BY Adekunle Adekoya
FROM today, the Nigerian Communications Commission decidedly is moving into management regulation of telcos operating in the country, following its resolution to “immediately enforce and implement Accounting Separation on the dominant operator.”
Not only that, the telecoms regulator bids to fix prices in some segments of the telecoms market by requiring operators to set tariffs within a price cap and price floor to be determined by the regulator.
At the weekend, NCC designated MTN Nigeria as the dominant operator in the Mobile Voice segment of the nation’s telecommunications market, which the regulator also said is “not effectively competitive.”
In a document, Determination of Dominance in Selected Communications Markets in Nigeria, posted on its website, the telecom regulator noted that “the mobile voice market is not effectively competitive and is still highly concentrated with an HHI (Herfindahl Hirschman Index) of 3063. MTN has a 44% market share of subscribers within this market. There is also a wide differential (of about 300%) between on net and off net calls and this is indicative of the likely establishment of a calling club for MTN subscribers.”
As a result of this, the NCC resolved that the Dominant Operator in the Mobile Voice market, in this case, MTN Nigeria, shall be required to adhere to the following obligations:
a) Accounting Separation: The Commission will immediately enforce and implement Accounting Separation on the dominant operator;
b) Collapse of On-net and Off-net Retail Tariffs: The differential between the on–net and off net retail tariffs will be immediately collapsed. The tariff for on net and off-net will be the same, and subject to periodic review; and
c) Submission of Required Details: The Commission may require the dominant operator to submit details on specific aspects of its operations from time to time as the need arises.
To curtail dominance by another operator, the regulator informed all and sundry in the document that it “shall make a determination of pricing principle to address the rates charged for on_net and off_net voice calls for all other operators.”
Similarly, in the upstream segment of the market (comprising spectrum, tower sites, network Equipment, Wholesale Broadband/ Internet Access, and Wholesale Leased Lines and Transmission Capacity), the regulator noted that “ MTN and Glo jointly control about 62% of the public terrestrial transmission infrastructure which is a bottleneck resource in the provision of voice and data services. There are concerns that operators playing in the wholesale and retail sub segments of these markets have the leverage to “squeeze” the margins of their competitors who are also their customers.”
As a result, NCC designated GLO and MTN “as joint dominant Operators in the Wholesale leased lines and transmission capacity sub segment of this market.”
In respect of this, both GLO and MTN shall be required to comply with the following:
a) Price Cap//Price Floor: The Commission will come up with a price cap for wholesale services and price floor for retail services, and subject to periodic review.
b) Accounting Separation: The Commission will immediately enforce and implement Accounting Separation on the joint dominant operators.
c) Submission of Required Details: The Commission may require any of the joint dominant operators too submit details on specific aspects of its operations from time to time ass the need arises.