By Prince Osuagwu ( Hi-Tech Editor)

The Nigerian Communi-cations Commission, NCC, has come under very serious criticisms in the past few days over its decision to introduce a price regulatory regime for data services in the country.

The data price floor, which was misconstrued as hike by many subscribers, appeared to portray both the commission and the operators as insensitive to the plight of Nigerian subscribers who are currently groaning under the hardship occasioned by economic recession in the country.

Although the commission tried to explain the technicalities of the price regime, simple mathematics of the financial implication to a common subscriber was actually that he or she would pay more to get data services.

The uproar generated by the attempt, threw the Information and Communications Technology, ICT sector and indeed the whole country into a bit of confusion.

The ministry of Communications was quick to absolve itself of complicity, claiming that it was not even consulted on the whole issue. Expectedly, the commission, last Wednesday, suspended the action which implementation was to take effect in the next 24 hours, claiming that as an agency working in line with the aspirations of the people, the cries of Nigerians would always get the better of its attention than the right to introduce any policy.

Even at that, the commission is yet to escape the eye of the storm. While some people have commended it for listening to reasons, others felt it chickened out so easily and by so doing could weaken the strong position of the Nigerian telecom sector in the global market.

The Trade Union Congress, TUC, was the first group to issue a statement commending the commission for suspending the action. According to the President, TUC, Comrade Bobboi Bala Kaigama: “While we commend the Federal Government, senate and NCC for staying the policy, we urge them to do more in other areas. The hike in data rate idea should not only be suspended, but must be done away with.

The people are hungry, angry and frustrated and the only way they ease their pressure should not be denied. Thank you for listening to the voice of reason” he added.

However, the suspension was not viewed in like manner by the licensed telecom operators in Nigeria. The operators who spoke through their umbrella body, the Association of Licensed Telecom Operators of Nigeria, ALTON, said that the NCC adhered to the sentiments of the people and suspended the action without recourse to the implications on the stability of the sector.

In a statement signed by ALTON Chairman, Mr. Gbenga Adebayo, and its Publicity Secretary, Mr. Damian Udeh, the operators said: “While we fully understand the public sentiments that would appear to have greeted the announcement of a minimum data tariff being introduced by the Nigerian Communications Commission (NCC), ALTON wishes to note that the Commission intervened to set the data tariff floor in exercise of its statutory responsibility to promote healthy competition by periodically reviewing voice and data tariffs in the industry and ensure the sustainability of the Nigerian telecommunications industry.

Meanwhile, the NCC has come out to say that it was not in any confusion about its right to introduce and or suspend/withdraw the action, but that its suspension of the recent price floor was purely to respect the people.

It categorically stated that the introduction of price floor for data services in the country was to address market distortions, unhealthy price wars and value erosion that could threaten the going concern of the service providers.

What is price Floor?

Price Floor is a minimum price set by governments or other Organisations, on goods, commodities and other services. It is generally, one of the regulatory safeguards normally put in place by the telecommunications regulator to check anticompetitive practices particularly by the Dominant Operators.

What this means is that without a price floor, the dominant operators can engage in predatory pricing to drive down other operators and introduce monopoly in the sector.

History of price Floor  intro/suspensions

The Nigerian Telecoms market has always been dynamic, capital intensive and effectively competitive. In 2014, the data market segment was very aggressive in price competition, posing risks of prices falling below costs; which could have negatively impacted sustainability in the industry.

The NCC also stepped in to introduce a price floor of N3.11/MB. The commission said then that its action was buoyed by the commitment to safeguard investment in the industry.

It added that the price floor would help to check and control anticompetitive practices by operators who are dominant in the upstream market, prevent further value erosion in the industry, create a level playing field for all operators and maintain the integrity of the networks.

However, in October 2015, the commission also announced that it has lifted the price floor, claiming that there was need to ensure sustainability, growth and development of the data market segment; and to promote pervasive broadband deployment, adoption and usage, considering the global paradigm shift from the provision of voice telephony services to data and digital services.

It added that the decision also took into cognizance complaints by service providers to waive the price floor for data service to facilate infrastructure roll-out  and growth of the data market segment.

