Telecoms companies may disconnect USSD services to banks —ALTON chair

The Unstructured Supplementary Service Data (USSD) is an access protocol in communications. It is the means by which customers are able to access online banking services. Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, in a television interview monitored in Abuja by SANYA ADEJOKUN, speaks on the brouhaha raging over the issue in the industry.

THE story looks like your members wanted to share the N10 to N50 that is charged by banks from their own end and they said no, that if you want to share with us, we will be compelled to increase by 40 per cent. What exactly happened?

The USSD is an access protocol in communications. It is one you use for checking your balances on the phone. At some point the banks came and said they will like to access our platforms using this channel which we obliged. We went to our regulator, Nigerian Communications Commission (NCC) and got the access code. In the first instance, it was meant to be just some form of access code but over the years and as the industry evolved, it became a means of primary access by the subscribers to the bankers.

We had a gentleman understanding as to how it should work. The banks charge their subscribers, which makes sense to do, they do some kind of revenue share with us, which makes sense to do because we provide the transport to access. They woke up after a meeting to say that they no longer want to continue to pay for the use of USSD charge. In their own view, we have no cost to run the service, we have no cost to provide the links and they think we should charge the end-user for the service. We felt otherwise. The records are there: I signed on behalf of industry, a letter to the Board of Banks CEOs around October 15, where we expressed a lot of concerns about the USSD charge.

We said in the letter that asking the subscribers to pay for using USSD is like a bank asking their customers to pay the bank’s landlord for access into the banks. We gave that analogy to them in that letter and the bankers came and said they don’t care. That we should find a way to get our charges from subscribers and we left it at that. We then approached our regulator to do what is fair to everybody and NCC in its characteristics conducted an extensive study benchmarking our market with other markets and they came up with a determination with what they think is a fair charge for the USSD like they normally do in all cases of pricing. All our prices are regulated, they are determined on a lower level and upper level limit provided by NCC based on studies, same for voice calls, for text messages. It was done normally and it was procedural.

Closure of borders in S/West suspicious — Gani Adams

We again approached the Body of Banks’ CEOs and say this is the determination based on the outcome of the studies. We showed them likely implications. Can you charge and repay us so that we continue with the sharing formula, but they insisted otherwise and said no. We have been very transparent in the industry and so our members that went to the public to say we are going to begin to charge was in compliance with the statutory ways of how things are done. But bankers will charge without even telling you that they are going to charge. They will introduce new rates without informing their customers of their intention. The uproar came and the Minister directed that we should discontinue and that status quo should remain, which is where we are.

It is unfortunate that bankers said things that they said. I am particularly disappointed at the response of the bankers because none of them has owned up that they asked us to charge their customers.

Minister has called for suspension of the proposed charges, but will it still be charged later and are you calling for a stakeholders meeting on the issue?

It is only fair to allow the operators to charge. I am saying that USSD actually operates using special signaling protocol and they use dedicated signaling protocol which is more or less the same as they use in delivering voice calls as used in delivering text messages and so why should we provide these links for them free of charge? After all, banks are charging their subscribers. And again like I said, it is like asking the subscribers to pay your landlord before they access your banking halls. So, if it is established that banks are already charging their customers, it is only fair that they pay the operators for delivering the service to them.

It is our expectation that when the meetings are called, facts will be brought on table. NCC has come with a determination of rates. They have the statistics, they have the data and all the supporting documents to this effect. What is honourable actually for the CBN to do is to ask the bankers to stop charging their subscribers while we have been asked to discontinue the charges,and we continue to provide those services. We have put introduction of thecharges on hold,yet we continue to provide the services in compliance with the ministerial directive that we have. We think it is only ethically right and morally right for the banks as well to discontinue those charges until we have the conclusion of how to proceed.

On morals and ethics, why are telecoms companies not thinking of reducing tariffs for their Nigerian customers despite doing well here?

Those are completely separate issues. That a company is doing business and making profit is not a reason it has to provide free service to anyone. If you look at what the industry has done for the economy, for instance the success of the banking sector is based on services that are provided by the telecommunications sector. If we say that we have better financial inclusion as it were, it is because of the services provided by telecom operators. What we are saying is that it is an industry that drives the economy. It is a sector that provides infrastructure for other infrastructure and so the issue of somebody making money is not relevant in this case because we are driving the economy, providing resources to drive other sectors of the economy, we are becoming one of the largest in terms of GDP, one of the largest in terms of foreign direct investment into the economy and therefore, we think that that environment where we operate should be fair, should be transparent and it should be encouraging for those who continue to invest in the economy.

In directing banks to turn against MTN, CBN Governor said there was a meeting five months ago where CBN interfaced with telecom operators and pointed out that this is a sunk fund and not an investment in infrastructure and that if you must go ahead in charging for mobile banking transactions, then the percentage should be small. Are you aware of that meeting and why was it difficult to reach an agreement?

Bankers want to eat their cake and have it and the argument is straightforward. We provided channels of interface which is supposed to be an access point, but they turned it into a revenue source for themselves and they don’t want to pay anything for it. I don’t know if the CBN Governor was properly briefed because what you have quoted him as saying is not a correct representation of what happened at that meeting. We had revenue formula arrangement with the banks, but the banks woke up after a meeting and decided that they no longer want to pay. We ran to the regulator and asked them to determine a fair rate. When the regulator came back with its findings, we then took the outcome to the banks. If you say that the cost of providing the services is sunk cost, I will then ask you if the cost of providing the life cycle sunk cost? The answer is no!

