Wanted: Communications appeal tribunal

The Communications sector is a fluid sector that evolves with technological development, a precursor to the emergence of new products and services in the communications markets hence the need to ensure the existence of a seamless regulatory framework which accommodates for its evolving characteristics, for example, section 70 of the Nigerian Communications Commission Act (2003) provides regulatory powers for regulatory making with the purpose of giving full effect to the provisions of the Act and its due administration.

Communications regulation

The Regulator’s mandate and role in the liberalised communications sector is formidable being the protector of the public interest, guardian of the diverse markets in the provision of communications networks and services, an unbiased referee and independent expert adjudicator; ensuring market competitiveness through regulation of termination rates where necessary to ensure fair pricing between providers, by regulating significant market providers, by preventing the abuse of dominant positions through predatory pricing, by mandating access to essential facilities such as the local loop, by mandating universal service provision of communications services where it is not profitable to operators but beneficial to the public interest, by managing scarce resources such as radio frequency spectrum and numbers, by prescribing cost oriented pricing methodologies to ensure consumers get a good deal, by ensuring regulatory compliance with ex-ante and ex-post regulation, by making regulation and exercising dispute resolution powers.

The requirement of expertise in communications regulation

and adjudication

The necessity of expertise in the complex regulation of the communications sector as illustrated above is the rationale for multiple jurisdictions adopting a fused system whereby the regulator in furtherance of its rule making powers also exercises adjudicatory powers. The British Institute of International and Comparative Law 2004 Report on Telecommunications Dispute Resolution: Procedure and Effectiveness gives credence to this view wherein it states that Oftel (now OFCOM, the UK regulator) in its combination of the roles of policy making with adjudication uses disputes and the dispute resolution process as an integral part of its policy making in a way that the courts are not able to. The Courts also shy away from meddling with such matters and have opined that such matters are best left to the experts, for e.g. the US Supreme Court in Verizon v Trinko 540 U.S. 398 [2004] stated that ‘effective remediation of violations of regulatory sharing requirements will ordinarily require continuing supervision of a highly detailed degree’ and reiterated that the regulation of the telecoms industry should be the purview of the FCC and the state public utility commissions, rather than judges all across the country. Also in Clear Communication v. New Zealand Telecommunications Corporation [1994] 6 TCLR 138; [1995] 1 NZLR 385 (PC) where an interconnection dispute arose following liberalisation of the market in the absence of the existence of a regulatory body, the Court stated that in the absence of guidance as to the principles applicable, the parties were ‘negotiating in a fog’. The experts and the Court agreed that such investigations are the function of regulatory bodies who can make decisive value judgments as the Court found it difficult to apply general competition rules to the dispute over interconnection rate. These historical cases reiterate the importance of regulatory adjudication in the communications sector.

Errors in regulatory decisions

However, disputes distinguished from complaints in the communications sector comprises of consumer/operator disputes, inter-operator disputes and regulator/operator disputes, Communications case law as it pertains to regulator/operator disputes has proven that regulators make mistakes and dispute resolution in the communications sector is an additional and autonomous form of regulation, which also fosters regulatory accountability. In BT v. Ofcom, Case No 1085/3/3/07, 12009] CAT 1, WL 6402, the appeal tribunal found that Ofcom, the regulator had erred and wrongly interpreted the term ‘reasonable’ in the context of the end-to-end connectivity obligation and that the ‘gains from trade test’ applied by Ofcom to assess the reasonableness of prices was seriously flawed; also in Hutchison 3G (UK) Ltd v Ofcom, Case No 1047/3/3/04, [2005] CAT 39, 12005J All ER (D) 396, Case No 1083/3/07, [2009] CAT 11, The UK Competition Commission determined that the price controls imposed on all the Mobile network operators by Ofcom have been set at an inappropriate level because Ofcom erred in its approach to the allowance of a network externality charge. The scrutiny by the CAT and its finding of regulatory errors is again illustrative of how the dispute resolution process is an additional regulatory tool which constitutes part of the overall regulatory framework in the UK. The UK institutional framework further distinguishes communications law disputes by referring pricing disputes to the UK Competition Commission and other disputes to the UK Competition Appeal Tribunal.

