Nigeria is starting a fresh licensing round to plug revenue leakages by local mobile network operators (MNOs) and cartels allegedly involved in independently monetising international SMS (short messaging service) and paying for traffic to “foreign entities” obscured from the industry regulator, the Nigerian Communications Commission (NCC) says.
The NCC led by Dr Aminu Maida, the nation’s telecoms watchdog executive vice chairman did not disclose the foreign parties involved in the alleged practice in connivance with the unnamed local MNOs, however the regulator’s latest market performance report states that in the international SMS service segment, Airtel Nigeria recorded “the highest count of incoming and outgoing SMS at 389,774,725 and 35,383,723 respectively in year 2022.”
NCC this week rolled out a new licensing framework that outlines plans to open new revenue pipelines for the Nigerian economy and address claims of distortions in the international SMS ecosystem with the introduction of a new telecoms licence category, “International SMS Aggregator.”
Due to this regulatory gap, NCC states that “local mobile network operators (MNOs) independently monetise international A2P SMS traffic, often using various technologies that may not be secure or known to the regulator.”
The NCC licensing plan is focusing on Application-to-Person (A2P) messaging, a communication format in the telecoms sector used to send SMS or notifications from an application directly to a recipient’s mobile phone.
“A2P is initiated through the internet”, NCC says, “but the text messages are transmitted over mobile networks reaching recipients via their cellular connection. This form of messaging is predominantly used by businesses and organisations to deliver bulk promotional or transactional messages, such as marketing campaigns, appointment reminders, announcements, product advertisements, and order status updates. A2P messaging serves as a critical communication channel for citizens, businesses and governmental Institutions alike.”
The regulator states that the international A2P SMS service in Nigeria “is not fully regulated, unlike the voice service segment.”
Due to this regulatory gap, NCC states that “local mobile network operators (MNOs) independently monetise international A2P SMS traffic, often using various technologies that may not be secure or known to the regulator.”
Additionally, the telecoms regulator further claims that revenue from international A2P traffic is currently collected by entities outside Nigeria stating that “individual operators set their tariffs, leading to distortions and inconsistencies in termination rates.”
Under the prevailing environment, the telecoms regulator says that payments for international A2P traffic “are made in foreign currencies, which do not flow into the country nor are the companies taxed.”
According to the Nigerian telecoms regulator, “there is no specific regulation on A2P SMS, leading to a lack of visibility in the SMS market, potential formation of cartels, and reduced competition.”
The international SMS service ecosystem in Nigeria, NCC says, “has not been fully brought under regulatory control. It has been observed that the excessive use of the Short Message Service has led to fraud, spam and illegal activities. The problem is likely to worsen as mobile connectivity and digital services continue to grow exponentially.”
To address these challenges, the regulator says that it has become necessary to implement a Centralised SMS Firewall. The proposed Centralised SMS Firewall, NCC says, “will regulate SMS exchanges, safeguard the integrity of short message communications and mitigate emerging threats. It will enable the Commission to maintain full regulatory oversight of the SMS service ecosystem, ensuring security and fraud control.”
The international SMS service ecosystem in Nigeria, NCC says, “has not been fully brought under regulatory control. It has been observed that the excessive use of the Short Message Service has led to fraud, spam and illegal activities. The problem is likely to worsen as mobile connectivity and digital services continue to grow exponentially.”
The total number of international SMS sent increased from 45,527,617 in year 2021 to 59,571,547 as of year 2022 , indicating a 30.84% increase in international SMS received in year 2022. The number of international SMS received in year 2021 also increased from 340,981,507 SMS to 459,329,782 SMS as at December 2022, translating to a 34.7% increase. “Airtel recorded the highest count of incoming and outgoing SMS at 389,774,725 and 35,383,723 respectively in year 2022,” according to the NCC report.
NCC, which says that applicants will pay ₦10 million per licence, did not indicate the number of licences it intends to issue under this telecoms service category. “The A2P messaging ecosystem,” NCC says, “will be open to competition. However, the Commission reserves the right to introduce additional licenses or market interventions if it determines that competition is inadequate or market conditions require regulatory adjustments.”
But the licence will come with tougher privacy and restrictions for operators of the A2P service providers. NCC insists that any A2P message not accompanied by an SMS sender ID must not be accepted by the originating operator and must not be forwarded to the subscriber by the terminating network operator. “These include messages coming through the internet, international gateways or local interconnect partners.”
According to the telecoms regulator, subscribers have a right to privacy; “therefore on no circumstance should a provider send an unsolicited message.”
They must also have systems in place for fraud detection, data protection, and security monitoring, including firewalls and encryption protocols to protect against unauthorised access and spam.
Applicants, the telecoms regulator insists “must be capable of routing international A2P SMS traffic through a centralised SMS firewall or any other technology mandated by the NCC.”
To qualify, licensees must demonstrate the capacity to integrate with local MNOs and operate within a secure network environment, according to the licensing rules.
“They must have systems in place for fraud detection, data protection, and security monitoring, including firewalls and encryption protocols to protect against unauthorised access and spam.”
The applicants are also required to be capable of routing international A2P SMS traffic through “a centralised SMS firewall or any other technology mandated by the NCC.”
The licensee must comply with all technical requirements specified by the Commission, according to the telecoms regulator.
The Nigerian telecoms regulator says the licensing plan underway will foster regulatory oversight and create a single platform where “the Commission will have better control over the International A2P SMS traffic, ensuring compliance with regulations and improving market oversight.”
