Nigerian Telecoms Firms Frustrate Subscribers

Tuesday, 20 January, 2015

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Ajibola Amzat

Yearly, telecommunication companies in Nigeria generate revenues that surpass their returns in other African countries.

In 2012 alone, the telecoms industry, which is controlled by four major companies – MTN Nigeria Communications Limited, Airtel Networks Limited, Emerging Market Telecommunications Services Limited (Etisalat) and Globacom Limited – generated 1.5 trillion naira (9.3 billion US dollars) in revenue out of the total 6.7 trillion naira (41 billion dollars) they generated in sub-Saharan Africa, according to Analysis Mason.

But as the market continues to expand and the companies’ profits climb in Nigeria, there are growing concerns about the quality of service they offer, as well about as their marketing campaigns which have left consumers frustrated.

THE RISE AND RISE OF TELECOMS FIRMS IN NIGERIA

With a population of about 167 million, Nigeria’s demand for telecoms services is the largest in Africa. Nigeria is also in the top ten fastest-growing telecoms markets in the world.

According to the Nigerian Communications Commission (NCC), as of June 2014, active GSM mobile subscriptions in Nigeria stood at a little over 130 million, representing 98.31 per cent of the market share of the telecoms industry. MTN leads the market with 58.5 million subscribers, followed by Globacom with 27.3 million, Airtel with 25.3 million and Etisalat with 19.3 million.

In 2013, MTN generated 775.3 billion naira in Nigeria against 638.6 billion it generated in South Africa, its home country. The difference represents 21 per cent. The company’s turnover in other Africa countries is far lower than in Nigeria – Ghana at 133.5 billion naira, Cameroon at 83.7 billion, Ivory Coast with 88.5 billion and Uganda 72.4 billion naira.

Although similar data for the three other major telecoms companies is not available, the growing number of subscribers they have both for voice and data services as captured by the NCC is a reliable indicator of their significant turnover in Nigeria.

As the revenues of the big four continue to grow due to the growing numbers of subscribers, the frustrations of mobile phone users in Nigeria also continue to rise.

The problems experienced by users are multiple: dropped and failed calls, network interruption, network congestion, failed attempts to load recharge payments, inability to change tariff plans, inability to activate the service offered, inability to send or receive SMS, unsolicited messages without an option to opt out, and calls misdirected to unintended numbers, among others.

In spite of these challenges, GSM operators continue to attract more subscribers to their networks through all manner of promotions, without simultaneously expanding their network capacity. Many unsatisfied subscribers who have tried to report the problems to their service providers report that it is nearly impossible to get through on the busy telephone line provided, and that they are constantly put on hold. Some say their inquiries go unanswered for days. Consequently, most Nigerians are compelled to own more than one mobile phone.

According to a Telecommunications Poll Report by NOIPolls Limited released in November 2014, a high proportion of Nigerians use two mobile phone connections.

VIOLATING CONSUMER RIGHTS

Many customers have experiences that make them feel they are not getting value for money, while the telecoms companies’ profits surge. Some believe that the quality of service constitutes a breach of consumer rights as guaranteed by the Nigerian Communication Act 2003 and the Consumer Protection Council Act LFN 2004.

The law mandates the NCC to promote the provision of a modern, universal, efficient, reliable, affordable and easily accessible communications service. Section 4 (1b-d) and 104 of the Nigerian Communication Act give telecoms subscribers a right to high-quality service and value for money. Similarly, section 2 of the Consumer Protection Council Act, LFN 2004, and Regulations 2(a-c), 3 and 8 of Quality of Service Regulations 2012 made by NCC emphasises the same rights of telecoms subscribers.

 Customers are legally protected under the United Nations Guidelines for Consumer Protection, otherwise known as the Consumer Bill of Rights. This legal instrument prescribes a fair settlement of just claims, including compensation for misrepresentation, shoddy goods or unsatisfactory services. This requirement is also found in sections 53, 70, 104, and 106 (3) of the Nigeria Communication Act (2003). 

