News Column

At NCC, we protect consumers and encourage investors –Juwah, Vice Chairman

August 10, 2014

HENRY UMAHI



Four years ago, Dr. Eugene Juwah mounted the saddle of leadership as executive vice chairman of the Nigerian Communications Commission (NCC). Within the period, the telecommunications industry has witnessed some changes.

Juwah reflects on his tenure and other key issues in the telecoms sector.

Did you ever expect to become Nigeria's telecom regulator?

As you know, I've been in the ICT (Information and communications technology) industry for a very long time, starting from my days in the early 70s at Shell. In 1990, I specifically moved to telecoms. So, I have had the advantage of seeing the development of telecommunication in Nigeria. And since 1990, I have worked in telecoms. I have interacted intensively with the regulators; I have quarreled with them, I have admired them depending on what issue is at stake. I must tell you honestly, I never aimed at being the primary telecom regulator in Nigeria. I admire regulators when they did things that were in my favour when I was in the private sector. And I quarreled with them when they did things against me. But as I said, I never aimed specifically to be the regulator until I was asked to apply. Graciously, Mr. President selected me and the senate confirmed the selection.

How far have you gone in the implementation of your six-point agenda?

Actually, I can summarise the six-point agenda in the following way; we wanted to consolidate the progress made before we came, and we wanted to improve quality of service (QoS) to enhance broadband implementation, improve competition, provide diversified choices for consumers at good quality and price and improve our presence in the international space.

On consolidation of the progress made so far, I think we have achieved significant progress in this area. If we start from the parametres, we've increased tele-density from 63 per cent in 2010 when I came in to more than 90 per cent in 2014. We've increased subscriber base from 88 million in 2010 to more than 130 million. This is an improvement of almost 50 per cent in four years that I have been here. And you should remember that the 88 million was for 10 years before I came. So, we have done remarkably well in this area.

We have also done remarkably well in the contribution to the Nigerian economy in terms of contribution to GDP (Gross Domestic Product). We have increased it from five per cent when I came in to 8.5 per cent as announced recently during the rebasing of the economy. Finally, looking at investment in the sector, we increased it from $18 billion in 2010 to more than $32 billion today. The sector has created the most stable jobs and as investments grew in the past four years, more jobs, both direct and indirect, had been created and are still being created.

For QoS, we would like to have done better but we have always been striving to do better. We're rolling out our initiatives for broadband implementation, as we promised. It has just started and it is progressing at a very great speed. We have also improved competition by looking at the competition space within the telecoms industry, looking at operators that are dominant, imposing some limitations on them.

I must say, like I have always said that dominance is nothing bad but what you do with your dominance matters. Dominance means that you've been doing everything correctly. You've been doing things well; that's why you're dominating. But if you use your dominance in uncompetitive practice, that's when the regulator intervenes. We have also rolled out Mobile Number Portability (MNP). This deepens competition. If you don't like your operator, you move to the next one; holding your number. We have provided diversified choice for consumers. There are many products being rolled out which we're approving.

We've reduced prices significantly. In fact, if you look at voice services, we've reduced price at more than 45 per cent in four years. We've slashed the prices of SMS from N10 to N4. We've actually provided good choice for consumers at reasonably good price. As for our presence in the international arena, we're taking part in all the International Telecommunications Union (ITU) conferences. In fact, the whole world knows us because we organise what we call Leaders Launch in every ITU World Telecom event where all the big shots in telecoms come and listen to us. And remember that in the recent ones we had, people like Carlos Slim, one of the richest men in the world and a huge investor in telecoms, came and we had the opportunity of explaining what we're doing in Nigeria to him. We've achieved a lot in our six-point agenda.

What is your expectation on mobile number portability?

The operators that have large market share will not want it. The operators that think that they're providing good service will want it. So, it was important that the regulator provide a level playing field. We consulted all stakeholders about what we're going to do. It took some time, then we offered a bid for the database provider for MNP. It started in April 2013. Initially, the transactions were slow and people thought that it was not successful, but if you go to countries (Ghana, Kenya) that have done it before, it always starts slowly and then it keeps on increasing.

It is starting to take off now and one of the issues that actually hindered strong regulatory intervention is that there were really no regulations but there were business rules. I'm happy to announce that the regulation for MNP has been gazetted by government. Now, we have full power by law to descend on any operator who is not carrying out MNP guidelines. It is a success, and I hope the public will appreciate it and give us the credit.