The proposed International SMS Aggregator Licensee aims to address the regulator’s plans to enhance security, ensure tax compliance, address the disparity in termination rates and prevent revenue leakages within the SMS ecosystem.
NCC explains that bringing international A2P SMS traffic under its purview guarantees the following:
a. The ability to levy international A2P SMS traffic appropriately, ensuring revenues are collected within the country. Revenues generated from international A2P SMS traffic will stay within Nigeria, contributing to the local economy and being subject to local taxation.
b. Standardised tariffs and increased transparency will promote fair competition among operators, preventing monopolistic practices.
c. Removal of fraud and unwanted traffic by enhancing security measures to detect and remove fraudulent and unwanted SMS traffic.
d. Securing the SMS space by implementing security protocols to protect the SMS ecosystem.
e. Creating a new revenue stream for the government through Taxation and Levies on International A2P SMS traffic.
f. Providing the Commission with complete visibility and control over the International SMS market segment to regulate it effectively.
NCC on licensing objectives for International SMS Aggregator
The proposed International SMS Aggregator Licensee aims to address the regulator’s plans to enhance security, ensure tax compliance, address the disparity in termination rates and prevent revenue leakages within the SMS ecosystem.
International SMS Aggregator Licensee will “develop and oversee a centralized A2P messaging platform to carry International A2P messages into Nigeria; implement unified rules and protections to protect Nigerian subscribers from spam and fraud attacks by enhanced security protocols, to protect user data and ensure the confidentiality and integrity of A2P messaging services.”
The objectives, NCC says, are to create a robust, regulated, and secure framework for international Application-to-Person (A2P) messaging services in Nigeria. They include:
a. To develop and oversee a centralized A2P messaging platform, making it the primary provider for International A2P messaging Services within Nigeria.
b. To ensure that all brands and Over-The-Top (OTT) service providers route their A2P SMS traffic through a central hub, ensuring standardized processing and monitoring.
c. Require every local mobile operator in Nigeria to integrate their systems with the unified A2P platform within a specified timeframe, ensuring comprehensive coverage and compliance.
d. To introduce and enforce a structured rate regulation to govern the pricing of International A2P SMS services. All entities using the A2P platform must adhere to the set rates, ensuring fairness and consistency.
e. Implement unified rules and protections to shield Nigerian subscribers from spam and fraud attacks. This includes country-level regulations to prevent unwanted SMS traffic and ensure compliance with SMS protection, storage, and data protection laws.
f. Enhance security protocols to protect user data and ensure the confidentiality and integrity of A2P messaging services. This involves implementing stringent measures to safeguard against data breaches and unauthorised access.
NIGERIA TELECOMS MARKET: National SMS Trend in 2022
According to the latest market performance information reported by NCC, SMS service continues to grow across the telecoms market. The total number of national SMS both sent and received as at December 2022 was 25,928,704,567. “This is an increase of 28.82% from that of the total SMS sent and received in year 2021 that stood at 20,126,551,822 SMS. There was a 48.84% increase in the number of SMS sent in year 2022 compared to year 2021,” according to the telecoms regulator.
The year 2022 count of received SMS also increased by 11.06% higher than that of year 2021 in Year 2022. “MTN recorded the highest count of SMS received and sent which stood at 8,738,690,150 and 8,323,722,485 respectively.”
The table below shows the total number of outgoing, incoming, local and national SMS trend in 2022.
| Operator | SMS Sent | SMS Received | Total |
|---|---|---|---|
| MTN | 8,323,722,485 | 8,738,690,150 | 17,062,412,635 |
| GLO | 3,638,401,509 | 777,235,958 | 4,415,637,467 |
| AIRTEL | 1,889,308,956 | 2,086,304,237 | 3,975,613,193 |
| 9MOBILE | 234,868,666 | 235,038,953 | 469,907,619 |
| SMILE | 173,607 | 766,588 | 940,195 |
| TOTAL | 14,086,475,222 | 11,838,035,886 | 25,924,511,108 |
NIGERIA TELECOMS MARKET: International SMS Trend in 2022
The international SMS service trend for 2022 shows that the total number of international SMS sent as at December 2022 was 59,571,547 while total number of SMS received was 459,329,782.
The total number of international SMS sent increased from 45,527,617 in year 2021 to 59,571,547 as of year 2022 , indicating a 30.84% increase in international SMS received in year 2022. The number of international SMS received in year 2021 also increased from 340,981,507 SMS to 459,329,782 SMS as at December 2022, translating to a 34.7% increase. “Airtel recorded the highest count of incoming and outgoing SMS at 389,774,725 and 35,383,723 respectively in year 2022,” according to the NCC report.
The total number of international SMS sent as at December 2022 was 59,571,547 while total number of SMS received was 459,329,782 as seen from the table below:
| Operator | SMS Sent | SMS Received | Total |
|---|
| MTN | 22,567,752 | 14,119,725 | 36,687,477 |
| GLO | 224,493 | 3,631,170 | 3,855,663 |
| AIRTEL | 35,383,723 | 380,774,725 | 416,158,448 |
| EMTS | 1,393,566 | 60,726,874 | 62,120,440 |
| SMILE | 2,013 | 77,288 | 79,301 |
| TOTAL | 59,571,547 | 459,329,782 | 518,901,329 |
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