NCC Suspends Data Rate Increase: No Hike for Nigerian Telcos

Today marks a victory for consumers in Nigeria’s telecom sector, instigated by an about-face by the Nigerian Communications Commission (NCC). Initially, the NCC had issued a directive for telecom companies to raise mobile data tariffs from the 1st of December. However, amidst widespread discontent, the proposed plan has been suspended.

Earlier in the week, we reported that the Nigerian Senate had interceded, requesting the commission to halt the planned hike. Their plea was motivated by a wave of dissatisfaction from several service providers. Amidst this sea of discontent, the Senate mobilized its communications committee members to liaise with the aggrieved telcos, seeking their support.

In a swift response to the Senate’s intervention, Tony Ojobo, the Public Affairs Director at the NCC, issued a statement. He revealed that the directive’s suspension was based on negotiations with industry stakeholders and an influx of complaints from frustrated consumers.

“The Commission has weighed all of this,” Ojobo stated confidently, “and consequently asked all operators to maintain the status quo until the conclusion of a study to determine retail prices for broadband and data services in Nigeria.”

Ojobo elaborated that the initial decision for a price floor was primarily to promote equal competition for all operators, particularly to embolden small operators and new market entrants. He recalled the fluctuation of the price floor, noting that the rate in 2014 was N3.11k/MB. This price floor was abolished in 2015, but a new floor of N0.90k/MB was proposed for December 1, 2016.

“However, the smaller operators were exempted from the new price regime, by virtue of their small market share.” Ojobo noted. He explained that the purpose of implementing a price floor was to protect the consumers, and to shelter small operators from dominant competitors who might push them into extinction.

The NCC’s original directive, according to Ojobo, was to provide a level playing field for burgeoning companies such as ntel. He defended against accusations that the NCC was price fixing, stating, “This is not true because the NCC does not fix prices but provides regulatory guidelines to protect the consumers, deepen investments and safeguard the industry from imminent collapse.”

Investigating the industry average before the proposed price floor was temporarily implemented, Ojobo provided some figures. The numbers reveal that dominant operators including MTN Nigeria Communications Limited, EMTS Limited (Etisalat) and Airtel Nigeria Limited offered data for as low as N0.53k/MB. Meanwhile, new entrants like Smile Communications, Spectranet and NATCOMS (NTEL) charged N0.84k/MB, N0.58k/MB and N0.72k/MB respectively.

Consequently, data prices will not rise tomorrow, ensuring that 1,000 Naira continues to land users 1.5GB of data. However, there lies an unceasing question of whether the NCC could have taken protective measures for newer entrants earlier in the game. Historical experience, such as the entrance of companies like Glo and Etisalat into the market, has shown that competition stimulates innovation. It was the competition they faced that prompted Glo to introduce per-second billing, a move widely embraced by Nigerians. As for what lies ahead, only time will tell.