What informed the slashing of SMS tariff?

We never do anything without studying it. We started by getting a consultant that has a lot of experience in that area and then consulting stakeholders including the operators and consumers. Slashing SMS price came from our cost-based study for SMS; I don't want to tell you the cost of SMS to the operators but I can tell you it is very much lower than N4, so the operators were making what I'll call an unacceptable profit when it was at N10 and that's why you see there was no terrible uproar against it. We believe we've protected the consumer by implementing the slash.

Did you slash the interconnect rate because of the consumer?

Interconnect rate according to international best practices must be cost-based. It must be based on the cost of making a call, so we hired PriceWaterhouse Coopers from London, which has a good model for determining the cost of making a call in Nigeria. Of course, these calls are average and so they interviewed all the operators, got their data, put it into their model and came up with the price of making calls today.

You see, it must keep on coming down because equipment are being amortised; new equipment that they bought are not as big as the ones they started with. You can see the dropping in interconnect rate. We adopted what is called a gliding model, where it is reducing year by year from N6.40k and by the end of the third year, which is next year, it will be N3.90k.

Operators like that, but what they argued about was that our model was asymmetrical in nature. Asymmetrical means that the bigger operators pay smaller operators bigger sums to interconnect. This is important to protect some of the operators. We said that operators that have less than seven and a half per cent of the subscriber base will be regarded as small operators. This includes the CDMA and new operators that are coming. You know small operators pay huge money to big operators whenever interconnection is considered, so by tweaking the interconnect rate to favour small operators, we try to strike a balance; they still pay huge amount but at least we've mitigated it.

How do you achieve a balance between the consumers and operators?

The regulator is a referee; he stands between the operators and the consumers. His duty on the one hand is to provide consumers a plethora of products and of good quality. For operators, we have a mandate to safeguard their investment, so it is a tight balance. Anything that will prevent operators from investing further… the more they invest the better the product they give to consumers and the better the quality. It is a very narrow work to balance the interest of the operator with that of the consumer. And as you say, if both of them blame me, we're doing something that is correct.

Does it make you happy when you fine the operators?

Not really, we're here to obey our laws. We have made a regulation saying that you must attain some minimum QoS indices and we have published it in our regulation, and this is also a way of protecting the consumer for whom we have the mandate to give good quality. Here is where we have power to regulate the operators. If we see that they don't give good quality to consumers, we penalise them and when we are penalising them, we do that according to our laws. Nobody likes penalty but we have to stick to our laws. They have to comply with our regulations, and when they don't do that, we have an option to fine them. But if we fine them every time, we'll drive them out of business and we don't want that.

Why so much energy on broadband ?

Right from the time I came into the communications industry, I saw that the trend is changing from voice to data and data in the good form must be broadband. That's why you have good Internet, good video service and a plethora of services coming out of broadband. Apart from that, broadband is a development product, a product that is capable of increasing the GDP of Nigeria. It is also capable of taking Nigeria into the knowledge-based economy that the world is pursuing. It is a product that is capable of increasing the efficiency of our younger generation. This is how we see broadband. And we see that it something that we have to do for Nigeria to enter the 21st century properly. If we don't do it, then we have failed. We have taken the issue of increasing broadband penetration as a priority. To start off that programme is not easy; you first of all have to convince the in-house people and the government that this is important and they have to support you. You have to tell the international audience what you want to do so that they'll get interested because you depend on them to bring in investment.

It took some time for this groundwork to be done, but we have started with a publication of our bid for the licensing of Infracos, which is actually the major foundation of our broadband intervention. I can tell you that the response is quite interesting; response from inside and outside the country. I can tell you that the International Finance Corporation, IFC, has endorsed it. They're supporting us and even helping us source for international investors. What we've done has not been in vain. So, we're keenly waiting for all these bids to come in and see the result of what we have done.

Why open access model?

The model is the leading model in the world. It encompasses the good things about access. It encompasses sharing of infrastructure, sharing of ownership. It encompasses competition because it structures the industry into primarily two layers- the wholesalers and retailers. If you're a wholesaler you cannot do retail. But most importantly, it provides open access to everybody at the same conditions. So, whether you're the biggest or smallest, you all have access to infrastructure. In Nigeria, we have added one more- we said that this entire environment is going to be regulated price-wise by the regulator. These make sure that our teeming publics get broadband at value for money.

Why regulate the price?

