Data Price Floor: Expert Absolves NCC of Any Blame

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The Nigerian Communications Commission (NCC) has been absolved of all complexities surrounding the introduction of a new price floor for data communications, which was later suspended by the NCC.


However, the introduction of the new price floor, had elicited massive outcry from telecoms subscribers, who expressed concern that the new price floor could lead to hike in data tariff.

But a Lagos-based telecoms expert, Akeem Akapo, has exonerated NCC of any blame for the introduction and suspension of the price floor for data tariff. According to Akapo, NCC meant well for the industry, and had the intention to protect smaller operators from what may later look like a monopoly of market, if the NCC allows the bigger operators to determine market price for data tariff.

The NCC had on November 1, 2016, written to Mobile Network Operators (MNOs) on the determination of an interim price floor for data services after a stakeholder’s consultative meeting of October 19, 2016.

The new price floor was supposed to commence on December 1, 2016 at a fixed price of N0.90k/MB.
Before the suspension of the new price floor of N0.90k/MB, the industry average for dominant operators including MTN Nigeria Communications Limited, EMTS Limited, trading as 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).
But the smaller operators/new entrants like Smile Communications, Spectranet, and ntel, charged different rates. Smile Communications charged N0.84k/MB, Spectranet charged N0.58k/MB and ntel charged N0.72k/MB.

Akapo however argued that MNOs, especially the big operators, were selling data for less than the cost of providing the service, which he said implied that there is a shortfall somewhere that subscribers would one day be forced to pay for if nothing is done now.

“It is about buying cheap data and not be able to use up one third of it before expiration and be subsequently forced to lose the unused data or forced to pay for a rollover. To the extent that NCC as regulator has worked to prevent this unpleasant scenario one can safely expect that the big players would be protected if Smile Communication’s disruptive technology becomes a threat to healthy competition,” Akapo said.

Commending NCC for introducing the new price floor for data communication, Akapo said “What we should be scared of is a movement of data tariff to the oligopolistic era where dominant operators can charge any amount, muscle out small players or simply continue to offer crappy data service. That is what will happen if we allow ourselves to be deluded into thinking we are enjoying cheap data at the expense of the competition being priced out of existence or the operators escaping the responsibility of improving their quality of service.

If the big operators are allowed to continue selling data below cost price the new entrants will have no option but to close shop; even two of the big four will likely fold up if the price war continues and that would leave Nigerians with an oligopoly of two or three providers that can then fix prices, Akapo said.

Blaming critics of NCC who are of the view that the introduction of the new price floor for data tariff meant increase in data tariff, Akapo said “Even with the benefit of some enlightened critics having clarified that what the NCC did was to re-introduce a data tariff price floor as opposed to “hiking” the price of data, critics are saying that the regulator increased data tariff when it is only the mobile network operators that can hike or slash the prices of their products within the band of industry benchmarks – an upper limit called price ceiling and a lower limit, price floor.”

Describing statements credited to NCC’s critics as misleading, Akapo said Etisalat already charges 94kobo/mb which is higher than the 90kobo/mb price floor hitherto introduced by NCC.
The Director, Public Affairs at NCC, Mr. Tony Ojobo, who announced the suspension of the new price floor for data, said the decision to have a new price floor in the first instance, was primarily to promote a level playing field for all operators in the industry, encourage small operators and new entrants.

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