Those opposed to data tariff hike has won a temporary victory over members of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) – the planned data tariff increase.
But in the days ahead, stakeholders in the industry would face the grim reality over the sustainability of the status quo. Maintaining prevailing price regime means a lot to the industry, except of course things have to remain as they are.
Experts have argued that things cannot remain the same in an industry considered as “dynamic, capital intensive and competitive.” As everyone awaits “the finalisation of the study on the determination of cost-based pricing for retail broadband and data services in Nigeria,” it is important to put the issues in their proper perspective once more.
The Nigerian Communication Commission (NCC), through a letter, had directed the big telecommunication companies to increase their data tariff beginning from December 1. The letter was signed by the Policy/Competition & Economic Analysis Director, Miss Josephine Amuwo and the Legal Regulatory Services Head, Mrs. Yetunde Akinloye.
The duo signed on behalf of NCC’s Executive Vice Chairman Prof Umar Garba Danbatta, who had on assumption of office in August last year, unfolded an eight-point agenda to drive the vision of the NCC. Among others, his agenda was to facilitate broadband penetration, improve quality of service, protect and empower consumers and promote fair competition and inclusive growth.
The proposed hike in data tariff was to check the emergence of dominant operators in the data service segment and ultimately enhance broadband penetration into the rural area.
It’s a journey that must start now
The document further explain that the measure would provide a level playing ground for all players and protect the industry from massive predatory pricing and safeguard investment, ensure growth, and development and sustainability of the industry.
In the letter, the NCC put the interim price floor for data services at N0.90k/megabyte (MB) for the big operators. The big carriers before this new development have been charging as follows: MTN 45k/MB, Globacom 21k/MB, Etisalat94k/MB and Airtel 52k/MB, putting the average at 53k/MB.
The smaller operators and new entrants price per megabyte shows that Smile was charging 84k/MB, Spectranet 58k/MB and Natcom was charging 72k/MB. The average charge of this category was 71k/MB. The small operator were described by NCC as “one that has less than 7.5 percent of market share and a new entrant is an operator that has operated less than three years in the market”.
Reactions to the new price regime were spontaneous from across the country, forcing the NCC to suspend the hike. Its spokesman Tony Ojobo cited a general outcry from Nigerians as reason for the suspension. He said the NCC new position was taken after due consultation with industry stakeholders.
Among critical stakeholders that kicked against the hike were members of the National Assembly, Trade Union Congress (TUC) and the National Association of Telecom Consumers (NATCOM). Nigerians also took to the social media platform to express their opposition to the hike.
The Senate ordered a halt to the increase and set up a committee to further look into the matter. The upper chamber promised to involve all the agencies connected to the matter in its investigation.
However, ALTON expressed disappointment over NCC’s decision to suspend the proposed price hike. ALTON Chairman Gbenga Adebayo said the regulator’s action would be unhelpful to the industry, as data prices had already fallen to unreasonably low and unprofitable levels.
He said the public sentiments expressed across the country against the hike were understandable, but that NCC’s intervention as a regulatory body should not be driven by sentiments.
Ekanga Attah, a Nigerian who resides in Ghana, in a publication by The Cable reacted thus: “inasmuch as I don’t support the increase in tariffs, but we have to understand that data (and goods in general) is still relatively cheaper than in most other countries.
“I bought 6GB on Vodafone Ghana for 90 cedis (N9000) and petrol cost 3.69 cedis (N369) per litre while a bottle of star which is manufactured here in Ghana costs the equivalent of N500 while every other commodity cost twice or thrice as much as in Nigeria while the salary scale is equivalent to that of Nigeria as I learnt due to heavy government taxing which makes me want to run back home.
“So, I know that the government is making some kind of miracle because bigger economies exposed to our type of shock like Venezuela and to some extent, Saudi Arabia, are actually experiencing total upheavals.
“And to think they still have to do all this with Northeast in total ruins while catering for about two million Internally Displaced Persons (IDPs). So, I would say at this point in time we should shoulder the shocks and ride it out because it could have been so much worse.”
Again, the planned increase in data tariff brought into the front burner the issues of infrastructure development and expansion in the industry and the imperative of quality of service. Would Nigerians prefer poor quality of service such as slow networks to improved quality and fast network service?
Would a reasonably justified hike at a period of recession not be an incentive to industry operators who are also facing the challenge of sourcing foreign exchange in the face of depreciating naira value?
Industrial operators also face the challenge of equipment shut down and vandalism, yet, the base stations are powered with diesel in the face of electricity supply gap.
The NCC had rightly argued in a document obtained by The Nation that chief among the reasons for the reintroduction of the price floor was that “some service providers were actually pricing their services below cost, a situation which could spell doom for the industry”.
The ALTON president had warned about the unsustainability of keeping the prevailing price regime. His outcry might be seen as a cry to protect his members, but his warnings that “if the matter is not urgently addressed, it could lead to deterioration in the quality of data services across all networks and attendant poor quality of experience of users,” should not be ignored.
An official of the NCC said “it is also in the interest of consumers who have stake their hard-earned income on data purchase to get quality service in return. Or of what benefit is a data purchased at cheaper rate, yet, to download a two-hour movie takes as long as a day, leaving consumers frustrated.”
The official also noted that attaching a 10-page Curriculum Vitae in a Cyber Café could be as slow and time consuming, the pains and frustration of not getting it done at all after buying a 1.30-minute airtime could be nightmarish.
“The hike in data tariff, he further argued should be a win-win situation for all stakeholders in the industry. Whether it is now or later, the choice is before all the stakeholders”, the official who pleaded for anonymity explained.
An industrial player also said that “ for those who do business with data, service quality is imperative and irreplaceable. This could be a different ball game all together for other consumers, however, the NCC is better placed in the long run to chart a course that would be more beneficial to all.
“Good that the NCC had developed a culture of consultation and openness to ensure justice, and fair-play by putting all the cards on the table, its regulatory functions to ensure the growth and development of the industry remains sacrosanct in the days ahead.”
