Assessing reality, myths of data pricing directive to operators
The Minister of Communications and Digital Economy, Dr. Isa Pantami, last week, issued a five-day ultimatum to the NCC to ensure that data prices were reviewed downwards. Pantami, however, backed down on this directive, following a statement issued by the Minister, claiming that the Commission had requested a deadline extension.
The statement, which confirmed the extension, was signed by Pantami’s spokesperson, Uwa Suleiman. While the statement failed to specify the new time-frame given to the Commission to act on the order, it, however, stated that the issues should be resolved “within the shortest time possible.”
Pantami reminded the NCC that its main agenda is to protect the interest of customers and Nigerians, which must be done in line with the current regime’s Next Level agenda.
The NCC had informed the minister that it had been working on the issue data pricing to protect both the consumers and ensure the sustainability of the industry growth and in the statement, the Commission was said to have requested an extension of the deadline to enable it to properly re-strategize and fully implement long-term solutions to the challenges.
The Guardian recalls that while measures are being put forward towards addressing the issue of illegal deductions to protect the over 179 million telecoms consumers in the country on the one hand and on the issue of possibly determining the new upper and lower levels of data pricing within the context of a cost-based study.
Meanwhile, the directive by the Minister has generated so much discussion with industry observers saying that beyond the rhetoric of slashing data prices or addressing consumer issues around data usage, the issue at stake again is that of the Minister’s interference into the NCC’s autonomy. Some quarters in the industry believed strongly that Pantami should be more cautious of some of his declarations lately, to avoid policy somersault and operational frictions.
They noted that similar interference was witnessed with regards to the plan by the operators to commence a regime of directly charging customers for the use of Unstructured Supplementary Service Data (USSD) which led to the Commission setting aside a legal determination.
How far can this directive go?
According to industry analysts, given that the directive was long overdue, within the context of incessant complaints by subscribers of increasing data depletion, inability to roll over, slow connectivity, among others as part of their daily experiences as far as uploading and downloading are concerned, the Minister’s directive appears appropriate. Such a directive will make the Commission to further sit tight to address consumers’ complaints regarding unsatisfactory service delivery experience.
With regard to consumer complaints, the Commission had sanctioned the operators on several occasions and has recently concluded work on its revised Consumer Complains and Service Level Agreements (CC/SLAs) to further strengthened consumer protections.
The revised consumer compliant management document unveiled in Abuja last Thursday by the Commission, a copy of which was obtained by The Guardian, showed that there were over 19,997 complaints lodged by subscribers against telecoms operators in the last 10 months of this year. It, however, showed improvement in the handling of consumer complaints by the service providers during the period compared to what was recorded during the same period in 2018.
In the list of the 18 complaints categories on the document, complaints related to early data depletion, the disappearance of data as wrong billing, among others formed part of the 19,997 complaints made by the consumers directly to the operators or through the NCC’s second level consumer compliant stool-free number 622.
On this, experts say the call by the Minister for the Commission to strengthen efforts to address issues around data deletion, data disappearance, slow connectivity or wrong data bundle billing, among others, is apt.
The experts, however, disagreed that a similar directive should not be given by the Minister to the operators or the regulator to reduce data price without an evidence-based determination.
Is NCC powered to determine retail price?
Meanwhile, part of the directive, which asked the regulator/operators to crash data price without any recourse to legal procedure, as enshrined in the telecoms laws have been described as a ministerial move that is antithetical to proper regulation of the industry to ensure sustained growth, a fact industry experts said the Minister failed to “acknowledge to demonstrate his understanding of the sector he is supervising.”
For instance, findings by The Guardian showed that NCC has no unilateral power under Section 108-110 of the Nigerian Communications Act 2003 to prescribe retail price.
Analysis of the sections of the Act showed that the NCC does not have such power to unilaterally determine the price contrary to the Minister’s directive, as the Commission is guided by the Act and in line with the International Telecommunication Union (ITU) recommendations.
However, what the law allows the Commission to do is to ensure that tariffs reflect the costs of providing services. This explains why NCC, according to industry experts, is mandated to carry out cost-based studies from time to time and as may be deemed fit to fix price floors and /or ceilings as this also helps the regulator to ensure that no operator can under-price to kill its competitors.
The Guardian reliably gathered that a cost-based study is currently on-going too, once again, determine if the price of data consumers currently enjoy will be increased or decreased in line with the reality of the markets (that is after the cost elements of the operators have been scientifically factored into consideration). The Policy Competition and Economic Analysis Department of the NCC have been working with KPMG, a global consulting firm, to determine this.
