By Nwobodo Chidiebere

THE dust raised by suspended data tariff increment, which was necessitated by public outcry, is yet to settle. The essence of this piece is to look at the pros and cons of the planned data tariff hike, its resultant effect on the operators cum consumers in relation to quality of service in the sector.
Prior to the halting of this policy pronouncement by the Nigerian Communications Commission (NCC), the media was budged with lot of fallacies; packaged as facts just to make it a dead-on-arrival policy. One of the conjectures is that, it was meant to jack up price of data by three hundred per cent. Second, naysayers coined it as the latest strategy deployed by the present administration to shutdown dissenting voices on social media, via exorbitant increment of data price, which would make access to internet a status symbol; exclusively reserved for the rich.
The third on the list of propaganda is that, NCC was heavily lobbied by service providers, via financial inducement to influence data price, just to enable operators smile to the banks at the detriment of Nigerians. This insinuation is not only a lie but a white one. Owing to the excruciating economic pain, instigated by degenerating recession, any intending policy pronouncement by government agency, perceived as anti-masses would be given jungle-justice treatment, especially on social media.
What was misunderstood by Nigerians as data price hike is actually known as price floor and price cap, which are the policy tools used by the regulatory agency in telecommunications industry, to maintain healthy competition—which would ensure survival of both big operators and smaller ones, at the same time giving consumers quality of service that would be commensurate to their hard-earned money.
The planned (suspended for now) introduction of new price floor and price cap is intended to reflect the new realties and proffer solutions to current challenges facing operators, especially the new entrants in the market. It would serve as a buffer that would protect the smaller operators from being consumed in the fierce price war engulfing the industry.
The pending price floor of 0.90 kobo/MB for big operators and 0.49kobo/MB for smaller operators is 0.20 kobo and 0.26 kobo, respectively different from current data tariff rate of 0.70/MB and 0.75/MB, respectively. Price floor policy was introduced in the sector in 2014 to serve as benchmarking criteria, used for preventing the data tariff from falling below the actual cost of providing such services, which has the tendency of stagnating projected growth of the industry.
The major reason for establishing price floor, is to check and control anticompetitive practices by operators, who are dominant in the upstream market (leased-line market), prevention of further value erosion in the industry and creation of level playing field for all operators, irrespective of their individual capacities. But in October, 2015, NCC as the sole regular of the ICT sector took a drastic decision to suspend price floor policy in the market. Its aim was to enhance massive broadband penetration across the country, make telecom sector the main driver of Nigerian economy.
However, it was categorically stressed that the NCC, as the referee of the industry would reinstate the price floor, if any sharp practice is experienced within the telecom market.
After more than one year of monitoring the price floor suspension in the market, NCC discovered that some big operators were engaging in what is called predatory pricing—which is the monopolistic strategy of intentionally lowering prices of services too low, enough to strangulate competitors, especially the fledging rivals out of the market, in order to dominate business activities in the sector; invariably cannibalizing the market for small operators.
Propelled by the regulatory mandate to maintain stability in the industry, protect investment, ensure infrastructural deployment and continuous increase in quality of service for over ninety million internet users in the nation, NCC decided to re-introduce the price floor in the market. Before it was put on hold, to create room for stakeholders’ engagements and enlightenment of the populace. The new pricing floor initially scheduled to commence on December 1, 2016, was conceptualized to save minor players cum new investors and prevent monopoly. It was also made to maintain the integrity of the network, though the new entrants were exempted from price floor to create space for them to woo potential subscribers into their networks.
One of the major arguments being canvased against the policy by its opponents is the timing of its proposed commencement. It is coming at a difficult time when many Nigerians are gasping for breath to survive the biting economic recession. Not everyone can afford the current data rate, let alone when it is increased; even if it is by 0.1 kobo/MB. As much as NCC should be prevailed upon not to add to the already filled basket of sufferings weighing down many Nigerians, or avoid the pitfall of being seen as conspiring with service providers to exploit Nigerians, we should also look at the long term consequences of not effecting this policy of price floor in the sector.
In as much as NCC will invoke its regulatory powers to protect Nigerians from undue exploitation from operators anytime, it also has the duty to safeguard investment of operators in the market, and facilitate adequate return on their investments in the industry, to encourage more foreign and local investors to flood the market with financial liquidity. How will someone explain the pathetic situation where big operators—with entrenched interests, are allowed to run new entrants out of the market via anti-investment lower data tariff?

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Chidiebere writes from Abuja.