Ahead of the
revolution expected to happen when broadband services become more ubiquitous in
the country, the Nigerian Communications Commission (NCC) is to develop a new
and proper pricing structure for high speed Internet services in Niger
ia.
The move is
in line with the Commission’s mandate of creating an enabling environment and
promoting fair competition in the telecoms industry and in line with the
strategic objectives of the National Broadband Plan.
The NCC said
this will not only ensure the affordability and availability of Broadband but
also ensure fair competition by checking price discrimination, excessive
pricing, predatory pricing, margin squeeze and price fixing amongst other
things.
To bring
this to pass, NCC Executive Vice Chairman, Prof. Umar Danbatta, at a
‘Stakeholders Forum on the Cost Based Pricing for Retail Broadband and Data
Services’ in Lagos, on Wednesday, disclosed that the commission has appointed
Messrs’ KPMG to conduct a study on the above subject matter.
Danbatta explained
that KPMG Professional Services, among other things would set guidelines for
the regulation of the pricing of retail broadband and data services in Nigeria
and specifically determine Price cap and floor where necessary; develop a
regulatory pricing model based on the peculiarity of the Nigerian broadband and
data services market coupled with international best practices; design the
framework for collation of data that will be used for the Determination;
determine the appropriate cost modeling technique and methodology to be
adopted; determine the appropriate pricing regulatory measures to be adopted;
determine need for ex-ante and ex-post regulation with respect to pricing in
the retail broadband and data market segments.
Other
expectations from KPMG would include to develop a suitable definition of big
and new entrant/small operators, if necessary; conduct a general assessment of
the retail broadband/ data market segment with a view of determining the
appropriate methodology to be adopted; and design a cost model that is suitable
for determining retail prices for broadband and data services taking into
cognizance the macro-economic, technology and technical relevant factors.
The outcome
of the study, according to Danbatta would result in among other things; the
determination of a uniform pricing structure within the broadband and data
segment; ensuring effective competition in the broadband and data market
segment; guaranteeing affordability and accessibility of broadband and data
services in Nigeria; facilitating inflow, development and growth of the
broadband market segment; and the stimulation of further economic growth
considering the catalytic role broadband services plays.
The NCC EVC
noted that the Nigerian Telecommunications industry has undoubtedly recorded
significant growth over the years and the impact and benefits that come with
this growth cuts across every segment of the Nigerian economy and the lives of
its citizeny.
“Whilst the
Commission is happy with this phenomenal growth recorded in the industry,
especially in active voice subscriptions, we believe that the next critical
phase is to ensure that everyone
– wherever they
live, and whatever
their circumstances – have access
to the benefits of broadband and this can only happen with the pervasive
deployment of broadband infrastructure and services across the country
considering the potential of broadband as a key enabler of national
productivity, economic growth and development, social inclusion and cultural
enrichment.
“The affordability
and accessibility of
broadband services however is
largely determined by
the prices that
are charged for
those services. Therefore ensuring that prices charged for
retail broadband and data services are cost based in line with international
best practice is critical to the deployment and uptake of broadband and data
services in Nigeria,” he stressed.
Danabatta
added that whilst addressing market dominance
issues in the
upstream, wholesale markets
is one of the ways to facilitate competitive price levels in retail
broadband access and service markets,
saying that it is possible that such action may not be a sufficient constraint
on pricing in all segments of a retail broadband market, “as such some form of
ex-ante regulation of retail prices is appropriate or even necessary.”
In their
presentation, a Partner in KPMG, Segun Sowande, explained that the Bottom-Up
(BU) methodology will be adopted in developing the cost mode, which entails
building up costs from many detailed components, and from the costs of each.
The BU model
will look at demand; geographical data; distance; cost splitting and leased
line cost (LLC). KPMG explained that Geographical data defines the nodes
locations (and hence fibre distances), while the demand for services defines
how many routers and multiplexers, among others are needed.
According to
them, the numbers and distances define the total cost (volume x cost per unit
or per km), while the total cost is then spit: the core network is split to
broadband services, voice services, as well as leased lines. They added that
the remaining leased line costs are broken down to the services, based on the
numbers, the speed and distance of each leased line type.
0 Comments