The Nigerian Communications Commission
(NCC) has said foreign exchange issue, high operating cost and the need to
protect smaller operators from closing shops have made data price hike
inevitable in Nigeria’s telecom industry.
Disclosing this
at a press conference in Abuja yesterday, three top NCC officials said the
current data price regime was unstainable as “it could kill the industry.”
Josephine
Amuwa, Tony Ojobo and Abubakar Yakubu, who are the NCC’s Directors of
Policy, Competition &Economic Analysis, Corporate Afffairs and Tariff
Competition respectively, said the introduction of price floor for data
services was also to address market distortions, unhealthy price wars and value
erosion that could threaten telecoms business in Nigeria.
Explaining
further why hike in data price is inevitable, Amuwa said an unnamed dominant
operator was engaging in predatory pricing to drive down prices and drive out
other operators.
“Where this is
successfully executed, the dominant operator will then increase prices to the
detriment of the subscribers. If this is allowed to happen, the industry could
be moving towards a monopoly”, the NCC Director said.
On the belief
that market forces should be used to determine the prices, Amuwa said due
to the Nigeria’s telecom market imperfections, market forces alone could not be
entirely relied upon to ensure efficiency.
“Based on the
comments from service providers, we observed
that small operators were not able to compete with big operators (MTN and
Globacom)at their average price per Megabite of 0.70/MB. Even Airtel and
Etisalat could not compete with these two service providers because of the
added advantage of operating in the wholesale transmission market segment. Most
of the small operators also complained that at the N0.75/MB (which is the upper
limit of industry average) they were not able to properly cover cost and make
profit”, Ojobo said.
Speaking further, Ojobo said it was not true that Nigeria’s data price
regime was one of the most expensive in Africa.
He said in bringing out the new data price floor, NCC consulted widely
with all stakeholders in the industry before it pegged it at 0.90kobo/megabite
for big operators and 0.49k/MB for smaller operators.
On his part, Yakubu said some
of the operators had capacity issues and the introduction of price floor
was one of the ways to correct that.
He said between
October last and now none of the operators expanded their networks as it should
be expanded and this was dangerous for the market.
Source:Daily
Trust
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Business