USSD CHARGES: BANKS & TELCOS' BACK AND FORTH AND NCC'S DIRECTIVE

On Sunday, 19^th of October 2019, MTN sent a message to its subscribers informing them that from the 21^st of October, it would start charging the sum of N4 per every 20 seconds spent using the Unstructured Supplementary Services Data (USSD) platform. MTN concluded the message by directing its subscribers who wanted to know more about the charge to contact their bankers.

The following Tuesday, the Body of Bank CEOs published an advertorial in several newspapers denying that they asked MTN to charge any fee and that it was within the purview of telcos to decide whether to charge and what to charge for USSD transactions. It would seem going by the advertorial of the Body of Bank CEOs (BOBCEOs), other MNOs (Mobile Network Operators) namely Airtel, Globacom and 9Mobile had been secretly charging some fees (not sure how much) for a while without alerting the subscribers to it. So, I guess when some of us complain that our phone credits sometimes disappear without us making calls, we now have a reasonable idea where the credit has been going.

What is also apparent is the fact that the issue of who should (continue to) bear the burden of the customers’ use of the USSD platform has been on for quite a while. For instance, the NCC (Nigerian Communications Commission) on 23^rd of July this year, signed a Pricing Plan for the USSD platform and the Plan which came into effect on 1^st September 2019, recommended the price of N1.63K per USSD session and determined a session to be 20 seconds. The Plan also capped the price per USSD session at N4.89K.

What is however quite instructive is the fact that in Paragraph 27 of the Plan, the NCC stated that the motivation for the commissioning of a study to determine the right price for the USSD access was the allegation of excessive charges by financial institutions against telecommunications operators. In paragraphs 28, 29, 32 and 37 of the Pricing Plan, NCC mentioned repeatedly the complaints of the MNOs about the arbitrary and high charges of the Digital Financial Services Providers (DFIs) really, namely Banks and proposed engagements with the CBN towards a possible revenue sharing model which will not defeat the financial inclusion goal of the Federal Government.

What the NCC’s Pricing Plan, the BOBCEOs’ advertorial (which many have called a denial of MTN’s claim that the new cost emanates from the banks but which I see more as an admission of the claims sought to be denied) and the (leaked) memo to ALTON, tell me are the following:

§  Customers’ use of the USSD platform had always attracted charges

§  The USSD charges were previously borne by the Banks and other Financial institutions

§  At some point, the Banks complained about excessive charges by the Telecommunications companies (telcos) for their customers’ access to the USSD platform,

§  The telcos/MNOs believe the Banks are making too much money from USSD transactions and their arbitrary charges are defeating the financial inclusion goal of the Federal government,

§  The Banks told the MNOs/Telcos to commence operation of end-user billing much like they bill for calls and SMSs for USSD transactions.

§  The Telcos/MNOs complained about being placed in a disadvantaged position with regards to remuneration for USSD transactions to NCC and NCC commissioned a study on appropriate pricing for USSD transactions, hence the Pricing Plan signed in July 2019.

§  The Pricing Plan which came into effect on 1^st September 2019 determined a USSD session to be 20 seconds and put the price between N1.63k and maximum of N4.89k.

§  NCC mulled the idea of engaging CBN on a revenue sharing model which will be affordable to the customers and further financial inclusion.

§  Other Telcos apart from MTN seem to have commenced the implementation of the end-user billing proposed by the Banks without the subscribers’ knowledge (if Bullet No 2 of the BOBCEOs’ advertorial is believed).

While it is not clear whether NCC actually engaged the Banks and the CBN as proposed in their Pricing Plan, it is however obvious from the above that the feigned ignorance of the CBN, the Banks and the Ministry of Communications and Digital Economy are just that; feigned.

In the Nigerian government’s usual gra-gra style, the Ministry of Communication has ordered a halt to the charging of fees by the Telcos for USSD transactions. The questions to be answered then are:

·       who pays for USSD transactions during this period?

·       Who is supposed to pay? What exactly is the N50 charged by Banks for electronic funds transfer for?

·       Were the Banks previously paying for the USSD transactions out of the N50?

·       Do the CBN and the Banks truly believe that additional charge raised by the telcos for USSD transactions will promote financial inclusion and help the cashless policy?  

In the revised Guidelines to Charges By Banks and Other Financial Institutions, Section 10.2 allows the Banks to charge N50 for transfer of funds below and above N10,000. Section 10.12 however allows for cost recovery where USSD transactions are concerned. The questions again are: who is entitled to recover the cost of the transaction? And from whom?

