The Nigerian Communications Commission (Nigerian Communications Commission) has commenced a comprehensive review of pricing frameworks for Unstructured Supplementary Service Data (USSD) and Application-to-Person (A2P) SMS services, as it moves to align Nigeria’s telecoms tariff structure with the rapid evolution of digital services and emerging market realities.

The review is part of a wider regulatory reassessment covering Mobile Termination Rates (MTR), International Termination Rates (ITR), retail pricing structures, and interconnection arrangements, unveiled on Tuesday at the Industry Stakeholder Consultative Forum on the Determination of Mobile Termination Rates in Nigeria held in Lagos.

Speaking at the forum, Omotayo Muhammed, Director of Competition and Tariff at the NCC, said the existing tariff framework no longer adequately reflects the scale and complexity of emerging digital services operating across the telecommunications ecosystem.

According to her, “USSD, MVNO integrations and A2P all operating at scale are not adequately addressed by existing tariff regimes and require formal regulatory treatment.”

USSD pricing underpins Nigeria’s financial inclusion

USSD remains a critical channel for financial transactions in Nigeria, particularly for unbanked and underserved populations, while A2P SMS has become a core communication infrastructure for banks, fintech companies, government agencies and digital platforms relying on text-based alerts, authentication codes and customer engagement messaging.

The telecoms regulator said the review is necessary because current pricing structures have remained largely unchanged since the last major regulatory determination in 2018, despite significant shifts in technology adoption and service demand.

As part of the study, the NCC will reassess existing USSD pricing floors and caps to determine their relevance under current market conditions. The commission emphasised that USSD continues to play a strategic role in Nigeria’s digital economy by enabling mobile financial services and supporting financial inclusion efforts nationwide.

According to the study scope presented at the forum, “USSD pricing floors and caps underpin mobile financial services and are central to digital inclusion for unbanked and underserved populations.”

The review will also examine the commercial and operational significance of A2P messaging services, which have expanded significantly over the past eight years as enterprises increasingly rely on SMS-based notifications, one-time passwords, transactional alerts and automated customer communications.

The NCC noted that A2P messaging has grown substantially since 2018 and now requires dedicated regulatory attention to reflect its importance in the digital services value chain.

The exercise is taking place against a backdrop of structural changes in the telecommunications industry, driven by new technologies and evolving consumption patterns.

Muhammed said that “5G rollout and AI/IoT adoption are reshaping network usage patterns, cost structures, and service delivery modes, making legacy interconnection frameworks less representative of current realities.”

The regulator also cited the increasing influence of Over-The-Top (OTT) platforms, shifting consumer behaviour, and the emergence of Mobile Virtual Network Operators (MVNOs) as key drivers necessitating a holistic reassessment of telecom pricing architecture.

Beyond USSD and A2P services, the review will also cover Mobile Termination Rates, International Termination Rates, retail price floors and caps, and wholesale access arrangements for MVNOs.

The commission said the overarching objective is to develop a cost-reflective, transparent and evidence-based regulatory framework that promotes investment, strengthens competition and enhances consumer welfare.

According to the NCC, the study will include a full assessment of the existing interconnection regime to identify implementation gaps and areas where current frameworks no longer reflect market realities.

It also plans to propose an updated pricing framework for mobile telecommunications services, encompassing MTR, ITR, USSD services, retail tariffs and MVNO interconnection arrangements.

Speaking on the broader objectives, Wole Adeloku, Partner at KPMG, the consulting firm supporting the study, said the review is designed to encourage investment while ensuring regulatory decisions reflect current industry realities.

He noted that the exercise will involve extensive stakeholder engagement, comparative benchmarking across selected jurisdictions, and the development of forward-looking cost models.

“This study is also meant to encourage investment, support the growth of the sector, and protect the consumer as we do so,” Adeloku said.

He added that the process will rely heavily on industry data contributions to ensure that recommendations are evidence-based and capable of supporting sustainable sector growth.

The NCC expects the outcome of the review to deliver a more transparent and predictable pricing framework that strengthens market competition, encourages long-term investment, and improves access to digital services.

For consumers, the regulator said the reforms are expected to yield pricing structures that better reflect current economic realities, alongside improved access to digital financial services and value-added offerings through clearer USSD and A2P regulatory frameworks.

Ultimately, the commission believes the review will help establish a more balanced telecommunications market while advancing Nigeria’s broader digital economy and financial inclusion objectives.