Again, we provide these links to the banks, we have quality of service obligations on those links which is one of the matrixes on which the industry is measured. It means that on a recurring basis, those circuits must not only be active, they must be effective. And so the argument and the narrative is that if you must charge, there must be a percentage. The next question is how much do they charge their subscribers and how much of this do they remit to the operators? While we charge in certain fractions, the banks’ charge between N10 and N70 which is in multiples of what we charge the banks. And the banks are even saying they want to charge this in whole and keep to themselves without giving anything to the operators.

You have asked for a stakeholders’ meeting on this issue. What do you expect to achieve?

We want to be paid for the services we offer to banks and it should be fair to subscribers and fair to the industry because at the end of the day, it is looking like the banks are lords unto themselves. And come to think of it: how many bank charges do we really know about? As a customer of banks, how many of their charges are as transparent as our rates as an industry? That is one moral question that the banks should answer.

You use an ATM, transaction fails, banks charge you. You use POS, you don’t succeed, you get charged. They do a reversal; they refuse to reverse the charges. What they have done now for the operators is to say: we put it in your nose that we are banks, we are the lords. But it doesn’t work like that.

The issue therefore, is that we need to come to a point where the rates are fair, and they have to be transparent and I think they owe that moral explanation to the public. How much are they charging for these services in the face of all these arguments. None of the bankers has come to tell the public how much they charge. When the CBN Governor said that we have sunk cost, did he tell you how much they are charging? Did he tell you how much they are making for the sunk from our “sunk cost”? The answer is no.

If banks refuse to be transparent about this issue, as an industry, we may decide to disconnect the links to the banks and let us see where they are.

But if you do that, won’tyou be sabotaging the financial inclusion goal?

This is why we are saying the earlier we gather around the table, the better. Today, if you talk about financial inclusion, there is no industry that has contributed to financial inclusion like telecom sector. The success of the banks today whether by ATM, by POS, by online banking, by digital access is all by the service providers. And that is why we ae saying that they cannot treat us like we are the least important in the line of things.

Is it not possible that MTN, which just got license for mobile money wants to introduce MSSD charges to discourage bank customers and redirect traffic to itself?

First, I don’t represent one company but the entire industry, so I can’t hold brief for any single operator but I have seen the terms of the payment service licenses. And the instrument of protection there for the banks is quite strong. And so there is no second layer operator either service provider or anyone who is a holder of this license who can remove any chunk from the banks. This can’t happen. The way the license documents are worded, the banks are well protected.

On the issue of financial inclusion, the point I will like to emphasise is that our sector has done the most for financial inclusion. What is also upsetting about this matter is that when USSD channels were acquired for the banks, it was made for financial inclusion, but statistics have shown that they are using it to sell more of products and services to the already banked and less to the unbanked otherwise, if you look at the trend of the growth in the banks, we have more people doing digital services with the banks than those being enlisted into the non-included financial group.

So, it has become elitist, it has become an access point for the banks to improve on their services more for the corporate and the banked and less for the unbanked. In our proposal even to the CBN when the issue of payment services to banks was discussed, we said that we have the largest access, we have the widest coverage of the country, so if you are talking about financial inclusion, the best group to partner with is actually telecom sector.

Now they brought in this issue of USSD, created this tension and there is now distrust between us.

The Minister of Communication has also asked operators to reduce cost of data because it is too high. He has asked for better services. What are your thoughts on things that should be done generally for the telecoms sector?

Today, our industry has become the infrastructure of infrastructure and it is important we realise that no industry is insulated from failure and so we need to be careful on issues of policy and regulation. We all remember the success of the textile industry in the ‘70s and ‘80s. It was like nothing can happen to them. But due to problems of policies and regulations, see what has become of our textile industry. Sometime in this country, NITEL was the institution to beat! Look at the story of NITEL, same thing with our NEPA, so while we have the industry that we built by the private sector, one must be careful in ensuring that policies and regulation does not stifle growth and does not impede development.

There is a need for us to protect the infrastructure of telecom operators and that is key. The issue of telecommunications as critical national economic and security infrastructure has become more than important. We are discussing about USSD and others because we have a live network. If networks are not live and active, the economy would be in trouble. Therefore, my first prayer to government will be to classify telecommunications as critical national security and economic infrastructure and accord it that level of protection to theextent that no one would be allowed to tamper with telecom infrastructure without paying the price.

Today, we are the most accessible, we are the most vulnerable and people consider us as an extractive industry where everybody wants to take something from. It is now even evident from what the banks are doing. When you hire a premises to install a base station, after collecting rent, the landlord will ask you for access fee each time you go to reload diesel on that site. The locals will ask you for money to access. If you refuse to give, they will prevent access. We have cases of people going to willfully switch off telecommunication sites and we think that these things are affecting progress.

I have said it over and again that tariff is a commercial factor and it should be led and driven by market forces. Government should provide the enabling environment and leave the rest to market forces to determine.

Will that not be to the detriment of the consumer?

It is not so, because there is a minimum cost and you need to cover your cost. We cannot shy away from the fact we have dearth of supporting infrastructure as we provide our own power, our own security, we solve our own problem in our own way. These costs are high and so you can’t prevent us from charging a cost reflective tariff. People usually compare us with other countries in terms of pricing, but we do not have the same operating environment.

Although Nigeria is the biggest market in Africa, but it is also the most difficult to operate in on the continent with the reason that if we have failure on Lagos-Ibadan Express road at 7pm, you can’t access that place. We have to wait till morning for reasons of safety of personnel and equipment. You can’t even do maintenance unlike other economies that operate on a 24-hour basis.

Nigerian Tribune