t.' fl..INSIGHT

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HOWINDEPENDENT'INTERCONNECTCOMPANIESWILLCRAsHGSMTARRIF.

So many times, the Nigerian nascenttelecommunication industry has beenthrown into states of unhealthyrancor over issues arisingJrominterco~ectivity. H major operatorswere not screaming the non paymentof ~ost of calls that terminated on .their networks from other networks,smaIl time private ~ .

telecommunications operatOrs wouldbe protesting the unwillingness of '

either a GSM or fixed wireless giantto interconnect with it. The industry,

even now, still seethes withdissatisfaction over issues arising'from interconnectlvity. Toresolve theseeming state of perpetual conflicts,the National Communication,Commission gave licenses to private

interconnect houses that are to playintermediary role among and betweenserri,ce providers. One of suchinterconn~ clearing houses isMedallion CommunicationsIn this interview with Fortune andClass team ofNiyi Akinsiju andMichael Popoola:Ajayi, th~ Presidentof Medallion, Mr. IkechukwuNncimani, explains the importance ofinterconnect houses to telephone

'. service providers and subscribers. .

What is interconnect an about?Interconnect takes place when you havemore than one telecom operator and there isa need forsubscribers on one of the networks

through interconnection, the call volume inthe industry increases and by default therevenue available for everybodyparticipating equally increases. That is the

bJlsiness reason forinterconnection.

Two, there is regulatory" p r ov i s ion for

interC"onnection. Theregulation is to enhancecompetition such that' alloperators must seamlesslyinterconnect their networks

, so that subscribers can haveoptions. Such, subscriberscan reach other serviceproviders without having tobe on the same network.This creates competition.So, from the regulatorypoint of view. the regulatorsalways desire to have

multiple operators so as to have theminterconnect seamlessly so that subs~erswould have options on which network touse.

to talk to subscribers on the other network.So. both telecom operators have to bephysically interconnected. Their switches.which conduct the call routing from onesubscriber to the other subscriber. have to bephysically interconnected. In the scheme of fIom quality of service point of view,things, that is what really creates inter- without seamless interconnection, theconnect. subscriber will suffer.Like in the case where

some operators do not want togotoa specificWedo interconnect for a number of reasons. geographical area may be for reasons ofOne is for financial reason because once a financial viability. in such a situation only a '

telephone service provider is interconqected regional or sectional operator can operate inwith any other service provider. the the area and for the subscribers to enjoy thesubscribers can exchange traffic and it. benefits of telephony' the regional orguarantees the provider more revenue, sectional operator that is providing thebecause he is supposed to be paid for caI1s ,service must be able to reach other networkterminating on his network. Also. by virtue' through inter-connectivity.of an nnArAfnr'c: t:nhc:!~Mhn~, 11:-- _d -.-

out~ide the country. we have needs forinterconnectivity.

What was the state of interconnection inthe country before your organisation came. ? .Ln. .The challenges that had been faced by theNigerian operators arh, of four differenttypes; they had challenges emanating fromtechnical issues; they had financialsettlement issues; they had regulatoryissues; and issues of :business. whichoperators look a,tfro.1.1ithe corporate point ofview.,."

. ,On the technical side; chis involves themethodology that is,being ,mployed. First ofall. when an operatof .wants to interconnectdirectly with other 'operators' may lead totechnical challeng8s.Thi~ is because in aplace like Lagoswhere you have over ten totwenty active telecom operators. tointerconnect With ,them independently istroublesome. because each needs eitherfibre-optics riricrowavelinks to link up witheach switching centres. So. it costs youmoney. It tak:estime to set up the links. Youhave to deal With right of way issues. ITyouare using microwave. you have to deal with

, P.A.M.and otherthIDgs. . '

Basically"'~ operators did not have acentral switching point. -Some of themstarted using NITEL [NigeriaTelecommunications Limited} as 1contracting ,~tching point. Some used tMobite!. So~e others are using Discom to iprovide transit service fa! them just to. :.,minimise the interconnect: links that were ineeded. .

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view,that is movingawayfromLagos,you- competitivein nature. But we'veseen it inwill find out that interconnect do not exist - the industry. Tosuch people, when you try tobecause apart locations like Lagos, Port create a seamless interconnect scheme toHarcourt and -Abuja where the GSM make things work smoothly, they ~e not sooperators open up their -networks for' interested inJt.just b~use they feet it willinterconnection, you don't have ultimately affect their corporate policy orinterconnect points in other parts of the position in the industry.country.What that means is that what ought -to be a local call within a locality in lefs say Then finally, on the regulatory side, we see aBornu,willhave to go to separate parts of the situation where the regulatory NCCcountry, probably Lagos, to beexchanged,before it comes back tobe tenninated in Bornu. When youdo that, the subscriber takes onsometransmission cost. Beside theadded cost, the possibility of thatcall not being successfullyterminated is equally higher whenit is making that journey becausethe call actually goes through theinternationalenvironment before it:;omesback. So, on the technical~ide, the method beingimplementedwasn't efficient.

