The telecom sector was alerted on May 17, 2024, to the announcement that the Nigerian Communications Commission (NCC) had put a temporary stop on the granting of communications licenses in three different categories.
This aligns with the Nigerian Communications Act 2003, which gives the Commission the power to grant and revoke licences. Inherent in the power of the Commission to grant and revoke licences is also the power to suspend the issuance of these licences.
The categories included Value Added Services (VAS) Aggregator Licences; Interconnect Exchange Service (IES) Licences and Mobile Virtual Network Operator (MVNO) Licences.
Their Roles in the ICT sector
By the Nigerian Communications Act, 2003, one of the main reasons for setting up the Commission is to facilitate the provision of communications facilities and access to communications services in Nigeria.
The Act further enumerates the functions of the Commission, including among other things, the issuance of licences to private companies for the provision of telecommunications services.
In carrying out these functions, LEADERSHIP gathered that the VAS, IES, and MVNO Licences were issued to bridge specific gaps in the ICT sector.
For instance, the Aggregator‘s licences were issued to bridge the gap between content providers, subscribers, and their operators.
Recall that operators are not allowed to distribute Value Added Services to their subscribers directly, thus a VAS aggregator provides the link between the operators and the content service providers.
VAS Aggregators are expected to provide simplified, direct, and secure connections to content and application providers for access to all network operators that can transmit VAS to end users.
They serve as the links between VAS Operators (VAS Content Providers) and Mobile Network Operators (MNOs). VAS Aggregators play a crucial role in the VAS ecosystem by facilitating seamless connection of VAS Operators (VAS Content Providers) to MNOs, thus streamlining the integration process of these VAS Operators to MNOs. These aggregators have the scale to ensure that all VAS Operators (VAS Content Providers), regardless of size, can easily integrate into MNOs.
As for the IES licence, also referred to as interconnect clearing houses, the original goal of introducing this licence category was to encourage interconnection for smaller players and reduce interconnect indebtedness in the telecom sector.
The licence was also issued to improve and streamline voice call routing within the industry, streamline the interconnect invoice settlement for smaller operators, and increase the resilience of the interconnect segment of the industry.
The IES licensees have so far, contributed to the transiting of voice calls between MNOs; between MNOs and smaller Licensees (providing voice services) e.g. Local Exchange Operators, and between one Local Exchange Operator and private Network Links licensee to others. Their roles also include facilitating the interchange of voice calls among networks.
On the other hand, the MVNO licences, were issued to deepen competition in the marketplace, expand coverage to rural areas, and increase market efficiency for different market niche segments.
Reasons for suspension:
As crucial as their roles in boosting the telecoms industry, there is a need for periodic review of several key areas within these categories, to ensure an effective ecosystem in the telecom industry and enhance the competitiveness of the industry for growth.
On this note, LEADERSHIP gathered that the reason for the suspension of the VAS licence, was the fact that 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.
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.
Findings also showed that there are currently 49 VAS Aggregator Licensees in the country, 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 MNOs.
As for the IES licensees, they have positively contributed to the interconnectivity of smaller operators. However, the issue of interconnect indebtedness has persisted in the industry, hence the reason for the suspension of the licence, LEADERSHIP learnt.
Recall that there are currently 37 IES licensees transiting traffic mainly to and from four major MNOs in the country. However, it is sad to note that cases of SIM Boxing and Call Refiling have 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.
Reports showed 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.
The suspension of issuance of MVNO was on the premises of the fact that the Commission is assessing the market to see how it evolves and performs, as there are a significant number of licensees (43) in that space.
Effect on industry growth
While stakeholders have expressed worry over the suspension of these licences, LEADERSHIP findings showed otherwise, as it will have little or no effect- the temporary suspension was to ensure the sustainability of the various players within the various segments and to enhance the industry’s vibrancy.
Recall that the reason for the suspension, was mainly because there are enough licensees in each of these categories to take care of the needs of the industry. Also, remember that this is a liberalized industry. When a segment is saturated, it is a must to review it and tackle competition issues to reposition the licensees for better service delivery.
There is no cause for worry, as the suspension of these licences should be seen from the perspective that it is meant to improve the sustainability of the various subsegments in which these licensees operate.
The Commission has proven to be on top of the industry and has undertaken this intervention to create a more conducive atmosphere for competition and ensure the survival of every player in the industry.