Nigerian subscribers report that seeking compensation from telecoms companies for poor service is a difficult task. As one subscriber put it, “It is like asking the Sahara desert to bring forth ice-cold water.”

Some subscribers believe that the regulatory system is too weak to come to their rescue. For instance, the National Association of Telecommunications Subscribers (NATCOMS), a body representing telecoms subscribers in Nigeria, has made several appeals to telecoms firms to work out fair compensation plans for subscribers. However, the body says it is yet to hear back from the telecoms companies. As a result, NATCOMS has itself decided to take the four telecoms companies to court for violating consumer rights.

The group wants 10,000 naira-worth of airtime to be given to each subscriber for 2013, and 15,000 naira for subsequent years until the quality of service improves.  NATCOMS lodged the case in court more than a year ago but no conclusion has been reached.

The only compensation paid were the fines ordered by the NCC for poor service delivery. Three firms – MTN, Airtel and Globacom – paid fines of 647 million naira due to the poor service they provided between July 2013 and January 2014. For March and April 2012, the big four paid fines totalling 1.17 billion naira for failing to meet the required standard of performance.

NATCOMS believes that this payment is an admission of poor performance on the part of the telecoms companies. But instead of compensating subscribers directly, the companies paid fines to the regulatory agency, NCC. The director of publicity at NCC, Tony Ojobo, justified the action by saying that the NCC Act does not provide for direct compensation to be paid to subscribers.

NATCOMS president Chief Deolu Ogunbanjo takes the opposite view. He argues that payment of fines to NCC is a subversion of the legal principle that guarantees remedy for a person whose rights are violated.

CUSTOMER COMPLAINTS

The Guardian’s investigation shows that customer complaints about poor telecoms services are widespread. Customers who spoke to The Guardian also questioned the methods used by telecoms companies to market their products.

Ganiyu lives in the Ikotun area of Lagos, and subscribes to one of the big four telecoms companies. He complains of continued poor reception on his phone.

“You can hardly have a successful conversation without three to four breaks in transmission,” he said. “Sometimes you don’t even hear anything, or the other person does not hear you. Yet the network providers charge for this failed call. And the situation appears to be getting worse by the day.”

Complaints like this one are commonplace not only in Lagos, but have become almost the permanent experience of Nigerian mobile phone users. Operators have consistently blamed the poor state of infrastructure in Nigeria for the bad call quality and unreliable connection.

Subscribers who responded to The Guardian’s investigation also complained about hidden charges passed on to customers.

Damilola subscribes to one of the four large providers. She told The Guardian that the company signed her up for caller tunes at a rate of 50 naira a month, without her consent.

A second individual, who subscribes to another of the main telecoms providers, said that this company signs its customers up to certain services. James, who lives in Lokoja, Kogi state, said the company in question charged subscribers 100 naira for a service “that you did not request for in the first place”. However, he said, although there is an option to unsubscribe by texting a certain number, this is hardly ever successful.

Caller tunes have inconvenienced other subscribers, too. In an account reported by The Guardian recently, subscriber Funmi Owolabi described her experience – “I returned from work on a particular night with an urgent need to call my mother. I had to get airtime to make the important call; unknown to me I was on a caller tune to which I cannot recall when I subscribed.

“I had no cash but the call was important, hence I pleaded with my neighbour to transfer 100 naira to my line. But my account was cleared a few seconds after it was credited. I felt like weeping when customer care informed me that the account was cleared to pay a monthly subscription for a tune I never ordered.”

Similarly frustrating experiences have prompted many customers to switch providers.

Dumping one network for another seems a reasonable step, yet the experience of many shows that it makes little difference. Bayo Omotubora, the secretary general of NATCOMS, described it as “moving from the frying pan to the fire”, because the big four are all “in hot pursuit of undue profit maximisation at the expense of quality of service”.

Other subscribers have told of marketing techniques that have left them feeling short-changed, or at best confused.