)f course, the only person that;uffers is the subscriber because:he subscriber doesn't understand:he technicalities of interconnect.rhe subscriber does not know what isIctuallygoingon. All he knows is that each

- ime he 'tries to call, the calls are not goingbrough. And he getS charged for -calls that11'8unduly terminated.

me of the major problems the industry isleingconfronted with is that some operatorslOWdisplay monopolistic tendencies, likerying to be the dominant operators. Theylon'twant smaller operators to interconnectrith them purely for corporate strategiceasons. It's not that they have technicalI1'Oblemsor financial challenges. Youknow,ven in some cases where they areuaranteed payment or th~ are even paid.p-front,some are not wfllirig to open up:reir networks for other operators. Their*'Boningis like,'well; this operator is giving18traffic,yes. He is also giving me revenue.ut his subscriber base is too small therefore's not commercially viable for me to evenlterconnect with him. Give and take, if heoes not interconnect with me, the smallumber of subscribers he has, would after)me time, abandon his network and joinline.' -

0, purely from the monopolistic or3minationposition on the corporate level,Ime operators won't want a seamlesslterconnect regime. They know that it -isIstingthem some regime. B~t the thing is.at if you lose some youll gain in spme4er ways.They [operators] envisage that ita matteroftime before this small operatorse off. That is unfortunate and anti-

[National Communications Commission]had created some guidelines that weresupposed to be good for the industry, forprotecting small operators who dominantoperators would want to intimidate intosigning interconnect agreement orintimidate into not being operational at theright time. So; in that case, you find asituation w4ere a small P.T.D.will want tointerconnect with a dominant operator andthe operator would say, sorry, I don't want tomterconnect with you; or, you can onlyinterconnect with me at so and so location.It's like a situation where all operator inSakato, for example, has to go to Ahuja to setup switching centre just to be able tointerconnect to other operators at anadditional cost.

In order to prevent such scenario, what NCChas done is to set up some guidelines. Thereis a regu,latory provision that you mustinterconnect with an operator who ~ksinterconnection with you. That is one. Then,even, if you-people are interconnected youcannot unilaterally disconnect somebodybecause he owes you or for whatever reasonwithout taking permission and goingthrough the guidelines set by the regulatoryauthority, that is, the NCC .

These are good policies that were intendedto protect the small operators and enable afair and level playing ground for everybody.But, unfortunately,. soine people have been.abusing it. Some operators haveaccumulated deht Icnnwino tJ.u.t nnn ..............

disconnect them. Some operators come toyou to apply for intercorinect withoutpresenting a business case. They just feel,bylaw, you must interconnect with them. So,they don't take time to present a businessscheme that will make it efficient andsmooth to make it attractive to other partiesto want to interconnect with them. These arechallenges the industry have beencontending with. In appreciating these

challenges and alleviating them,< ..' . - the regulatorybodyhas takenastep

forward by giving out independentinterconp.ect licences last year. Wewere one of the six companjeslicensed to provide this service.

What exactly are you licensed todo? .

Wewere licensed to provide-privateinterconnect services to operators.The provision- of interconnectservices, given the challenges illthe industry, i_will entail twospecific things. One is to have aninterconnect switch, a trafficswitch that will be able to generateaccurate calls records, that is, callsthat move around the operators

that use your services. 'lWo,you must have avery good billing system and platform toaccurately generate invoices for calls that gothrough your network so Utat people willknow exactly how much.they are owing andhow much should be Paid. Three, you musthave an efficient settlement scheme in placeto ensure that operators arepain.

How to do these is to-establish a goodswitching platform to ~~ure that operatorsare interconnected and '-adequ~telyprovidenew ones to them where surlh is needed.. -- .'/Interconnect both the big ones~nd the smallones so that small ories:Carireach whereverthere is service withouthiiving-io go throughdifferent channels. So, when' an operatorrelate with us, if he has an mter-connectpoint, he won't need have to have switchpoints in 10 different states. AlI'he need is tolink to the private interconnect-house, so,heis reducing of coStof getting stap:ed.Such anoperator is equaUyreduciDgthe cost of what.

-it takes him to get into b~siness and enjoynational spread.

We have multiple switches so that calls arenow localised. So, call no longer have tomove from one city to another even when itis a local call tha,t ought to have terminatedlocally. The moPtent you start localisingcalls termination: points tariff will continueto drop all over the country that is actuallythe biggest benefit to the subscriber for ourtype of service. The second one:is that everyclearinghouse like ours shoul~ be able to!"..J- I & .." ..

