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Telecommunications Industry and Services

Paper type: Essay
Pages: 10 (2413 words)
Categories: Business, Industry, Marketing, Service, Services
Downloads: 3
Views: 284

1.0 INTRODUCTION

Increasing demands for telecommunication services also means that more investments in critical infrastructure is needed. Related policies also need to be discussed, updated and put in place to promote/maintain competition and forestall antitrust practices. Crucially, the increasing rise of OTTs and other disruptive technologies requires more proactive regulatory measures that would serve the best interests of competition and consumers in the Nigerian telecommunications industry.

It is for these reasons that the Commission through the PCEA Department continue to dedicate avowed commitments to respond to the dynamics of the telecommunications industry for optimum delivery to all the industry stakeholders especially the consumers.

The Internal Audit Team visited the PCEA Department as scheduled in the approved 2018 Audit Plan. The activities/operations of the various units at the department for the period of 1st January 2017 to 31st July, 2018 were reviewed from 14th to 28th August, 2018.

2.0 AUDIT OBJECTIVES:

The objectives of the review were to:

· Identify any and all new policies, procedures and organizational developments within the PCEA Department in order to achieve the Commission’s goals and objectives.

· Evaluate and determine the extent of compliance with internal policies of the Commission as well as other national regulations.

· Determine the availability and application of complementary controls in its activities vis-a vis other related Departments as basis for collective achievement of the Commission’s objectives.

· Verify the overall congruence of the operations with the Commission’s goals.

· Determine the overall efficiency in PCEA with greater regard to value-for-money.

3.0 AUDIT SCOPE

For the period under review, the areas covered include the following:

· Competition and Tariff

· Economic Analysis

· Policy and Knowledge Management

4.0 AUDIT APPROACH

The audit findings and conclusions are based on a review of pertinent documents presented, published records from the Commission’s website and interviews with relevant staff of the Department. These records were reviewed, and satisfactory explanations were made by the schedule officers to clarify issues raised.

5.0 FINDINGS/OBSERVATIONS

During the operations review of the Policy completion & Economic Analysis (PCEA) Department, the following was noted:

1. Telecommunications Market

PCEA Dept. carries out the review of spectrum details of licensees, in order to identify licensees that complied with the requirements associated previous year’s spectrum fees and rolling out services. Afterwards, the department generate appropriate invoices to Finance Department, which serves as the payment collection point for all spectrum licensees’ payments.

1. Telecommunications Market Share:

The statistics in accordance with the market shares of the operators, shows that The sector includes a strong multinational presence with MTN, a South African based multinational company with a market share of 37.21%, Airtel (an Indian based multinational telecommunication), followed by Glo (a Nigerian multinational company) and then EMTS-9mobile (formerly Etisalat) which is represented by the graph below:

Based on the information available to the team, the active mobile subscribers as at the period under review stood at 153,879,113. Hence, the number resource utilization (which refers to the percentage of mobile numbers assigned to subscribers compared to the total of mobile numbers assigned to operators during the period).

A detailed summary of active mobile number utilization.

S/N OPERATOR Active Subscribers 2nd Quarter, 2018

1 AIRTEL 34,832,181

2 EMTS 20,188,214

3 GLO 37,250,455

4 MTN 61,390,697

5 VISAFONE 213,106

6 MULTILINKS 4,460

7 Total 153,879,113

Fig1. Pictorial representation of subscriber’s base of mobile operators as at February 28th, 2017

2. State of the Telecommunications Market

1. During the period under review, the macroeconomic situation in the Nigerian Telecommunication Industry was challenging, partly as a result of local currency (NGN) depreciation and adverse economic conditions.

2. significant market power in the different market segment to ensure sustainability, growth and development of the Nigerian Communication market.

? As at the time of Audit, the Commission has engaged a consultant, Messrs. CTWorx Limited to undertake a study of the level of competition in the telecommunications industry for the period 2010-2015 and propose where necessary regulatory obligations to be imposed on dominant operators in each of the identified telecommunications markets.

? Progress report from the work being carried out by the consultant showed that market segments were categorized into five (5) namely: Mobile Voice Telecoms Operators, Data Fixed and Mobile Service Operators, Colocation and Infrastructural Service Segment, Upstream Segment Operator and Fixed Voice Telecoms Operators which in Audit opinion aligns with thecuurent rtend in the

east and north-west, respectively.

The National Broadband Plan 2013-2018, which has the objectives of promoting broadband deployment and availability of broadband services at affordable prices, comes up for review in 2018.

