Nigeria telephone operators eye fixed monthly talk rates

Nigeria's telephone market appears set for fixed monthly charges on talk as some operators consider a new tariff model that would increase levels of competition among operators.

New tariff models allowing users endless talk time at fixed rates would also mean that operators are gearing up to take advantage of the country's telephone boom, which is unlikely to shrink now that CDMA (Code Division Multiplex Access) operators are rapidly gaining ground in GSM-dominated areas.

"We are making very appreciable inroads into those virgin territories and given consumers," said a Visafone official.

Most operators have deployed IP (Internet Protocol) switches, making call generation less cumbersome and costly, but the benefits have not been passed on to subscribers. Nigeria's booming telephone market is characterized by high tariffs and low call quality. However, now some operators see the market margin increasing, allowing users to pay approximately N6000 (US$51.62) for unlimited calling with some locations off the call radar, including London and other international call destinations.

"This is the next level of calls. Consumers are bound to go for this unlimited access to voice telephony once they pay up their monthly fixed tariff," said Olu G. Alabi-Isama, a Lagos telecom analyst. "Billing voice has gone beyond the traditional method. IP allows for greater flexibility in service offering and billing."

The Nigeria telephone market is currently dominated by three GSM (Global System for Mobile Communications) operators -- Celtel (soon to be re-branded as Zain), Globacom and MTN. All three networks have over 97 percent of the market of some 50 million subscribers, with CDMA operators and Nitel sharing the balance.

One national carrier and two CDMA operators are far gone on plans for fixed monthly talk rates. One of them is also thinking of tweaking its network to allow for fixed monthly rates on Internet services bundled with voice service, officials revealed this weekend.

Officials asked not to be named, as telcos are keeping quiet with their plans, hoping to make a surprise onslaught on the market.

"We see this happening by fourth quarter of the year," one company official said.

Some analysts, however, worry that Nigeria's largely under-developed infrastructure could not handle the heavy calling that would come with unlimited talk time.

"This new tariff model could cause further deterioration in the networks quality" warned Lanre Ajayi, president of Nigeria Internet Group.

"That is unlikely," argued Dr. Kwami Boakye, CEO of Abuja's Backbone Infrastructure Network (BCN). "Networks are investing heavily on improving their networks, and the presence of infrastructure providers such as BCN should help the telephone company to step on service quality."

For Titi Omo-Ettu, Lagos telecom analyst and principal consultant at Telecom Answers Associates, "the chicken is coming to roost." Telcos are beginning to realize that consumers demand that benefits of technology, particularly IP, are be passed on to them, he said.

Monthly fixed talk rates are not entirely new. In the U.S., Verizon charges subscribers as little as $30 for unlimited talk time, including calls to non-mobile numbers in the U.K.