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operators.It's not just-a question of everymonth an operator sends a-ninvoice fo otheroperators; there must be payment guarantee-from both the operators that have positive ornegative tariffflow for the month. Operatorsof private interconnect houses like oursmust have settlement schemes in place, thisshould ensure that the debt ratio is reducing.That is what makes Medallion different fromother clearing houses, we are the only onethat as of today. is pushing a settlementscheme. every other operator simply wantsto provide inter-connect of networks withgood billing system and ask you forguarantee without a seUlement scheme inplace. ~

What manner of settlement scheme do-youhave in mind? -The Medallion seulement scheme - entailsthat all operators have to be part of"ourseUlement scheme before they pass calIsthrough us. We have our settlement banks,which basically means the banks theoperators are using must agree to act onbehalf oCtheoperators that at any given pointwithin the billing circle they must makefunds available for the seulement of theirinter-connect debts once the -invoice isdelivered and it is accepted by all the inter-connect parties. So this time, we are moving

--thepayment of the debt from the operatorStothe bank. it's like inter-connect clearingsystem. An operator that passes callstluough Medallion or expects calls fromMedallion won't be waiting for Medallion tosend the cheque any day we feel like becausefrom past experience the cheque may never -comeor it may come or be delayed and so on.So this lime, we are looking at taking it to theplayers in the banking industry where-crediting and debiting of both accounts isexpected. With..,thisf'YOu don't wait foroperators to write the cheque anytime theyfeel like or chasing the operators around tocome and payor risk the possibility of suchoperator disappearing. Because that is partof what some of them have done, by the timethe debt gets so high, they just pack up anddisappear. So wehave a settlement schemein place that will ensure that for every callthat goes from Medallion switch to -anoperator the operator will be paid.

.Ave .JfIfll ~ film ~ oj 6lm:~~jt?Yesour licence covers all operators both toGSMand to PTOand fixed wireless.

. One would have thought that one inter-connect company would be enough forNigeria, how many do we have at presentin the country?

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caries that call; the first leg of - it. fromMiduguri to Abuja will have to be borne bymost likely starcom except they are doing itthrough.Nitel, it has tobe borne by them.

What they do is that most time if there is a V--SAT base between Maiduguri and Abuja

How do you make your own money or how starcom will pass it through V-SATto send itdoyou recoup your investment? -this means that the call will first go up andWe are paid for the number of calls that go come to;Ahuja starcom switch centre-fromthrough our switch. It is on the volume of where the call.will then be passed to MTNcalls $at pass through our network. We do which will now try to locate the subscriber,not charge operators for using our facilities' by the time MTN finds out that thelike telling them to pay for one and all that, subscriber is in Maiduguri it will pass theno. Remember that we are dealing with two call to their Maiduguri exchange or sitelayers of services, we are dealing with whiChwould then tei.'minateit. So normally,technical issues by providing a cheaper way let's assume Starcom and MTN interconnectto be connected. technicall!, - and .we are at Maiduguri what will look like local callequiilly ~n?e~ finanCIal se~ces ~r will have to go through the national orthem. This ISa different type of servIce on Its -.sometimes international route before being.own but for all these we just take a token of terminated ~t the local handset. The cost of

operators per minute charge. that transmission has to be borne by the<subscriber. ..

Until each city in Nigeria has inter-connectexchange we'll still be having calls which are

. supposed to be local calls going throughregional switches centres in Lagos beforetermination. Sowhat will it take to put ~ter-connect exchange in each State Capital.

For the benefit of our readers, we want youto explain how calls traveL. .Okay, let's say yeiu want to call Cameroonfrom Lagos,let us use Nilel for example. On aNUelline you di~la number in Cameroon theline you are dialing belongs to an operator inCameroon probably the national carrier ofCameroon. so Nitel and that network has tobe connected physically, the networkS haveto be connected. the need for that connectionis that there is a fibre optic through which aninternational call has to gothrough..Yourcallwill actually leave your handset to NUelExchange, the one closest to you, it will thenmove from that local exchange to NITELprimary centre or its international gatew.aydepending on the way NUel does theirrouting within their own network and then.leave Nigeria either through SAT-30rwhatever fibre linkage or in the absence ofthat leave through V-SAT.If it goes throughV-SAT,it willdefmitely go to Europe orNorth America from there the call will berouted back into Cameroon, to the gatewayin the capital city from there it makes ajourney to the operator that owns that.subscriber's line before tfmninating on theset of the subscribers. That is for aninternational call. .

Now let's look at national calls, for instance,-JtIIIIl2I!Bim ~'\"UIV",;, aod1 JmIl1.tLVBDl:ttID1IBHIal ..~ mDmJbDcmrnJWmINTlfiiJm iiD 11m 9IBIIB!

Maiduguri. What happens at the moment isthat to get interconnected in Maiduguri, thecall has to first leave Maiduguri and go to.Ahuja where both starcom and MTN areinterconnected before coming back. toMaiduguri to be terriJ.inatl~don the set of theperson you are calling in Maiduguri. Even if

Can you give us a brief background ofyourself!I am Engineer Ikechukwu Nnamani. I hadmy first degree in Mechanical Engineeringatthe University of Nigeria, Nsuka,.and then I'went to the United State~ofAmerica where Igot a second degree Opto-MechanicalEngineering from Tennessee State

. University. Thereafter, I -worked for some'time at Caterpillar then I worked for LuxcoreNetWork in Atlanta Georgia. USA for anumber of years. We were into photonicwavelength conyertership. an opticalregenerative device; Then;I decided to come

.home to contribute-my o.~ little quota tothe industry. . .~

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