recent directive by the Nigerian Communications Communication to all operators to reduce the cost of off-net Short Message Services to N4.
The NCC had, in January, issued a directive to the telecoms operators that off-net SMS tariff should be slashed to N4 from N10.
An off-net SMS is a text message sent from one network to another such as from MTN to Airtel or Glo to Etisalat.
A report by global consulting firm, Price WaterHouse Cooper, commissioned by NCC, puts the total SMS volume for 2012 at 1.8 billion (on-net and off-net).
Outgoing on-net SMS, according to the report, increased from 911 million in 2011 to 958 million in 2012; outgoing SMS to other mobile operators moved from 316 million to 449 million, while SMS from other mobile operators also increased from 327 million to 421 million during the same period.
This, therefore, puts the total off-net SMS last year at 870 million with an average annual growth rate of 35.4 per cent SMS volume.
This means that the volume of off-net SMS this year will be 1.178 billion, comprising 870 million and 308 million (35.4 per cent anticipated growth rate).
With the annual growth rate, the operators will most likely make N4.712bn this year on off-net SMS instead of the estimated N11.78bn they would have made if the NCC had not forced the tariff reduction.
With a drop of N6 per SMS multiplied by 870 million off-net SMS, given an estimated annual growth rate of about 35.4 per cent, telecoms operators in the country stand the chance of losing about N7.07bn in 2013 alone.
The NCC directive on a price cap of N4 for all domestic off-net SMS took effect on February 5.
The Head, Media and Public Relations, NCC, Mr. Reuben Mouka, said the commission notified the operators of the new SMS tariff regime on January 3, 2013.
The Director, Legal and Regulatory Services, NCC, Ms. Josephine Amuwa, who signed the letters sent to the operators, explained that the commission arrived at the new price cap after due consideration of the submissions made by telecoms firms at various consultative meetings.
Having evaluated and analysed SMS traffic information provided by the operators, Amuwa said, “There was a general recognition that the cost of SMS is too high, especially in view of the interconnection rate of N1.02 for SMS as determined by the commission in 2009.”
She also said the operators had proposed a price cap ranging from N5 to N10 per message for off-net SMS.
Amuwa recalled that the operators also urged the NCC not to set a cap for international SMS, arguing that interconnect rates for international messages were outside their control, as they were being terminated through international carrier service providers in various jurisdictions.
Based on the considerations and in the interest of striking a balance between sustaining operators’ profitability and ensuring consumer satisfaction, and also in accordance with the powers conferred on it by Section 4, Chapter VII of the Nigerian Communications Act, 2003, Amuwa said NCC decided to fix off-net SMS tariff at N4.
She said the commission had also directed that the new rate should be implemented within 30 days from the date of the directive.
She said, “The commission will not place a price cap on international SMS at this time, but will encourage operators to work towards lowering the cost of international SMS.
“The directive informed operators that the commission will monitor compliance by the operators and noted that failure to comply with the directive will be penalised as provided by Section III of the NCA 2003.”
