confirmed to our correspondent.
“The Commission also carried out a benchmarking exercise with some jurisdictions across the world, and it was observed that there may be currently more VAS Aggregator Licensees than may be required. There are currently forty-nine (49) VAS Aggregator Licensees in the country. There is, thus, the concern of saturation, with not enough market for the aggregators due to ‘over-supply’.
“This has also led to an increase in several aggregators with difficulties interconnecting with the four (4) Mobile Network Operators (MNOs)”, the impeccable source said.
With a technical knowledge of the review processes, she told Techeconomy that on the Interconnect Exchange Service, “Since the assumption of office as the EVC of NCC, Dr. Aminu Maida has always maintained that he stands for transparency and professionalism and as a responsive and proactive regulatory body, NCC had expressed serious concerns over issues around interconnect debt, SIM Boxing, and Call Refiling.
“The original goal of introducing this licence category was to encourage interconnection for smaller players and reduce interconnect indebtedness in the telecom sector. While these IES licensees have positively contributed to the interconnectivity of smaller operators, the issue of interconnect indebtedness has persisted in the industry.
“Cases of SIM Boxing and Call Refiling have also become a major issue impacting the Licensees in this sub-segment as well as MNOs that serve as the major terminating points of voice traffic in Nigeria”, the source said.
Reports show that some of the licensees under this category also have other licensees to terminate traffic internationally.
Some are suspected of abusing this for SIM boxing and Call Masking to terminate international traffic as local calls.
“With this, they take away revenue that should ordinarily accrue to the operators.
“There are currently thirty-seven (37) Interconnect Exchange Service licensees transiting traffic mainly to and from four major MNOs in the country”.
When asked about the Mobile Virtual Network Operators license which NCC started issuing few months back, with as much as 43 companies already granted approval, the source said the Commission is assessing the market to see how it evolves and performs.
When asked if NCC can suspend the issuance of licences, Niyi Oladapo, a telecommunications lawyer, told Techeconomy the Nigerian Communications Act 2003 gives the Commission the power to grant and revoke licences.
“Yes. NCC reserves the power. Inherent in the power of the Commission to grant and revoke licences is also the power to suspend the issuance of these licences”.
What effect can this suspension have on the growth of the telecommunications industry?
Oladapo agreed that it has little to no effect.
“The Commission already has enough licensees in each of these categories to take care of the needs of the industry. Also, remember that this is a liberalised industry.
“When a segment is saturated, you must review it and tackle competition issues to reposition the licensees for better service delivery. As a Commission, our role is to ensure they can compete and provide better services to the industry”, he said.
Meanwhile, our source at NCC said the length of the suspension would depend on the conclusion of a review that would be done in consultation with industry stakeholders.
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