Olajumoke described one experience where she loaded credit onto her phone on the understanding that the operator would double her balance at the weekend. “By Monday, all my credit was gone without me having used the airtime at all,” Olajumoke told The Guardian. “[The company] said I should have used it all up on the weekend. This they had conveniently forgotten to mention in all their promos. So, I lost all my recharge and the promo extra credits given to me.”

Olajumoke said she lost 19, 000 naira after she subscribed to a call plan with terms and conditions that were not fully explained to her beforehand. Her efforts to get compensation from the company that sold her the call plan were not successful.

In order to verify Olajumoke’s claim, The Guardian’s reporter responded to a promotional message from the same company that offered 1 Gb of data for 2,000 naira. But when the data was loaded, only 500 Mb of data was registered on the phone. When the Guardian reporter called the company’s customer care unit, he was assured that his account with the network still showed 1 GB, but repeated checks from the customer’s end only showed credit of 500Mb.

Experiences like these force subscribers to question the way telecoms firms advertise their products and the level of care provided to their customers.

Besides direct marketing, customers are dissatisfied with the deluges of SMS messages and automated calls that have become part of daily life. Bolanle Hassan, a lawyer, described the sending of unsolicited messages by telecoms service providers as “acts of nuisance”.

According to Hassan, he has received unsolicited messages from a particular company for more than a year, despite several efforts to stop them. Hassan has started the process of seeking redress in court.

The experiences of these customers reflect only a fragment of the glitches associated with service delivery by telecoms firms in Nigeria. One subscriber, Solomon, from Lagos, said the problem showed that the regulatory agencies – the NCC and the Consumer Protection Council (CPC) – “are not pulling their weight appropriately”.

The Guardian sought to interview staff members of the big four telecoms companies, including customer care centre staff in Lagos and other states in Nigeria’s southwest. Many employees spoke off the record because they are not authorised to talk to the media. But former employees, especially the contract staff members, commented on record.

One former staff member who worked for one of the providers for more than six years, told The Guardian that most adverts for telecoms products come with conditions. He said customers often discovered this only after they had already subscribed. At that point, despite feeling cheated, they could hold the company liable for misleading information.

“Any advert you see in the newspapers bears the clause ‘terms and conditions apply’,” the source said. “But many subscribers don’t see it because the proviso is printed faintly. Even if they do, not many can figure out the meaning of the legalese.”

The former employee gave an example of how some promotions work. “If you buy any of our mobile devices we promise you a one-year subscription, but the one-year subscription is actually dependent on if you exhaust a 1,000 naira subscription every month,” he said. “Which means you must exhaust the 1,000 naira every month before we can give you the bonus for the next month. If you don’t, you may not get it.  And if you exhaust it faster, you won’t get another bonus for that month.

“Promotional messages do not provide complete information,” the staffer warned. “And the ‘terms and conditions’ clause is always faintly written at the corner far below.”

He added that companies rolled out different plans without giving details of the cost implications. He gave an example of a deal where a company “promises to give you 200 per cent bonus of all your recharge. So when you recharge 200 [naira] worth of airtime, we give you 400 naira worth of bonus, which is stored in your bonus account. But the tariff is higher. You won’t see or hear that in the advert message.”

He said that if a company had an ongoing promotion, it might decide to limit the validity of the offer in order to save on costs. This could lead to customers losing the airtime they expected to benefit from.

“The snag here is when they review this plan, they don’t place adverts to inform the subscribers just as they did when they introduced it. So many subscribers would not immediately know of the downward review. Therefore, once a subscriber exhausts his or her bonus, we will be deducting from his or her main credit.”

But as Damilola, also a former employee of one of the big companies, noted, customer care centres are rarely notified immediately when there is a product review. When customers discover what has happened, many prefer to unsubscribe, but this is sometimes difficult to do.

“I have made three attempts to unsubscribe to Facebook Weekly offered by one the network providers, all to no avail,” said Busola, a polytechnic lecturer in Ogun State.

