NCC, consumers and limits of impunity

It is just as well that the Nigerian Communications Commission (NCC) under pressure from high and low, ‘suspended’ the proposed increase in data tariff to be imposed on Nigerian internet users. The Senate ordered a halt to the plan while the consumers as represented by the National Association of Telecoms Consumers of Nigeria (NATCOMS) condemned it as ‘counter-productive’ and an obstacle to internet penetration in the country. The NCC might even have been in breach of sections of its enabling law by what seemed an insensitive plan.

Following what the NCC said was an ‘industry stakeholders’ meeting that was held some time ago where service providers were asked to comment on the interim price floor for ‘data services,’ the regulatory body, in a November 1 letter to the telecommunications companies, ordered them to raise data charges to an ‘interim price floor’ of 9 kobo per megabyte ‘in order to promote a level playing field for all operators in the industry, encourage small operators and new entrants to acquire market share and operate profitably.’

The justification for the increase that would have taken off three weeks ago was hardly reasonable. Firstly, why, in a democratic system of government and a liberalised economy would a regulator impose a cost on goods and services, contrary to the spirit and practice of competition that, by all common sense, encourage improvements and lower costs in the overall interest of consumers? In any case, it is simple economics that the cheaper the service, the more likely its patronage with the benefit of, more, albeit marginal, profit to the service provider. It is reported that at present, tariffs range from 21 kobo to 94 kobo. If the increased tariff were allowed, “somebody who is paying N5 will pay 90kand somebody who is paying 45k will pay 90k…’ This means that the small – and poorer consumers of data – including enterprising, technologically savvy youths who are into applications development – would pay double while the big – and richer consumers would pay a fraction of their previous charge. That would be an anti-people policy; it does not make sense at all.

Secondly, technological innovations continue to facilitate better services at cheaper rates and smaller start-up companies leverage on this fact to create a niche in, as well as incrementally expand their market shares. New entrants into any business must have defined their niche and honed the unique selling proposition of its product well enough to capture the appropriate share of the market.

The NCC intervention for the reasons it gave will neither promote industry competition, nor encourage greater and wider use of ICT in the country, nor even encourage an improvement in the quality of telecoms service. It should not be the business of an industry regulator to seek to protect new entrants with a price control mechanism. One would have expected the NCC to encourage the smaller operators and the new entrants to exploit such cost-saving measures as technology in order to offer cheaper tariff and enlarge patronage.

In a world and an age propelled by information technology, in a global economy increasingly based on knowledge and complex thinking, the steady and cheap availability of data is, like electricity, a sine qua non for any society to survive at all, not to talk of compete. Indeed, other nations encourage measures that reduce the cost of and in turn broaden citizens’ access to data. The benefits are immense and obvious. Therefore, for the NCC to seek to make data costly and thereby discourage access to global body of knowledge – in order to encourage the business of a small segment of society – is wrong.

NCC has behaved as if it is created to serve the interest of the telecoms. And it does not make sense to begin to compare Nigerian prices of products and services with those in other African countries. The fundamental factors that influence pricing are different in several important respects.

NCC seems to have lost sight of the objectives for which it was set up which basically is to facilitate a holistic and efficient communications sector that serves the best interests of Nigeria and its people. Section 1(c) of its enabling law charges it to ‘promote the provision of modern, universal, efficient, reliable, affordable, and easily accessible communication services and the widest range thereof throughout Nigeria.’ Section 1 (d)-(g) requires the regulator to encourage the introduction of innovative services and practices in the industry in accordance with international best practices; it should ensure fair competition; encourage the development of a communications manufacturing and supply sector within the Nigerian economy; the NCC should protect the rights and interest of service providers and consumers within Nigeria. And Section 4 (b) charges the NCC on ‘the protection and promotion of the interests of consumers against unfair practices, including, but not limited to matters relating to tariffs and charges…’ While 4(d) demands of the NCC the promotion of fair competition in the industry. A unilateral imposition of tariff violates virtually all of these provisions and puts the NCC in breach of its own law.

Nigerian regulators are generally not known to do their job firmly according to the objectives of their enabling laws. So often, the very purpose for which these bodies were established, which is the interest of Nigeria and its people, is subordinated to other interests.

NCC must not fall into that mould.