Contrary to the general perception that the Nigerian Communications Commission (NCC) gave network providers the directive to increase data tariffs, the commission said that it never gave such a directive.
The commission, which made the disclosure at an investigative hearing organised by the Senate Committee on Communications at the National Assembly, Abuja, said all it did was to establish a price floor for all telecoms operators for the purpose of price regulation.
According to the Executive Vice Chairman of NCC, Professor Umaru Dambatta, the price floor was first introduced in 2014 to serve as a check against “anti-competitive practices particularly by dominant operators”.
He further described the price floor as a minimum price placed on a good, commodity or service to prevent dominant operators from engaging in “predatory pricing to drive down prices and drive out other operators from the market”.
Dambatta said against this backdrop, NCC in 2014 imposed a price floor of N3.11 per megabyte for data services, but eventually lifted the price floor in October 2015 following the request by service providers to waive the price floor for data services “to enable a roll-out of infrastructure and growth of the data market segment”.
He added that in accordance with its mandate to promote fair competition in the telecommunications industry and avert monopoly by major operators, it took a decision to re-introduce the price floor with effect from December 1, 2016 following the commission’s discovery that “some service providers were actually pricing their services below cost, a situation which could spell doom for the industry”.
He disclosed that the rumour that NCC gave the directive for the increase in data tariffs was borne out of pure misunderstanding of its intentions, explaining that it only introduced a price floor of N0.90 kobo per megabyte which was considerably lower than the price floor of N3.11 kobo introduced in 2014.
Dambatta further explained that the need to re-introduce the price floor was meant to avert a price war between major telecoms players and smaller ones, adding that the telecoms sector contributes N1.4 trillion to the economy every quarter.
However, the angry reaction which trailed NCC’s announcement of a new price floor by the general public was triggered by the text messages sent by MTN to its subscribers that data prices would go up in compliance with the NCC directive.
It was learnt yesterday that the text messages sent by MTN were meant to affect only its subscribers who patronise its products whose rates are lower than the 0.90 kobo price floor, as MTN’s messages to such subscribers had stated that the price of data would go up in line with NCC directive on December 1.
Although the MTN’s texts messages appeared to be a true reflection of the NCC directive, they only ended up instigating the public against the NCC. It was also learnt yesterday that the introduction of the price floor was not beneficial to major players such as MTN whose lower tariffs help to capture more subscribers.
In his submission, the Chief Executive Officer of Etisalat, Mathew Willsher, said following the lifting of the price floor in 2015, data tariffs were forced down by 80 per cent. He however, added that a situation where the price floor has now been suspended might not be the best for the industry.
The CEO of MTN, Ferdi Moolman, said it was not true that MTN was behind the move for the data price hike, saying that the interest of Nigerians was the drive of the telecoms industry.
He added that an industry that is technologically-driven like the telecommunications, needs to apply new technologies, a trend he said was affected by Nigeria’s rising inflation rate.
But Airtel, which was represented by its Director of Legal Services, Sola Adeyemi, said that telecoms operators would abide by the suspension of the price floor, saying operators would adjust prices to fit the price floor fixed by the NCC.
The vice chairman of the committee, Senator Adeola Olamilekan, who presided over the meeting, blamed the misconception of NCC’s price floor on poor consultations, adding that the ignorance on the directive displayed by the Communications Minister, Adebayo Shittu, was a testimony to the insufficient consultations before the announcement of the new price floor.
However, Dambatta said fresh consultations on the matter would continue, pointing out that the study to be carried out on the issue would be scientific.
The committee threw its weight behind NCC’s submission that it would engage in a scientific study before coming up with a price floor that will be acceptable to all stakeholders.
In his reaction, Shittu appealed for support to both the NCC and telecoms operators, arguing that whatever is necessary must be done to ensure that the telecoms industry which he described as the most vibrant sector is sustained.
He said: “I am appealing to the distinguished Senate that in the intervening period, they should try to encourage NCC to be the best that it can, they should try to assist us in the area of holding the balance between the interest of operators and the interest of the Nigerian masses so that we can be seen to be providing the best.
“I want to say that whatever we would do, we should encourage NCC, we should also encourage operators and we should also encourage Nigerians to appreciate the reality on ground. My information is that in the West Africa region our tariff is the lowest…
“The fact that our currency has depreciated in terms of value will perhaps justify this assertion.
“What we are operating or experiencing in Nigeria in terms of the devaluation of the naira, in terms of over reliance on crude oil whose prices crashed, means that we must do the needful in ensuring that the industry is sustained.”