Another complaint concerns Value Added Service (VAS) providers which provide applications and additional phone content such as mobile entertainment, call tunes, ring-back tunes, music downloads, news breaks, Biblical and inspirational quotes, flight information, telemarketing and more. In Nigeria, the VAS subsector provides non-core telecoms services, and is currently worth over 200 million US dollars annually. This has the potential to rise to 500 million dollars over the next five years, according to industry statistics. 

Although the NCC directed all the network operators to disengage unlicensed VAS providers in 2013 as a way of “sanitising” the system, the directive seems to have been ignored because the monitoring exercise carried out in March showed that mobile service providers still have some unauthorised VAS providers on their networks. 

VAS providers are largely responsible for most of the unsolicited messages, said. Osho Saheed, a former contract staffer at a telecoms company.

“They are the owners of the application that is used for generating short-code messages, and they do not surrender this code to telecoms operators. Therefore the customer service centres cannot unsubscribe customers because they do not have control,” he said. “We can only refer customers’ complaints to the VAS providers who have control. But they may not want to opt you out for commercial reasons.”

Osho said telecoms firms configure their system in such a way to bring in more revenue for the company, even at the expense of subscribers.

“For example, if you subscribe for a plan that terminates in 24 hours, you might activate that plan by 11:59pm. At the count of 12, you lose your money if the airtime is not used up within that one minute. Whereas people tend to think that the 24 hours begins at the time of your subscription, this is not so,” he said. “The system is configured in a way that favours telecoms companies at the expense of subscribers. But it shouldn’t be so.”

CONSTRAINTS ON BETTER SERVICE

Telecoms firms frequently blame the poor quality of service on infrastructure challenges in Nigeria. Unlike other African countries such as South Africa, Egypt and a few others where governments have created a relatively enabling environment for the telecoms industry to thrive, Nigeria lacks basic telephone infrastructure.

A senior official at the NCC described the infrastructure of NITEL – the former Nigerian flagship telecoms company –as “analogue” compared with the new technology being deployed in the industry today.

Similarly, the electricity shortage in the country is a great barrier to the growth of the telecoms industry. While Nigeria can only boast 4,000 megawatts (MW) of electricity supply in 2014, South Africa’s electricity capacity is about 45,700 MW and Egyptian capacity stand at 30,000 MW, according to official figures.

In 2013, MTN Nigeria reportedly spent 12 per cent of its total operating costs on diesel [to power generators], amounting to 34 billion naira. The industry workers to whom The Guardian spoke maintain that the huge infrastructure gap is the major reason why service is poor. According to the public relations manager at Etisalat, Chineze Amanfo, building a telecoms network is capital-intensive, and the telecommunications industry is constantly evolving.

“The Nigerian market is, however, peculiar because operators also have to invest in infrastructure such as power and security, resources which should have been channelled into core telecoms infrastructure and products,” she said.

Because of this challenge, MTN Nigeria – in a statement sent to The Guardian recently – says it has been investing approximately 1.5 billion dollars annually in the last 13 years in increasing its capacity. In spite of this aggressive investment drive, demand for telecoms services – driven by the sharp decline in tariffs over the last three years - continues to outstrip supply, and overwhelms whatever new capacity is created, MTN Nigeria said.

The public relations and protocol manager at MTN Nigeria, Funso Aina, explained that the drop in tariffs had been stimulating increased minutes of usage and activity on the networks by a growing number of people, with a telling effect on the networks.

This situation, Aina noted, was further exacerbated by underlying environmental challenges. These included power shortages, the vandalism and theft of network infrastructure, lack of security in certain parts of the country, multiple taxation and over-regulation. He said the catalogue of problems led to interference in critical network infrastructure and disruption to services.

The industry challenge highlighted by MTN Nigeria seems to be known to the regulators. In fact, NCC has often come to the defence of the big four, to the surprise of subscribers. More than this – they seem to actively support the telecoms companies in these cases.