However, it clearly stated that the  price floor would be restored if any distortion is witnessed within the market segment.

Why we re-introduced price floor in 2016

In line with its mandate of promoting fair competition in the telecom industry, the Commission said it has continued to monitor activities in the data market segment and observed a significant reduction in current market prices for data services; in addition to complaints by subscribers to re-introduce the price floor for data services.

Besides that, the commission listed a few observations which led to its earlier decision to re-introduce price floor. They included:

*Some service providers were actually pricing their services below cost, a situation which could spell doom for the industry.

*Dominant Operators in the wholesale leased line market, who also operate in the retail market embarked on massive predatory pricing, a conduct capable of substantially lessening competition.

*The removal of floor price for data resulted in eroding value in the market.

*The need to safeguard investment and ensure growth, development and sustainability of the telecoms industry was inevitable.

*It is important to maintain the integrity of the network as operators lack capacity to accommodate the volume of transaction on their network.

We consulted

The NCC also claimed that it consulted widely. “Subsequently, letters were sent to service providers requesting for their comments and inputs on the following: The rate to be fixed as interim floor price for data services pending the finalization of the study on the Determination of Cost Based Pricing for Retail Broadband and Data Services in Nigeria.The position of the Commission that there should be no price floor for small operators and new entrants.

“Based on the comments and inputs received from operators and in line with the Commission’s principle of participatory regulation, the Department invited and held stakeholders’ meeting with service providers in October 2016, to share with the industry anti-competitive practices witnessed in the data market segment and to get their comments and inputs on what the price floor should be.

Again, from the comments of the service providers, the Commission observed the following:

*The need to create a balance by ensuring that the interim price floor is not too low in order to provide a cushion for small operators and new entrant to offer competitive products.

*That the price floor should not be too high to ensure affordability by consumers.

*The rate should be fixed at a level that will encourage growth, roll-out services and ultimately attract investments into the telecom sector

We lowered cost based on 2014 floor

“Subsequently, the Commission fixed an interim price floor of N0.90k/MB for big operators. The rate which we planned to subsist pending the finalization of the study on the Determination of Cost Based Pricing for Retail Broadband and Data Services in Nigeria.

“In order to promote a level playing field for all operators in the industry, encourage small operators and new entrant to acquire market share and operate profitably, we exempted them from price floor for data services. This means that the rate is only applicable to big or major operators. Small operators such as Smile, Spectranet were not affected”.

Explaining further, Director public Affairs of NCC Mr Tony Ojobo noted that “the telecommunications industry is in a time of intense transformation. As the traditional source of telecommunications revenue – voice telephony services continue its decline, there is increased pressure to roll out services beyond traditional offering.

“Consequently, there is a gradual paradigm shift from voice telephony services to data and digital services. In line with the global trend to drive the vision of Internet of Things (IoT), the network service providers in the country have embarked on aggressive promotional campaigns. As a result, all market players follow each other in introducing daily packages and engage in serious price war.

“Some operators were actually pricing below cost and this will affect the ability to continue in operational existence if the issues are not addressed urgently by the Commission.

“It is therefore our collective responsibility to ensure the steady growth, development and sustainability of the telecoms industry in the country. This responsibility is further underlined by the current economic challenges facing the country.

“We cannot afford to have a crisis in the ICT sector as this will have a wide spread ramifications on the entire economy”.

NCC’s position appears to support the general belief that telecommunication is described as the infrastructure of the infrastructures because it propels the socio-economic development of any nation. Telecommunication is not only the backbone of modern economy, it is more and more becoming the economy.

In view of the importance of telecommunication, the primary objective of government is to ensure that markets work efficiently for the benefits of businesses and consumers whether through competition or where necessary, through regulation.

When markets work efficiently, companies provide customers with more choice, lower prices better quality products and services. However, due to market imperfections, market forces alone cannot be entirely relied upon to discipline the operators to ensure efficient market conducts and promote market efficiency.

It is in that recognition that the regulator should be encouraged to introduce fair regulatory intervention necessary to facilitate competition and create a level playing field between competitors.