There is obviously no doubt that since the infrastructure of the Telcos are used in carrying out USSD transactions, they are entitled to be paid for it. The Banks who were paying however also had valid point in complaining about being charged for failed or extended transaction time as a result of network issues of the Telcos. It is thus my firm belief that for this issue to be resolved in a way that will further financial inclusion, both the Banks and the Telcos must explore the revenue sharing model proposed by the Telcos. No additional financial burden should be placed on the customer if truly, the CBN is serious about financial inclusion and the cashless policy.

THAT HUGE $5.2 BILLION NCC FINE ON MTN

It was widely reported on Tuesday the 27th of October 2015 that NCC, the regulatory body for the telecommunication companies in Nigeria had slammed MTN with a huge fine of $5.2 Billion! The fine was to serve as punishment to MTN for failing, contrary to the directive of NCC, to disconnect about 5.1 million phone lines which were not registered as directed by NCC after the end of the August 2015 deadline set by the NCC.

While it is appropriate that MTN be sanctioned for violation of NCC’s directive, the fine levied, N200,000 for every line not disconnected by MTN is huge and could result in crippling the network’s operations.

Analysis of the fine according to AP (Associated Press), may provide some guidance. In the AP report, the $5.2 Billion fine imposed on MTN is equivalent to at least 2 years average profit for MTN and nearly three times the $1.83 (this figure might be a mistake as the figure on MTN's website differs) the telecommunications network has invested in Nigeria. Also, when looked at from the fact that MTN in 2001 paid what now seems like a mere $285 Million for the licence that enabled it to start operations in Nigeria, one can only conclude that the regulatory body has dealt a blow which while it may not result in death for the big telecommunications firm, may send a big part of its operations into a coma for quite a while.

Information available on MTN’s website show that MTN invested a total of $12 billion in the country from 2001 to 2013 and planned to invest additional $3 Billion between 2013 and 2015. The amount invested in the country by MTN was said to include what was spent on getting the largest digital (microwave) transmission backbone across the country, the investment in fibre optic service and the largest network switch centre in the country.

The above are mentioned to serve as a guide to what an amount as huge as $5.2 Billion can achieve.

Indeed, the NCC in imposing the fine on MTN must have borne in mind the provision of Section 2 of its Guidelines on Procedure for Granting Approval to Disconnect Telecommunications Operators. Paragraph (3) under Section 2 of the Draft (Not sure whether it’s still draft or now in force) Guidelines provides that one of the criteria which NCC should consider in deciding whether or not to grant approval for a network operator to be disconnected shall include the public interest to observe the rule of Law and the need to entrench good corporate governance practices among operators.

There is absolutely no doubt that the above guide is a very sound one. I am a firm believer in the fact that the major reason why our dear country has turned out the way it has is because no sanction attaches to wrongdoings. Where the wrong doer is particularly a “big” man or woman, not only is there no sanction, what the wrong doer gets is a reward. This will always have the effect of promoting wrongdoings while at the same time discouraging all those who always want to the right things.

Because of this, I believe very strongly that MTN should be sanctioned for disobeying the NCC directive especially in these days when the country is battling with terrorism and kidnappings and all sorts of other criminal activities. However, much as I support that MTN should be sanctioned, the sanction should not be such as would cripple the operations of the company unless that was the intent of the NCC in imposing such a debilitating fine.

A look through the provisions of NCC’s Guide on Interconnectivity earlier mentioned shows the reluctance by the drafters of that guide to approve the disconnection of any network operator mainly because of how this may affect subscribers. In the same vein, I believe NCC should also bear in mind the larger impact crippling a company as big as MTN may have on the economy. There is no doubt MTN should be sanctioned. But while the sanction should have an impact on the sanctioned in order to serve as deterrence to others, it should not be such that it could kill it.

NCC under Sections 55 & 65(1) of the 2003 Nigeria Communication Commission Act that created it has the power to impose fines in such amounts by exercising its discretion. But just like judges, such discretions are not to be exercised arbitrarily.

As an aside, I wonder what NCC does with all the fines collected from licensees. I remember that NCC slammed huge fines a few years ago on the three major telecommunication networks for the bad services they were rendering. Since then however, the services of the network operators have consistently deteriorated. Perhaps, NCC has to think of another way to enforce provision of good services to consumers of telecommunication services.