According to a telecoms expert, Kehinde Aluko, it will be dangerous therefore, if NCC takes action not supported by science/data. Aluko said the Commission may lose its credibility as well if it panders to the whims of the Minister, “who is yet to understand the industry that price determination must be based on scientifically-based evidence as recommended by the ITU.”
Aluko said this means that if NCC toes the Minister’s path of calling for an arbitrary reduction in the cost of data, the Commission will definitely lose in court if/when operators challenge its action and that will be unfortunate for a regulator.
He also revealed that if NCC lowers data prices (assuming it has the power), the big/foreign-funded operators can manage, but smaller operators will be sent to an early grave because of their inability to compete.
To the Association of Licensed Telecommunications Operators of Nigeria (ALTON), telecom regulation all over the world is a process and Nigeria shouldn’t be an exception.
The Chairman, ALTON, Gbenga Adebayo, noted that the Minister’s directive appeared dictatorial and capable of eroding the gains of the telecom sector by scaring away investors, who have invested in the industry.
“Reduction not possible! NCC should be allowed some level of independence to do its work of regulating the telecom industry,” he said.
Adebayo wondered how it will work, without first putting in place a good framework that will save the huge investments made by the telecom operators. “I don’t know how the government is going to achieve data reduction any time soon. Have they put into consideration the high cost of operating our businesses and the very harsh operating environment in Nigeria,” he asked.
He posited that telecoms service price determination is always a product of a survey, research, and benchmark based on what is obtained in other climes.
Adebayo added that the issue of data price is a commercial matter, and when policies interfere with commercial matters, the industry will be jeopardized.
From his perspective, the President, Association of Telecoms Companies of Nigeria (ATCON), Olusola Teniola, said, “we cannot expect the minister to know everything,” suggesting the need for the Minister rot take time to learn and understand the industry before giving directives.
Teniola posited that it will take some time for the Minister to be aware that, in fact, Nigeria has one of the cheapest rates of data in Africa.
‘‘So, when we work more with the minister, we can provide the evidence that seeks to ensure that the industry is regulated in a manner that ensures that services can be provided to consumers in a cost-effective manner and at a high quality of service.”
Balancing the Act in telecoms regulation
Teniola further explained that there are many people who still do not have access to the Internet. “We have to be cognizant of that and that requires investments. So, the balance between attracting investments has to be measured against the reality of consumers wanting very cheap prices for data. If you make the data so cheap that consumers can afford it, an example that the poor can afford it, then it will require the necessary investments for infrastructure to be able to give them the service.
‘‘So you know what comes first, the investments or the reduction in data prices, you can’t have data prices reduced without the investments. The regulator needs time to ascertain how best to do this. And we encourage the NCC to continue to regulate the industry in the manner that is a win-win for everyone,’’ he noted.
Nigeria among countries with the cheapest data in SSA
While the battle rages on, it is also expedient to mention that Nigeria is ranked among countries that still offer the cheapest data prices in sub-Saharan Africa (SSA).
The Alliance for Affordable Internet (A4AI) disclosed that although Internet data services remain high in Africa, Nigeria, Egypt and Rwanda offer the cheapest tariffs on the continent. As at the end of 2018, it ranked Nigeria as the second country after Egypt with the lowest tariff in Africa.
A4AI revealed that the cost of Internet access dropped globally last year, except in Africa. With Internet users on the continent already paying the highest prices for mobile data compared to average monthly income, new data from A4AI showed the average price of a gigabyte (GB) of data (relative to income) has increased over the past year in Africa while dropping or remaining the same in other regions.
The Cable.co.uk put the price of mobile Internet (1GB) in Algeria at $5.15; Tunisia $2.87; Cote d’ Ivoire $4.17; Togo $11.76; Kenya $2.75; South Africa $7.19; Zimbabwe $75.2; Chad $23.33; Egypt $1.49, and Nigeria $2.22.
Focusing on bridging the infrastructure gap
Perhaps, what should be the focus of the Minister is to address all the issues around challenges being faced by the telecoms operators in order to drive investments
Operators currently incur more cost of running their operation arising from multiple taxation and regulations, the indiscriminate shutdown of their BTS, vandalism, which takes time to fix the affected facilities, denial or high cost of Right of Way (RoW), all of which are slowing down faster infrastructure deployment which concomitantly affects service delivery.
Other challenges confronting the operators include theft of their equipment at sites, power problem, where two heavy-duty generators are used by the operators to run each of their over 39,000 BTS across the counties.
According to Adebayo, “Our operations depend on power 24/7. All these are cost elements before you determine the price. Why are other manufacturers in other sectors not being asked to reduce their prices by their respective Ministers? So, operators also run their businesses within the same ecosystem and where prices of diesel and everything is going up and they, therefore, cannot price below the cost of providing the services. Otherwise, they will run out of industry sooner or later.”