At a time when many Nigerians are complaining about the dwindling fortunes of the nation’s economy, with its attendant high cost of living, any legislation that seeks to increase their burden even in the short-run could be resisted.
As with most capitalist societies, with a dysfunctional welfare scheme or absence of social safety nets, the federal government has, most times, collaborated with industry players to rip-off hapless
consumers.
From the gradual phase out of the corruption-ridden fuel subsidy regime, and the very recent hike in electricity tariff to the planned, but subtle regulation of the social media, the Nigerian consumer is
often at the receiving end, always having to make up for a shortfall in the revenue of government and many economic players.
Having made huge profits in the past at the expense of consumers, telecommunication companies in the country are gradually experiencing revenue losses, at least, so they have said.
The entrance of many investors into the industry has ensured stiffer competition among the operators who have had to evolve eye-pleasing strategies to stay afloat.
Nigeria’s telephone penetration as at January 2016 was 140,822,483 active lines/phone numbers on the operators’ networks. This is, no doubt, a huge market, but the operators say they continue to face a stream of revenue losses, no thanks to the threats posed by internet telephony. But while succour might be on their way soon, owing to the decision of industry regulator, the Nigerian Communications Commission (NCC), to regulate Over-The-Top (OTT) services, the same cannot be said of the Nigerian consumer, the sacrificial lamb.
Over-the-top services are services carried over the networks, delivering value to customers, but without any carrier service provider being involved in planning, selling, provisioning, or servicing them. The services are offered through internet communication.
In Nigeria, the services are mostly classified under social media applications. This implies that telecom operators such as MTN, Etisalat, Glo, and Airtel lack direct control or influence over
WhatsApp messenger, BBM, Facebook or Skype. Internet telephony and live streaming are also part of OTT services.
Experts say the growth of OTT services is encouraged by the access to 3G and 4G networks which offer mobile broadband and high speed IP data.
But in Nigeria, there is good news for the telecommunication companies. A report ‘An Overview of Provision of Over The Top (OTT) Services’ published recently by the Policy, Competition and Economic Analysis Department of the Nigerian Communications Commission, indicated that the OTT services are becoming a threat to the traditional telephone network operators and must be regulated.
According to the report, the threat is made possible by the fact that Internet telephony is not only cheap, and free in some cases, but it also offers many features previously unavailable with telephones and, therefore, makes it more attractive to consumers. On the other hand too, operators of Internet telephony don’t pay tolls for their services.
“Many traditional telecom service providers are of the opinion that traditional telephony and SMS revenues are under threat from newer, IP based alternatives like WhatsApp, Skype, Viber, etc. Similarly, third party web content and social networking companies such as Google and Facebook are increasingly generating huge revenues and driving high levels of data traffic which ride on the broadband networks of traditional telecom operators”, the report said.
Still giving reasons as to why the system has to be regulated, the report said to further worsen this issue, the traditional operators still have to make significant investments in upgrading their networks
to handle the increasing volume of data generated by the same providers of OTT services.
“Most traditional telephone network service providers therefore argue that unless there is a revenue flow to them from such services, they do not have an incentive to continue to maintain or upgrade the networks,” it said.
According to the NCC, there is also a need for some kind of regulation because OTT services portend security risks to the country.
“Because VoIP relies on your Internet connection, it may be vulnerable to many of the same problems that face computers. Attackers may be able to perform activities such as intercepting communications, eavesdropping, taking control of phones, making fraudulent calls from an account, conducting effective phishing attacks by manipulating one’s caller ID, and causing service to crash,” the report further stated.
Economic Confidential recently quoted a report from brokerage, Credit Suisse, revealing that the threat to traditional voice and messaging business of telecoms in the country from internet-based software applications, offering free calls and messaging, was fast on the rise.
The Credit Suisse report stated that proliferation of over-the-top content services such as Skype and WhatsApp, among others, could trigger a whopping 30 to 50 per cent revenue loss on Nigerian telecoms companies’ voice services in the coming months.
