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Report Of Public Inquiry on Universal Access and Universal Service Regulations


INTRODUCTION

The Nigerian Communications Commission published a notice in accordance with Sections 70 and 120 of the Nigerian Communications Act, 2003 (The Act) that it shall hold a public inquiry on Universal Access and Universal Service Regulations. The draft Regulations were published on the Commission’s website for comments from the general public especially, operators and stakeholders.  

The notice of public inquiry was also advertised on the 29th June, 2006 in two National Newspapers. The notice required members of the public to submit their comments and observations on the draft Regulations to the Commission before the close of business on 25th July, 2006. 

By the close of the business on the 25th of July 2005, the Commission received submissions and comments from:

 Medallion Communication Limited
 

Vee Networks Limited
 

Intercellular Nigeria Plc and MTN Nigeria Communications Limited submitted their comments on the day of the inquiry.
 

Nitel’s submission was received after the day of the inquiry.
 

The inquiry took place on July 27, 2006 and all comments received were duly considered.

 

THE INQUIRY

The Inquiry was held at the Conference Hall, Nigerian Communications Commission, Abuja and it commenced at 10.30 am.  

The Executive Vice Chairman (EVC) welcomed the operators and stakeholders and thanked them for attending the Public Inquiry which he said was aimed at providing clear rules and ensuring a level playing field in the industry as enshrined in the Act. 

The EVC said the process culminating in the Public Inquiry began in July 2005 when the firm of McCarthy Tetrault of Canada won the bid in a World Bank sponsored project to develop regulations for the telecommunications industry including regulations on Competition, Numbering, Type Approval, Internet Service, Quality of Service and Consumer Protection. 

A Project Monitoring Committee was set up by the Commission and this Committee with representatives of McCarthy Tetrault met with industry stakeholders in September 2005 to canvass their views on the issues that should be addressed in the Regulations. The views expressed by stakeholders such as GSM Consultative Forum, Consumer Protection Council (CPC), Ministry of Communications, Association of Licensed Telecommunications Operators of Nigeria (ALTON), Internet Service Providers Association of Nigeria (ISPAN) and some operators were considered and incorporated into the Draft Regulations.  

The process of consultations in respect of the regulations is still on-going hence any additional comments received at the Public Inquiry will be considered before the finalization as the Commission’s processes are open, transparent and participatory

The Director of Legal Services analysed and made a presentation on issues raised by the stakeholders who had made submissions on the Universal Access and Universal Service regulations as requested by the Commission prior to the holding of the public inquiry.

Further comments submitted by the stakeholders as agreed at the Public Inquiry are also covered by this report.


CONSIDERATION OF COMMENTS FROM STAKEHOLDERS

1.

Comment

In regulation 23 the definition of immediate family as children under the age of 18 is ambiguous and the section should be deleted. The meaning of immediate family should be extended to include brothers and sisters of the affected person. Another operator suggested that the Act misinterpreted the definition of immediate family and it is expected that the Regulation will attempt to cure some of the defects of the Act.
 
  Response

 There is no definition of the term immediate family in the Act except in the second schedule dealing with conflict of interest by Commissioners and staff. In that schedule, immediate family is defined as ‘a person’s spouse and children who are under the age of 18 years’. The power to make regulations is derived from the Act and where the Act defines a word then for consistency that definition should be maintained.
 
2. Comment

 Regulation 24- The Act does not provide for a USP Director and if someone is needed to run the affairs of the USP, then the director should be appointed from the two Commissioners indicated in S.116(1)(c) of the Act. There was an additional comment to the effect that the USP Director should not be a staff of the Commission
 
  Response

Section 118 of the Act provides for the establishment of the USP secretariat which shall reside in the Commission with functions as listed there-under. Subsection 3 of this section mandates the Commission to staff the secretariat with suitably qualified candidate. The head of the secretariat is referred to as the USP Director in this regulation
 
3. Comment

 The time period recommended for actions under regulations 27, 28, 31, 34 and 35 is too long:
 

Regulation

Action

Timeline

27

Approval of Standing order

8 months

28

Prep of Standing order

6 months

31

Approval of Investment Mgr

12 months

34

Activities of Fund Mgr

8 months

35

Recommendation of Fund Mgr

6 months

 
  Response

 We accept this recommendation and will review these timelines before the final publication of the regulations.
 
4.

Comment

 A bidder whose contract is terminated as a result of corruption as provided in regulation 59 ought to be given an opportunity to defend the allegations.
 
 

Response

 Comment noted and accepted. Under the rules of fair hearing the Board will not unilaterally cancel a contract without giving the bidder an opportunity to defend the allegation
 
5.

Comment

 Regulations 91 and 93 - operators are already paying annual operating levy and numbering fees and it would be onerous to demand further contribution to the USP, especially in the light of multiple taxation from other government agencies. Numerous charges and levies will affect the ability of licensees to reinvest earnings on infrastructure development and coverage obligations.
 
