RegTech

NCC Caps telcos USSD Tariff at  N4.89k per Session

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Prof Umar Danbatta, says although the NCC was not ready now in terms of policy and regulations, it has however kick started processes and reserved three frequency bands to facilitate 5G roll out

The Nigerian Communications Commission (NCC) has issued an order to all telcos to bring down their Unstructured Supplementary Service Data (USSD) services to no more than N4.89k per session.

This came after the Commission issued a regulatory document titled Determination of USSD Pricing which is binding on all Mobile Network Operators (MNOs).

The usual practice involves a negotiation between Mobile Network Operators (MNOs) and financial service providers in determining what the consumers pay for mobile USSD transactions.

The NCC, however, waded into the matter and issued orders on how digital financial services should be done with the aim of issuing new guidelines for licensing finance and getting more Nigerians into the government’s financial inclusion plans.

The document stated that a USSD session is 20 seconds and would not be charged above N4.89k. The change will be effective from 1st September 2019.

Here are the new USSD guidelines

A USSD session is 20 seconds.

The cost of a USSD session is N1.63K.

The price floor for a 20-second USSD service is N1.63k.

The price cap for a 20-second USSD session is N4.89k.

Telecoms operators are to price at cost plus margin.

This determination does not apply to the currently zero-rated USSD services such as  customer service, balance enquiry, purchase of airtime and data services, etc. related to telecommunications services.

The NCC explained the reason for the order, stating that other financial services by the network providers were often high and arbitrary. The regulator also expressed beliefs that banks and licensed mobile financial services providers would comply with this new instruction.

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“It is expected that other players in the Digital Finance ecosystem (such as banks and licensed mobile financial services providers etc.) would equally be transparent and ensure that their charges reflect their true cost structures. It is expected that this determination will enable such transparent cost application in that sector. The commission looks forward to action by the other regulators in this regard to achieve fair pricing to the benefit of consumers, the different players in the ecosystem, and Nigeria as a whole.

“The Commission encourages the Central Bank of Nigeria to look into, and conclusively address these concerns.”

The reaction of telcos: MTN, Globacom, Airtel and 9mobile kicked against the NCC’s decision, noting that the recommended cost might not be a true reflection of the total costs for the provision of USSD services.

They explained that the new regulation is a significant reduction of what obtains in the industry rate and could bring down proceeds for future investments towards supporting the evolving digital financial service ecosystem.

NCC’s answer: NCC fired back, saying the cost determined took into consideration all the relevant cost elements required to perform a USSD service.

“The cost is modelled after an ‘efficient operator’ and not intended to be a direct reflection of the cost of any individual operator.

“The Commission aligns with the assertion that there is no obvious market failure in terms of competition amongst the MNOs in the USSD service market segment.”

The regulator also said this new directive is very crucial in the attainment of Nigeria’s social and economic-financial inclusion strategies.

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