The NCC’s executive vice-chairman, Dr Eugene Juwah, once disclosed that business was not as profitable for operators as many consumers and stakeholders would like to believe. But with the increasing number of data users, in addition to voice calls, it is unlikely any of the companies will go bankrupt.

In an interview, an NCC spokesperson told The Guardian that “telecoms companies are working in an environment that is challenging, and this is affecting the quality of service”. He added, “Quality of service would only improve if the environment improves.”

These statements underscore the level of neglect of infrastructure development in Nigeria, and implicitly point an accusing finger at the government, which NCC often supports despite being notionally independent. 

But Ojobo of the NCC was swift to lay the blame at the doorstep of state governments, which he said often prevented telecoms companies from building infrastructure in their jurisdiction. According to Ojobo, right of way is one of the major constraints facing telecoms providers. He said many state governors were making it difficult for telecoms operators to put infrastructure in place. “In Abuja for instance, in the last two years, no new base station has been put on the ground; the FCT authorities say it is defacing the city. They [network providers] are also having similar challenges in other states of the federation. These are part of the challenge.”

Ojobo added that all telecoms lines in Nigeria are today mobile, and this puts enormous pressure on the network.

This defence notwithstanding, NCC has on a number of occasions sanctioned telecoms firms for not meeting the Key Performance Index (KPI). Fines running to billions of naira have been paid by the big four in the last couple of years.

Observers of the industry think the government should have provided the necessary telephone infrastructure before imposing sanctions on network providers for poor service. Alternatively, some argue that the NCC should have stopped all the networks from further sales of SIM cards, since network capacity is already overstrained by excess demand.

The NCC is not persuaded by this argument. “We can’t stop them from selling SIM cards because it is a liberalised market. It is a demand and supply thing. The demand we have is greater than what the infrastructure can cope with. And to put infrastructure on the ground, operators are having challenges because of the restrictive measures introduced by state governments,” Ojobo said.

WEAK JUSTIFICATION?

Plausible as this explanation may sound, customers forced to suffer poor service with no compensation remain unsatisfied.

The Consumer Protection Council (CPC), the agency responsible for protecting consumers’ rights, has said it is no longer impressed by the reasons offered by telecoms service providers for poor service delivery. It says the lack of infrastructure may not have affected the networks as much as the companies want subscribers to believe. It therefore wants providers to make a greater effort to assuage the feelings of their displeased customers.

The CPC’s director general, Dupe Atoki, recently advised the NCC to look beyond the imposition of fines in its efforts to ensure consumers got value for money, since the fines that have been handed out did not seem to be producing the expected results.

“The fines are legal… but we want to move this beyond fines to see what we can do to ensure that consumers get value for money,” she said. “From the consumer side, we say it is not fair because providers are in business and are making profit, and that profit emanates from the resources that consumers put into that business. As long as they are in business, it means it is profitable. As long as no operator has filed for bankruptcy, it means business is good.”

While the CPC appears to support what is right for consumers, it often fails to carry out its duty because of its own limitations, as one of its workers who spoke to The Guardian off the record pointed out. First, the CPC is just a department under the supervision of the Federal Ministry of Trade and Investment. Its mandate covers various sectors of the economy; but the council has limited human resources with which to carry out its multiple functions, one of which is to provide redress for consumers’ complaints. And its inability to effectively discharge this responsibility explains why subscribers do not depend on the CPC for redress.

One subscriber, Mr Hassan, who complained of being harassed by a deluge of unsubscribed messages, said the CPC was in fact the last organisation he would think of approaching to lodge a complaint.

The CPC has publicly found fault with this kind of attitude. It blames subscribers for being reluctant to complain about abuses of their rights. On the last World Consumers’ Day, the council launched a compendium of the rights of telecoms consumers, with the theme “Fix our phone rights”. The compendium states that the first step towards aggrieved consumers obtaining redress is to empower them by letting them know their rights.

The NCC spokesperson has advised subscribers to always seek compensation from service providers whenever they are dissatisfied. However, he disagreed with the idea of subscriber groups like NATCOMS approaching the NCC for compensation instead of approaching the telecoms providers, describing this as taking the NCC for granted.

