NCC: Telecom Operators Cannot Determine Data Tariffs

Dele Ogbodo in Abuja

The Nigerian Communications Commission (NCC) wednesday said it would not allow market forces between telecommunication operators to determine call data pricing for subscribers because it would stifle small operators out of the market, which might lead to monopoly or duopoly.

Making clarifications during a media briefing on the suspended price floor of 90 kobo for all operators, in Abuja, the Directors of Public Affair of the commission, Mr. Tony Ojobo, Policy and Economic Analyst, Ms. Josephine Amuwa and Head, Competition and Tariff, Mr. Abubakar Yakubu, averred that the commission would revisit the price cap with a view to fast tracking it for general acceptability for every stakeholders.

Amuwa said: “We have gone back to our call tariff study to see how far we can fast track, it because we cannot do without with the price floor, adding that without a price floor in the industry, the telecom sector will fail.
“We need to agree on a price that is sustainable that will encourage the industry to expand the network because if we don’t expand we will not be able to enjoy the benefit of high speed data services across the country.

“NCC cannot allow market forces to determine the price of call tariff, if we do this, a lot of the operators are going to go out of the market and it will result in either a monopoly or a duopoly. Monopoly is not known for efficient service delivery, “Ojo said.

Amuwa stressed that price caps are regulatory tools employed to ensure that markets remain competitive, adding that the introduction of price floor for data services in the country was to address market distortions, unhealthy price wars and value erosion that could threaten the going concern of the service providers.
She said: “Before NCC announced the 90 kobo price floor, there was an initial price floor of N3.11kobo for data and this was in place up till 2015.

“The commission we decided to remove that price floor because we needed to see some expansion in data penetration in the industry and how people respond to the internet usage.
According to her, in doing this, NCC warned operators against predatory pricing or price war and that operators should behave in a manner to encourage competition that the agency will re-introduce the price floor when the need arises.

While accusing some operators of not playing according to the game, she said: “NCC, therefore needs to encourage both players as small operators have less than 1 million subscribers, therefore, NCC needs to encourage them. We found that operators were offering prices that did not cover cost of providing the service.
“The bigger operators use predatory pricing to attract customers into their networks and once this is done they increase prices and the smaller operators will not be able to compete at that level and are pushed out of the market.

“As regulator we are responsible for all stakeholders including the consumers, government and even the operators.”
Though suspended, she added that the introduction of 90 kobo price cap to avoid what obtained when the defunct NITEL was the only provider of telecommunication service and so many people were short out from the data market.
“As you are aware, operators have different data tariff or platform and on these platforms they have different prices for data, some are N5, and others as low as 45 kobo. NCC saw predatory pricing and different price differentials and some consumers paying as high as N5 per data while others were paying 45 kobo.
“The commission, saw a situation were operators were not investing on expansion of networks, they were just getting more and more subscribers to their networks from October last year till date.

“NCC before introducing the price cap did a benchmark call study involving all the 28 operators.”
According to her, two major players wrote to the commission that prices had dropped more than 80 per cent between 2015 and July 2016, stressing that that situation was inimical to the sector.
“NCC wrote to them about price floor, all of them agreed for a price floor and on the 28 operators were here and we all agreed on the need for a price floor and decided that 90 kobo was an appropriate interim figure because in between N5 and 45 kobo, 90 kobo looked balanced for subscribers.