 

Response

 The power to impose a USP levy is provided under the Act. (Section 120). The Commission has decided to make contributions to the USP from the annual operating levy. (See regulation 89). However the Commission has by these regulations reserved the right to levy a USP charge if it determines as provided in regulation 91 that the amount of the contributions is insufficient to meet estimated financing needs of a current USP operating plan.

 Regulation 93 limits the levy to only such shortfalls, and such levies should not exceed 1% of net revenues. We think that these provisions are equitable and fair to all. We are aware that in other jurisdictions, USP levies are higher than the current amount adopted in Nigeria
 
6.

Comment
Can it be possible for the Universal Service Provisions Board to be independent and not a surrogate of the Commission and also what percentage of the Annual Operating Levy (AOL) is to be allocated to the Universal Service Provision Fund
 
  Response

 The USP is not a surrogate of NCC given the composition of the Board which has the Minister of Communications as the Chairman.

Section 116 of the Act provides that the appointment of members of the USP Board is the responsibility of the President based on the recommendation of the Minister for Communications.

The representatives of the Commission on the USP Board are not in the majority and other members of the Board are independent of the Commission. The fund for USP is source as laid down by the Act and is to be separated from the funds of the Commission. The USP Board as presently constituted are persons with wealth of experience and integrity.
 
7.

Comment

 The Consultation process should be such that comments received from stakeholders, presentations and the Regulation are bound and given to participants as they come for the Public Inquiry to enable full participation during the proceedings.
 
 

Response

 The draft regulations was published on NCC website to ensure the public has access to it and sufficient time was given to the operators to make submissions on the regulations but unfortunately, comments came in late.  The Commission will publish the report on the public inquiry within 45 days and the report will include the comments made by the Operators.
 
8. Comment

 Membership of the USP Board requiring participation by private sector and sub-committees created by the Board should include participation by the telecommunication operator’ sector
 
 

Response

 Operators cannot be private sector members of the Board as Operators are supposed to implement Universal Access and Service. It will amount to conflict of interest for an operator to be on the board of USP and also bid for projects.
 
9.

Comment
Even though the USP board may not be a surrogate of NCC, the Commission should ensure that it does not take on too much work looking at its present Project. It is suggested that staff should not just be seconded from NCC but that vacancies should also be published
 
 

Response

 The USPF will be guided by the provisions of the Act in its operations.
 
10. Comment

 The relationship between the Universal access and the Universal Service agency bill 2005 and what type of licence will be issued and the fees payable should be explained
 
 

Response

 The Universal Service agency Bill is not a legal instrument as it was not passed into law by the National Assembly.
 
11. Comment

 The activities of the fund managers will determine the success of the USP fund and so there should be a plan to restraint or check fund Managers from making fruitless investments.
 
  Response

 Comments noted. Fund Managers will be approved in a transparent manner, with experience and proven track record of performance.
 
12. Comment

 Regulation 6 that deals with the constitution of the Board is invalid to the extent that it fails to comply with the explicit provisions of Section 115 and 116 of the NCA that provides for same.
 
 

Response

 We do not see any inconsistency in the provision of this regulation. It does not diminish from the express provision of the Act, but it is provided so that there is always a fully constituted board for the USP.
 
13. Comment

 How will it be resolved where there is a tie in the voting process given that the quorum for meeting is 6 members present as provided for in regulation 9 (c).
 
  Response

 This is noted and will be amended accordingly.
 
14. Comment

 Regulation 14 (a) should be redrafted to extend the term of the Board members longer than a minimum of at least two years.
 
  Response

 The term of two years is expressed as the minimum a Board member will serve and this implies that it may be longer than this period but not shorter.
 
15. Comment

 In regulation 16, a USPF member is “removed” and not “withdrawn”.
 
  Response

 Section 116 (4) of the Act stipulates that a member representing an organization on the Board may be withdrawn and replaced by another representative of the organization by the organization and this is what regulation 16 reflects.
 
16. Comment

 Section 16 (f) (iii) (e) should be corrected to read “he has not been certified to be of unsound mind”
 
  Response

 This is noted and will be amended accordingly.
 
17. Comment
The proposed selection process of the USP Fund Manager shall be made public, transparent and a competitive exercise upon which the USP Director shall make due recommendations to the USPB
 
  Response

 NCC is in agreement with the provision.
 
18.

Comment
The USPB should prepare a strategic management plan for the implementation of UA projects on a short, medium and long term basis. This SMP should be well aligned with clearly defined policy goals and targets for the industry which would have been best articulated in a revised/updated national telecom policy or similar document.
 
  Response

 NCC is a responsible regulatory agency that is well aware of its obligations under the NCA and will carry out its functions as provided by the Act.
 

GENERAL COMMENTS

The Commission has taken note of the all submissions and has carefully considered the view made by stakeholders and necessary amendments will be included in the final regulations.

 

Dated this 14th day of September, 2006
 

Engr. E. A. Ndukwe (OFR)
Executive Vice-Chairman/CEO