TYPE APPROVAL ADMINISTRATION

Type Approval Process

Applicant pays and Finance Department issues a receipt while TNSI department either issues a Type Approval Certificate or “A Letter of Grant” depending on whether the equipment is a network equipment or a terminal equipment (e.g. Phone)

Compliance Test/Test of Controls over the Type approval Process

In conducting the test, we built a matrix of questions relating to each stage of the process including controls put in place to ensure integrity of the process. Seven separate transaction (Applications) were selected and tested. The Matrix is attached as Appendix A. The summary of the findings is given below;

? The processes are being implemented as documented.

? There is greater efficiency as the EC-Technical could sign the Type Approval Review Reports and the Certificates in the Absence of the EVC

? The Controls over the different stages are Adequate except for that over generation of Invoice Advices. No evidence of review of the Invoice Advices prepared prior to being forwarded to Finance Department for generation of Invoices.

Other Observations on Type Approval Administration

? Type approval Processing is a one-off transaction and does not require subsequent renewal of certificate. However, a default in already type approved equipment may lead to withdrawal/cancellation of the certificate.

INTERCONNECT AND NETWORK MONITORING /QUALITY OF SERVICE UNIT

The Standard Operating Procedures (SOP) Manual defines the function of the unit to include, preparation of the Departmental Action Plan, Budget & Action Plan performance report, monitoring and reporting on the necessary Quality of Service Parameters set for the Industry (NOC Monitoring, Drive Test & POI Audit). Its function of managing Interconnection issues was classified under the Wireless Networks Unit of the Department. Preparation of Departmental Action Plan, Budget & Action Plan performance report cuts across each of the units but is collated by the secretariat /office of the Head of Department

Confirmation of reasonableness.

On a regular basis, the PCEA Department reviews assists the Central Bank of Nigeria (CBN) in its forex operations by confirming the reasonableness of fees invoiced by overseas service providers, to the Commission’s licensees by approving and issuing of reasonableness certificates for all intangible telecoms transactions, denominated in foreign currencies.

Audit team ran a check through the process and it was revealed that

? In compliance to the need to prevent capital flight and all manner of infringement on the Country’s foreign exchange reserve, a review of the NCC -CBN collaboration and the minimum requirements required for approval and processing of transactions were ascertained to be compiled and sustained by the PCEA.

? In conjunction with the NMIS department, The Department’s process of providing expert advice and vetting invoices and international payments to overseas vendors was commendable except in cases where clients submit improper documentation.

? To strengthen the guideline for processing reasonableness of service requests, the Department held a stakeholders’ Framework on confirmation of Reasonableness of Service fees paid in foreign exchange by the telecoms industry to improve the processing of approval for invisible/intangible telecoms trade transactions.

? The above is envisaged to eventually lead to the development of suitable rules and procedures to strengthen the processing of confirmation of reasonableness of service request/application submitted by CBN to the commission on behalf of Nigerian telecom

Test of controls in the processes involved showed that:

? Licensees submitted quarterly reports relating to the utilization of frequency assigned to them, as is required;

? The reports submitted were reviewed promptly by the Department to ascertain the integrity of the data submitted;

? In order to ascertain the accuracy and completeness of network deployment data submitted by operators, microwave frequency verification exercises were conducted periodically by the Department

This involves. Even though the database of various transactions are not maintained, the cases are usually analysed and reports duly written, recommending possible steps to resolution. Also, Audit team noted the need to automate the process.

4. Test of Controls over the Renewal Invoice Advice and Payments Received Process

In conducting the test, questions relating to each stage of the process including controls put in place to ensure integrity of the process were critically reviewed. Few transactions were selected and tested. The summary of findings is as follows:

? The processes are being implemented as documented;

? There is greater efficiency when there is unwavering interface between the Spectrum Administration and Finance Services Departments;

? The controls over the different stages were adequate, except for the need for a more consistent follow up with operators with pending payments. No evidence of recent collaborative meetings of relevant departments in the Commission for the purpose of determining the best approach of resolving issues surrounding debt/outstanding spectrum fees was sighted.

RECOMMENDATIONS

1. As the Department with the primary obligation of deepening competition in the industry on behalf of the Commission, It is imperative that more comprehensive studies be carried out to;

2. To ensure sustainable growth, the sector is in need of reform. previous changes (e.g. the Nigerian Communications Act 2003) are outdated as they focus on how voice calls are regulated and not on matters that relate to the new technological era. The focus today should cover competition in the sector, the market and other services the telecom sector is linked closely to such as finance, technology and media services.

