Telecommunications
operators have urged Nigerian Communications Commission (NCC) to as a matter of
urgency revisit the suspended data floor price in order to save
them from
distress.
Data Floor
Plan Price is a partial price control measure, which is the lower limit price
to check unhealthy but foster healthy competition among players.The price floor
is a means of controlling anti-competitive behaviors by operators considered to
have attained the dominant status in the industry.
Engr. Gbenga
Adebayo, chairman Association of Licensed Telecommunications Operators of
Nigeria (ALTON) stated this at breakfast meeting organized by the Nigeria
Information Technology Reporters’ Association (NITRA), in Lagos.
He explained
that floor price is a partial price control measure, which is the lower limit
price to check unhealthy but foster healthy competition among players.“The
price floor is a means of controlling anti-competitive behaviors by operators
considered to have attained the dominant status in the industry. Earlier, there
was a limit to how low ISPs could charge for data services, the regulator in
October 2015, approved the removal of data floor price, giving internet service
providers opportunity to drop their data prices as low as they can in order to
survive.”
He added:
“before then, NCC had set the data floor price limit as a way of ensuring
smaller ISPs and ‘upcoming’ telcos had the chance to compete with the bigger,
already established ones. The ISPs could compete for customers with low prices.
This has now come to hurt the industry very badly, as the smaller operators are
finding difficult in a recessed economy to survive due to the ‘heavy weight of
the bigger players who are able to cross-subsidize the array of services they
offer.”
According to
him, ‘statistics available has shown that bigger players lost some market share
when the floor price was set and smaller operators got some space in the market
place. The Internet service providers
have been badly hurt by none determination of a floor price as they are left to
compete at prices below their costs.’
He noted
that demand for data have increased in recent times following a rapid growth of
mobile phone subscribers in the country as there has been an influx of
smartphones and other data consuming gadgets into the Nigerian market in recent
years. “The social media Over the
Top (OTT) like the Facebook, Whatapp, Instagram, etc have taken over the voice
revenues.
The
activities of the social media operators have greatly eroded the revenue of the
legacy operators. The industry is going through a lot of challenges; it is now
inevitable for the NCC to review the Data Floor Price that was suspended. This
is necessary to save the industry. Mobile data revenue is growing while the
growth of mobile voice revenue is declining.”
“More
subscribers are dropping the voice call to embrace the OTT operations which are
offered free of charge on data services. Since the OTT operators do not have
any regulatory obligations, no taxes and no operational levy, there is the need
to revisit the suspended Data Floor Price in order to save the telecom
industry.”
Adebayo also
decried the challenge operators are facing in purchasing foreign exchange to
fulfil their contractual obligations to equipment suppliers and foreign
vendors. “This situation is adversely impacting our network operations and also
some recent developments in the industry have alluded very clearly to the risks
at hand. The prevailing scarcity of FX has occasioned a situation where the
Banks are unable to obtain FX for an upward period of six months.”
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