The
telecommunications operators, under the aegis of Association of Licensed
Telecommunications Companies of Nigeria (ALTON), have called for the
implementation of the suspended data price floor.
Speaking at
a Breakfast meeting with journalists in Lagos, the Chairman of ALTON, Gbenga
Adeayo, said the price floor is a partial price control measure, which is the
lower limit price to check unhealthy practices, but foster healthy competition
among players.
Adebayo, an
engineer noted that the price floor is a means of controlling anti-competitive
behaviours by operators considered to have attained the dominant status in the
industry.
He explained
that earlier, there was a limit to how low Internet Service Providers (ISPs)
could charge for data services, saying the regulator in October 2015, approved
the removal of data price floor, giving ISPs the opportunity to drop their data
prices as low as they can in order to survive.
“However,
before then, National Communications Commission (NCC), had set the data price
floor limit as a way of ensuring smaller ISPs and ‘upcoming’ telcos had the
chance to compete favourably with the bigger, and already established ones. The
ISPs could compete for customers with lower prices, but this has now hurt the
industry very badly. The smaller operators are finding it difficult in a
recessed economy to survive due to the ‘heavy weight’ of the bigger players,
who are able to cross-subsidise the array of services they offer,” he said.
According to
Adebayo, available statistics has shown that bigger players lost some market
share when the price floor was set, and smaller operators got some space in the
market place. As a result, the ISPs have been badly hurt by the non-determination
of a price floor, as they are left to compete at prices below their costs.
“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,” Adebayo
noted.
The ALTON
boss revealed that the social media Over the Top (OTT) like the Facebook,
Whatapp, Instagram, among others have taken over the voice revenues, stressing
that the activities of the social media operators have greatly eroded the
revenue of the legacy operators.
According to
him, the industry is going through a lot of challenges, “it is now inevitable
for the NCC to review the Data Price Floor 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 over-the-top (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.”
Already,
some Tier II operators are of the opinion that without data price floor, they
may die.The Chief Executive Officer (CEO) of nTel, Kamar Abass, said:
“Increasing the data price floor ensures that operators can provide better
services. It also ensures that they can get adequate returns on investments.”
To the CEO
OF Spectranet, David Venn, “we need sanity and a data floor because there is a
lot of anti-competitive behaviour in the market.” He added that “Quality of
Service has fallen in the past six
months because of Nigeria’s huge data hunger,” a state of affairs that has seen
Tier II telecom companies offering unlimited packages in a bid to stay ahead of
competition.
Providing
another perspective to the issue at a Broadband forum in Lagos, the Director,
Strategy and Performance Management at Airtel, a Tier I player, Tenu Awoonor,
said there is a misconception which must be corrected. He said: “reinstating the data price floor
will not necessarily make broadband more expensive, rather it will help with
penetration. We need better pricing to help ensure that operators stay afloat.”
The
President, Association of Telecommunication Companies of Nigeria (ATCON),
Olushola Teniola, also harped on the data price floor, saying: “Without a
review of the data services provisioning market structure, there is a serious
risk of market failure with the resultant ripple effect. Current evidence
suggests that with inflation at 17 per cent, input costs at a per unit per Mb
level, retail data prices available in the market are unsustainable even with
economies of scale, hence a serious distortion exists that needs immediate
regulatory intervention.”
Also
commenting on the issue, Academic Director, Lagos Business School, Dr. Olayinka
David-West, noted that for operators to continue to deliver value and ensure
optimal Quality of Service to customers, there must be the right balance of
“affordability and value. Else, they won’t be able to provide the right
services in a broadband world.”
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