3. To drive economic growth, PCEA Department needs to establish new reforms and review existing policies and regulatory actions to monitor the health of the sector.

4. The Commission should ensure that the quality of service provided by telecom operators are enhanced through an emphasis on the strength of their signals and the quality of their data services.

5. Customers should be educated as they can also play a part in regulating prices by valuing and promoting services that offer the best customer experience and not those that offer only the cheapest price.

6. To ensure long-term growth and sustainability there is a need to improve on general business processes/practices to create new revenue streams, recreate existing products, diversify into new areas for which the resources and capabilities are available and establish a minimum market price.

7. There is a need for the Commission to strengthen policy development collaboration with relevant agencies of government and the private sector to encourage stakeholders to adopt policies and positions that promote healthy competition in the Nigerian Telecommunication Market.

8. In order to ensure the Commission retains a measure of control in its regulatory functions, Management should continue to sustain a balanced regulatory framework supporting MNOs and innovation of Over-The- Top (OTT) players, considering that OTT services are growing exponentially.

9. That Management may consider as the department has a key technical role to play during Numbering Technical Audit exercises, that the Numbering Audit exercise is anchored by the department. The activity data held on network operators’ databases has a 90 day life cycle. Therefore, it is vital that Numbering Audit exercises are carried shortly after the end of each quarter to improve the quality of findings from such exercises.

10. While it is important that active participation of the PCEA Department’s team in Data collection from Network operators should be sustained. It is important to note that the Technical standards and Network Integrity should anchor this regulatory function;

11. As a strategy to yield more efficient and timely results in the Commission’s CRS procedure, the PCEA Department should consider introducing an automated process for the Commission. Also, the PCEA should consider maintaining a Database for all CRS transactions for ease of administration;

12. Considering that automating the process will require auditing through the System, the Internal Audit Department should be involved right from the Developmental Stage to ensure its proper implementation for both work processing and auditing purposes.

13. To ensure long-term growth and sustainability, the sector needs to focus on innovative business practices by investing their assets in more creative services that focus primarily on meeting consumer needs and establish a regulated minimum market price. These will create new streams of income for operators and mitigate the decline in their traditional revenues.

14. It is essential for new and existing investors to reduce operation expenses in order to focus on monetizing the networks. This involves infrastructure sharing or outsourcing, as well as investing in alternative energy to reduce reliance on fuel powered generators.

15. First, for uniformity and certainty in law, we recommend the harmonization of the laws and regulations that make provisions for regulation of anti-trust and anti-competition practices, both in the telecom sector and in the larger Nigerian economic/business regime, as a whole considering the legislations stipulate different thresholds and standards, with respect to anti-trust rules.

16. We recommend that all legislation with provisions seeking to regulate competition must be subject to supervisory regulation of the Federal High Court, as obtains under Section 122(6) of ISA, which states thus: “If the merger is approved by the Commission, the parties shall apply to the court for the merger to be sanctioned and, when so sanctioned, the same shall become binding on the companies and the court may, by the order sanctioning the merger, or by the subsequent order, make provision…” The mandatory provisions for the Court’s sanctions will also obviate the tendency of conflicting standards being adopted by different governmental agencies. It will also help achieve uniformity, consistency, and certainty in competition/anti-trust law in Nigeria.

17. Finally, to mitigate serious risk of market failure with the resultant ripple effect. We recommend periodic review of market structures, including market segments, which may be subject to anti-trust practices. This should be complemented by continuous reviews of the level of competition within identified telecom markets and periodic determination of the existence of dominance in all telecom markets in Nigeria.

CONCLUSION

· In conclusion, the Audit Team noted that The PCEA Department, on behalf of the Commission has taken commendable steps in the operations and processes involved in achieving the mandate of driving International best practices for telecommmunication competition policies in Nigeria, in line with emerging issues and global trends.

? However, in order to sustain enabling environment for technological initiatives and long-term normal functioning of all communications markets and segments, there is

? the need for comprehensive telecommunication markets studies to match the evolving industry needs.,

? stakeholder’s engagements (internal and external),

? updated regulatory provisions that reflect market realities with the industry dynamics

? and proactive regulatory interventions

will be required by the Department as telecommunication operators seek increasingly efficient ways of delivering services, and are motivated to adopt new technologies.

Above is submitted for your consideration and further directives, Sir.

Thank you.

Shafii Ndanusa

Cite this essay

Telecommunications Industry and Services. (2019, Nov 16). Retrieved from https://studymoose.com/telecommunications-industry-and-services-essay

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