Review of data price inevitable, says NCC
The Nigerian Communications Commission (NCC) on Wednesday hinted that data price hike by telecom operators in the country was inevitable, citing high cost of foreign exchange, poor power supply and taxation as some of the reasons for this.
The NCC however quickly added that before the review of the data price is reviewed, necessary wide consultations among all the stakeholders in the telecom industry will first be embarked upon.
The Commission stated this at a press conference jointly addressed by some of its Directors in Abuja.
The NCC’s Directors at the event were; Mr Tony Ojobo, (Public Affairs), Mrs Josephine Amuwa (Policy Analysis) and Mr Abubakar Yakubu (Tariffs and Competition.
The NCC Directors pointed out that the operating environment seriously called for realistic approach to the issue on ground.
While saying that NCC was not out to inflict pains on Nigerians and decide what price floor the telecom operators should undertake, they stated that it became necessary for the Commission to intervene so as to ensure that no party was cheated.
According to Mr Ojobo, “issues such as high cost of foreign exchange, electricity and general infrastructure challenges make the review of the cost of data inevitable so that the system does collapse”
He clarified that it was necessary to intervane by way of price cap to make the sector attractive.
Continuing, he said, “Price floor is one of the regulatory safeguards normally put in place by the telecommunications regulator to check anticompetitive practices particularly by dominant operators.
“Without a price floor, the dominant operators can engage in predatory pricing to drive down prices and drive out other operators from the market. Where this is successfully executed, the dominant operators will then increase prices to the detriment of the subscribers.
“If this is allowed to happen, the industry could be moving towards a monopoly”, ge said.
The reintroduction of price floor on December 1, 2016, the NCC maintained, was due to the fact that some service providers were actually pricing their services below cost, a situation which could spell doom for the industry.
According to the NCC, “Dominant operators in the wholesale leased line market who also operate in the retail market embarked on massive predatory pricing, a conduct capable of substantially lessening competition.
“The removal of price floor for data resulted in eroding value market.
“The need to safeguard investment and ensure growth, development and sustainability of the telecoms industry, and maintain the integrity of the network as operators lack capacity to accommodate the volume of transaction on their network”, the Commission explained.
Continuing, the NCC said in order to thoroughly exhaust the process, letters were sent to service providers in August for their input regarding appropriate rate as interim floor for data services pending the finalisation of the study on the determination of cost based pricing for retail broadband and data services in Nigeria.
After a stakeholders’ meeting, the Commission said it observed that “operators agreed on the need for price floor, fixed rate to encourage growth, rollout services and to start investment to the sector”.
According to the Directors, “the Commission agreed the price floor should not be too high to ensure affordability by consumers. There was also the need to create a balance by ensuring that the interim price floor is not too low in order to provide a cushion for small operators and new entrants to to offer competitive products.”
The NCC clarified that the initial removal of the price floor was due to complaints received by telecom operators who said the value of the price floor was too high and that data market segment was an emerging market, calling in the Commission to ensure it grows and develops.
According to them, “In the bid to ensure sustainability, growth and development of the data market segment, the Commission approved the removal of the stats price floor in October of 2015.
“In the letter conveying approval to the operator for the withdrawal, it was clearly stated that the Commission will not hesitate to restore the price floor if any distortion affecting competitiveness is witnessed within the market segment,”they said.
According to them, the need to correct the price war during this window of observation informed the new development of price floor.
They stated that when the appropriate price floor will be reintroduced, it would be properly communicated.
It could be recalled NCC withdrew it directive approving increase in hike in cost of data last week following public outcry.
In putting a hold to the hike, it noted that in a statement the “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.
Nigeria has witness various degree of price floor such that the price floor in 2014 was N3.11k/MB but was removed in 2015. The price floor that was supposed to flag off on December 1, 2016 was N0.90k/MB.