Dispute resolution: An additional and autonomous regulatory tool

The role of dispute resolution being a regulatory tool as illustrated in the case law and institutional framework above is achievable through a de novo review of a regulatory decision where the regulatory decision is considered in its entirety by a specialist adjudicatory body with cross-disciplinary expertise in law, economics, business and accountancy capable of hearing appeals against decisions of regulatory bodies on the merits, fact and law and enabling it to deal with legal and economic issues in economic related disputes. This composition evidently exhibits the inadequacy of the courts to adjudicate over such complex communications disputes, for example, the UK Select Committee on the Constitution Sixth Report, Chapter 11 on improving Appeal Mechanisms indicates that there was a gap in the UK institutional framework due to the lack of expertise in the courts to adjudicate over economic related disputes and states some of the reasons for the establishment of the Tribunal in the UK to deal with telecommunications appeals was because the judges lacked detailed economic expertise and the intensity of review in commercial regulated matters was limited. Jurisdictional experiences as discussed above illustrates the benefit of having a regulatory framework where appeals are reviewed on the merits and the appellate body seised with jurisdiction possesses the expertise to adjudicate over ensuing disputes.

Nigerian framework

Whilst the UK framework should not be a one size fits all model as each jurisdiction has its own peculiarities, the present Nigerian framework in the absence of an expert appellate body can glean some lessons towards enhancing its communications institutional framework, for example, appeals in communications matters are made to the NCC in the 1st instance, and following a review by the NCC to the Courts. A cause for concern in the Nigerian framework can be seen in the following cases NCC v MTN, Appeal No. CA/A/25/2004 where MTN, the Plaintiff/Respondent applied to the FHC for a review of the Interconnect Rate determination carried out by NCC. The NCC in response entered a preliminary objection in the matter contending that MTN was obligated to explore pre-action conditions stipulated in s86-88 of the NCC Act 2003. On appeal, the Court of Appeal held that it is essential that MTN meet the pre-condition stipulated in s86-88 of the NCC Act 2003 requiring a review of the decision by NCC, before going to court; also in Econet Wireless Nigeria Ltd V. NCC, Appeal No. CA/A/83/2004 Econet applied to the FHC challenging the Interconnect rate determination carried out by the NCC in December 2004. The NCC also challenged the jurisdiction of the court on the grounds that Econet had not followed the necessary procedural requirements before filing the suit. The Court upheld NCC’s contention and ruled that Econet was obligated to comply with the requirements of section 86-88 of the NCC Act 2003. The suit was thereby struck out.

The Courts decision were accurate as section 86-88 of the NCC Act 2003 clearly provides for pre-action provisions which if not complied with ousts the jurisdiction of the Court pending compliance with the provisions. However, it is doubtful if the economic related disputes in both instances could be competently adjudicated by the Nigerian courts in the absence of the requisite expertise. Perhaps, the rhetoric that the Court could rely on expert evidence with the overriding duty of the expert to the court in adjudicating over the matter or seek the assistance of an amicus curiae, nonetheless the judge will still be required to understand, for example, economic evidence to make a reasoned decision especially where presented with two conflicting expert opinions. Moreover, communication disputes tend to be inquisitorial and not just adversarial going beyond the interests of the parties to the public interest especially in relation to economic related disputes, for e.g. an adjudicator may at times when reaching its decision carry out a consultation on its proposed decision to the parties in dispute or to interested stakeholders.

Towards a robust legal Olawale Fayoseand institutional framework

The ills of the absence of a robust legal and institutional dispute resolution framework are lack of regulatory accountability; it breeds errors in regulatory decision making; stifles legal development; creates distortion in the market through the application of incorrect regulatory decisions thereby impacting on the competitiveness of the sector and consumer welfare regulatory objectives, the epicenter of communications regulation. In contrast, the benefits are immense, the regulated network and service providers exercises its constitutional right of appeal to have their objections reviewed on the merits of the case by a competent appellate body; it provides a mirror which reflects the increasing effectiveness of competition in the market; it’s a good means to monitor the effects of ex-ante and ex-post regulation in the sector and to assess whether or not there is a need for more or less regulation in the sector thereby ensuring that regulatory objectives are met and not dated; it fosters regulatory accountability by testing the effectiveness of a dispute resolution framework in terms of resources, personnel and structure; and it facilitates timely resolution of commercial disputes.

Nigeria should therefore consider developing the third regulatory restraint in communications regulation, the dispute resolution framework in addition to ex-ante and ex-post regulation towards a robust communications legal and institutional framework by enacting legislation creating a communications appeal tribunal to adjudicate over appeals from NCC decisions in particular regulator/operator disputes. The existence of such a framework will be most suited to resolve the on-going dispute between MTN and NCC.

Fayose is of Soji Fayose & Co, Lagos. e-mail: wale@so jifayose.com, wfayose@yahoo.com