“If your flight to Abuja is cancelled or your flight delayed for four hours, do you demand compensation from the Federal Airport Authority of Nigeria? Or if you go to the bank to ask for your money and the bank did not treat you well, do you go to Central Bank of Nigeria to complain? If you are not given a regular supply of power, do you go to the Nigerian Electricity Regulatory Commission to ask for compensation? Subscribers should learn to demand their dues from their network providers,” the spokesperson said.

Subscribers like Mr Hassan think this advice is unlikely to help them, especially when they have had so little success in approaching network providers in the past.

“I have complained several times to [the company] to stop sending me unsubscribed messages, without any action,” he said.

A WAY FORWARD

Nonetheless, industry watchers think the service could improve if the NCC prioritised subscribers. A member of the Senate committee on telecommunications wants the NCC to see its duty to consumers as its primary obligation.

“The problem of poor service arose in the first instance because NCC fails in its duty to protect the subscribers,” said Bayo Omotubora.

At various conferences on the state of the Nigerian telecoms service, experts have suggested that the poor network issue could be partially resolved if the NCC gave greater license to companies that have regional coverage. With many more players in the industry and the effective deployment of broadband, competition would bring greater improvement, they argue.

“The effective deployment of broadband in Nigeria will unleash a new phase of competition in the telecommunications sector… and ensure availability of broadband services at affordable prices,” said the NCC’s executive vice-chairman, Dr. Juwah.

Customers also believe that telecoms companies could invest in infrastructure to prevent unsolicited messages.

“With 775.3 billion naira as revenue only in 2013, MTN Nigeria should be able invest in infrastructure that will prevent unsolicited messages,” Omotubora insisted.

Meanwhile, the CPC and the NCC have constituted a joint committee to work out ways to appease consumer concerns in the telecoms sector. The NCC assured subscribers that new regulations against sending unsubscribed messages will be released before the end of 2014.

“Though some of those things come from outside the country via the internet, and the internet is not yet controlled or regulated… we shall find a way around it,” an NCC spokesperson said.

As a way of improving quality of service, MTN Nigeria says it has outsourced parts of its network to third-party specialist vendors, for greater efficiency. It added that the recent decline in quality in particular areas could be attributed to the transition to the new vendors. “But there will be a sharp improvement very shortly, once the lapse has been bridged,” the company assured subscribers.

In addition, MTN Nigeria’s management says it has reached an agreement in principle with IHS Holding Limited for the transfer of its mobile network tower business, comprising up to 9,151 of MTN’s towers in Nigeria. This transaction will drive network efficiencies and further improve MTN’s voice and data capacity.

The NCC has advised subscribers to be patient with the telecoms firms as they continue to strive to get it right. In response, NATCOMS says its members are prepared to be patient, but telecoms companies must be prepared to compensate subscribers while they wait for the service to improve. This compromise may look like a fair deal, but will telecoms companies accept the proposition?

Postscript: There were five dropped calls during The Guardian reporter’s ten-minute conversation with NCC spokesperson Ojobo. There were three dropped calls and one undelivered message during the reporter’s conversation with a source in the Senate Committee on Communication. The source sent the GSM number of the secretary to the Senate Committee Chairman twice before it delivered on the reporter’s phone.

The Guardian’s reporter received more than 300 unsubscribed messages on his three lines within two months of investigating this story.

The chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, did not respond to the questions sent to him. Neither did he return The Guardian’s calls.

Gloworld and Airtel did not respond to The Guardian’s request for comment.

Ajibola Amzat produced this report with support from Partners for Democratic Change and the Institute for War & Peace Reporting.  This is an abridged version of the story published by The Guardian of Nigeria in December 22, 2014. 

It is one of a series of investigative reports produced under the Access Nigeria/Sierra Leone Programme funded by the United States Department’s Bureau of International Narcotics and Law Enforcement.