We've left it to market forces, you've seen the result. The cost of say Lagos to Ibadan for broadband today is higher than from London to Lagos. We've not succeeded in leaving it to market forces because very few companies have the funding capacity to do this. So, it leads to some sort of monopoly pricing. Government has intervened and made a programme and declared the Nigerian version of open access; and government wants to intervene to keep the prices reasonable, and also ensure reasonable profit for people that are operating it.

Why does NCC adopt the use of unobtrusive regulatory style?

The trend of regulation now is towards what they call soft regulation. The infinite end of it is self-regulation where the regulator does nothing. But the industry in Nigeria hasn't matured to that extent. There's still unhealthy competition, there's still not good QoS. So, in these areas, we must intervene strongly. But we only intervene when it is necessary; and that's why you see what you see.

Transparent auction of 2.3GHz frequency 

We started by saying we're going to be firm, transparent and not going to play with our integrity. When we decided to do the auctioning we consulted the industry. We had more than two consultations with the industry. Some didn't like it while others liked it. But we as regulator must do what we think is best for the industry. So, we hired an auction consultant from the UK, published what is called Memorandum of Auction where we detailed every process in the auction which they must abide by. This gives confidence to the bidders and we actually carried out a computer-based auction where nobody can interfere; the computer does it and broadcasts it at the same time. You will remember at the hotel where the auction took place there were people on the seventh and ground floor and they were seeing the results at the same time. It wasn't a question of me going to tell people. Everybody saw it was clear and transparent.

Many nations are adopting the NCC template, why?

Well, in NCC, we have adopted a position that we must maintain transparency in everything. We must be firm for operators and stakeholders to comply with what we're doing and we must be dynamic in rolling out regulations and interventions, so the world has seen this. I can tell you that a few weeks ago we received military officers from Botswana who came to study our security interface, which is very rare. And we don't talk about this. They know this and they applied to the National Security Adviser, NSA, in Nigeria to visit us and discuss our security interface. A number of other regulators have come here. Kenya has been here twice, first to study our competition interventions and secondly to understudy our consumer affairs bureau, which is our own innovation. This is why we're dynamic in rolling out intervention and new areas. As I'm talking to you now, we have regulators from Ghana who want to come and understudy our intervention in determining interconnect rate. Regulators as far as Sweden recognise our firmness and say that we're just like them; that operators hate them but the intention is not for operators to hate us but for us to be firm.

Why the code of corporate governance for telcos?

It is a primary objective of regulatory agencies that you consult your stakeholders before you carry out any intervention. Right from the start, we carried out three major consultations about this CCG with our stakeholders and then we involved them in the committee that worked out these codes. These codes are necessary because it is an investment of more than $32 billion and it has to be properly managed. There are certain rules that operators have to obey. People may be seeing this investment as foreign, but I can tell you that the amount of pre-paid money that operators are holding may be almost equal to this investment. Subscribers are co-investors, so it is important that operators run their companies in a way that is transparent. Also, because we do not have operators who are members of the stock exchange, which imposes governance once you enter, we have to develop specific governance for our own industry.

What is the way forward for quality of service?

I am not comfortable with the position of QoS in Nigeria today. It hasn't reached where we want it to be. There are still issues that make it difficult for operators to attain our projected QoS. Principal among them is the issue of capacity; the voice market keeps on increasing; the operators are investing, but they're not investing fast enough to meet that increase. And that is why we jab them by fining them. People feel that it is not good to fine them, but if we were not fining them, it could have been worse. I can tell you. But apart from the issues from the operator side, there are many other issues that are not from their side; issues of vandalisation of their facilities. And one thing you'll notice is that bad service at times is intermittent. For a few days, it gets very bad and then it gets better. What that shows is that a key facility has been tampered with and when it is repaired good service recovers. There's also the issue of state government interference; they interfere by imposing all sorts of taxes on the operators and when they don't pay, they lock up key facilities shutting off subscribers from getting good service. If you lock up a hub base station for example, it will affect many states. So  we're appealing to state governments to be more reasonable since their actions do affect QoS. But having said all these, I want to challenge any Nigerian to show me a service in Nigeria that is more efficient than telecommunications. Is it electricity, banking services, airlines etc. There's no service in Nigeria that you expect to get 24 hours, notwithstanding that there are a few hiccups here and there. So I'll implore Nigerians to be patient with us. We're improving, maybe not in a revolutionary way, but slowly and slowly we'll get there.


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Source: Sun, The (Nigeria)


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