At the dawn of the liberalisation of the telecommunication industry in the country, both products and services were expensive. While SIM Cards were sold for as high as N25, 000, calls went for as high as N50 per minute and short message services for N15 for a page of 160 characters. Gradually, with the entry of many competitors in the industry landscape, SIM Cards are now almost free while short message services go for as low as N4 and sometimes even free.
However, 15 years down the line, the tables have turned. Innovative internet-based applications have made telecom services even more worthwhile for the consumer thereby making an economic caricature of what was the exclusive preserve of mobile operators. Communication has now gone beyond mere voice calls and texts messaging. Users can, of course now send pictures, audios, videos, files and many other data through internet-enabled applications like Facebook, 2go, Whatsapp,
Skype, Viber, Twitter, Instagram, BBM and many more at a very minimal cost.
For instance, 2go, Facebook, Mobofree and Whatsapp are instant message applications that provide avenue for users to send and receive instantaneous messages as far as they have internet data services. As a matter of fact, WhatsApp, BlackBerry Messenger (BBM) and Facebook now give users opportunity to make and receive calls using their data packages.
Consequently, telecommunications and network providers are already facing immense pressure due to the introduction of messaging and VoIP calling apps, which have hit their SMS and call revenues.
This development recently forced Airtel to issue a circular expressing its resolve to have a separate data plan for VoIP calling. The company later backtracked following criticisms by subscribers.
As with their global partners, telecommunication service providers in Nigeria are reported to have lost nearly 50 per cent of their revenues.
Only recently, the Public Relations Manager, MTN Nigeria, Funso Aina, said the argument is that OTTs allow users to send unlimited texts, images, video and audio messages free of charge using their current data plan.
Aina further stressed that the problem is that these services are provided using network infrastructure of operators but without commensurate compensation to operators.
Recent findings at Nigeria’s Federal Inland Revenue Service (FIRS) showed that there has been a relative drop in the amount of tax paid by telecommunication providers between 2013 and now. While, for instance, MTN alone was said to have paid almost N120 billion in taxes, the same company is now struggling to pay N80 billion as tax even as it battles to pay over a N1 trillion fine.
Globally, this development has caused disquiet between telecom owners and the application owners like Mark Zuckerberg who owns Facebook and Whatsapp applications.
The Mobile World Congress, telecom service providers such as Vodafone, Airtel and Telenor have made their discomfort clear when it comes to offering free Internet services over expensive telecom networks in direct reaction to internet.org, an innovation by Zuckerberg to give free internet service for applications and services which have partnered with Facebook and various service providers. Internet.org is an effort to bring the internet to the developing world by allowing users in developing countries to access certain websites for free, turning Facebook and Internet.org into de facto gatekeepers of the net, dictating what people can and can’t access online.
Last year, a disagreement arose between Zuckerberg and telecoms providers regarding distribution of free internet services at the Mobile World Congress (MWC). The bone of contention was the billions worth of investment made by telecoms companies for spectrum acquisition and increasing cell phone tower reach.
The main argument canvassed by telecoms operators present at the event was that Zuckerberg was serving his own personal business interests by providing free internet access over telecom networks.
TelCos have accused application owners of doing philanthropy but with the money of the former. Vodafone Chief, Vittorio Colao, was quoted as saying that Internet.org wasn’t fair. “It is almost like Zuckerberg does philanthropy, but with my money,” he said.
Economic Confidential learnt that network providers in Nigeria are indirectly raising data rates to shore up their revenue base while in Britain, mobile operators want “over-the-top” internet-based calling and messaging applications be subjected to the same regulations as their own more traditional telecoms services.
Some months ago, the Nigerian Senate moved to introduce social media legislation despite having in place a comprehensive cybercrime prohibition law. Expectedly, the move was greeted with a wave of discontent among millions of Nigerian social media users who accused the government of trying to re-introduce the infamous Decree No. 4 (Protection Against False Accusation) promulgated by the military administration of Gen. Muhammadu Buhari in 1984.
Could the new move by the NCC have been motivated by pure economic considerations or is it a surreptitious move to gag usage of the social media? For now, that remains to be seen.
