An Open Letter to the Nigerian Communications Commission (NCC)
By Ndianabasi Udonkang
On November 1st, 2016, the NCC wrote all Mobile Network Operators (MNOs) informing them of a new Price Floor of 0.90 Naira/MB. Nigerians rose to the occasion and demanded a reversal of the directive which led to your suspension of the proposed price floor.
In your statement, you claimed that "The decision to have a price floor was primarily to promote a level playing field for all operators in the industry, encourage small operators and new entrants. The price floor that was supposed to flag off on December 1, 2016 was N0.90k/MB.
“Before the new suspended price floor of N0.90k/MB, the industry average for dominant operators including MTN Nigeria Communications Limited, EMTS Limited (Etisalat) and Airtel Nigeria Limited was N0.53k/MB.” “Etisalat offered (N0.94k/MB), Airtel (N0.52k/MB), MTN (N0.45k/MB) and Globacom (N0.21k/MB). The smaller operators/ new entrants charge the following: Smile Communications N0.84k/MB, Spectranet N0.58k/MB and NATCOMS (NTEL) N0.72k/MB.” [1]
While you are consulting with relevant stakeholders (which I guess includes data services customers like me), kindly take note of the following:
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The Telecommunications sector is one sector which I am proud of as a Nigerian. The sector features players who compete fiercely while trying to woo customers away from each other. This competition is good for customers and economy at large since it ensures that players do not take their customers for granted. We all are witnesses to the fierce media campaigns embarked by each player in order to win more subscribers. The NCC should encourage more of such healthy competition which will ensure more value for monies spent by customers.
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We appreciate your role as a regulatory authority in the communications industry. But your role should not include being a “price fixer.” The players in the industry should be allowed to determined their prices according to their internal dynamics and external market forces. Your role should be that of encouraging strong and robust players who can compete effectively and offer customers value for their monies. Just like the banking sector, the Telecoms industry has involved to the point where it is no longer efficient to have small players like Smile, Swift, Spectranet, etc. If these small companies (which you claim are being suffocated by bigger players), are no longer able to compete, then you should set regulations to encourage their merger or acquisition. Increasing tariffs in order to favour the small operators is simply being insensitive to the cost burdens already being borne by subscribers who are clamouring for cheaper data rates
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Pioneers of 4G LTE services such as Smile, Swift, and Spectranet had the chance of acquiring a huge market share by offering cheap data plans while they almost had a monopoly of the market. However, they continued to extort customers with exorbitant prices. It was a matter of time before the GSM operators came into the 4G LTE space. The advent of GLO, MTN, ETISALAT, and AIRTEL into the 4G LTE service space saw a drastic drop in 4G LTE tariffs. It is my conviction that this proposed price floor might have been lobbied by the pioneer 4G LTE service providers in order to protect their businesses. NCC should resist such manipulations and set rules for them to recapitalise, merge with each other, or get acquired in order for them to compete with other telecoms companies. The NCC should not be caught in the web of favouritism and unnecessary manipulation of prices.
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Data enables Technology. The adoption and advancement of technology begins with Internet (or better, broadband) penetration. One of the benchmarks for measuring Internet penetration is the number of subscribers and data volumes per subscriber. NCC is focus on solutions which will ensure that more Nigerians are brought online so that they can easily access the Internet for information. An increase in data tariffs across board will be counter intuitive with respect to this goal. Developed economies are known for highly affordable data services which are offered at unlimited caps. Such services enable individuals to make use of the internet for productive purposes, encourage technology startups and large companies by saving them considerable cost, and ultimately lead to increase in national productivity and value creation.
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Your decision was a show of sheer insensitivity to the plight of Nigerians. Nigerian subscribers are already groaning under the weight of high data cost and when we were beginning to see the light at the end of the tunnel, you sprung up with a tariff hike. Imagine GLO which is already offering data rates as low as 0.21 Naira per MB as compared to your proposed price floor of 0.90 Naira per MB. This means that GLO will have to raise their prices by over 400% in order to conform to the price floor. Isn’t this ridiculous? If GLO is saying that through their internal dynamics they will be able to remain profitable at that rate of 0.21 Naira per MB, why rob Nigerians more of their hard-earned monies. You should concern yourself more about the quality of services than the prices offered by the MNOs.
In summary, I’m calling on the NCC to avoid direct interference with market prices of data services. The NCC should encourage robust telecoms companies which will be more beneficial to the economy.
Ndianabasi Udonkang is a Technology Entrepreneur and Founder at Furnish.NG. He can be reached at ndianabasi[at]furnish.ng.
References
[1] http://www.vanguardngr.com/2016/11/breaking-ncc-suspends-planned-data-tariff-increase/