Operators claim data price floor will check anti-competition

The telecommunications operators, under the aegis of Association of Licensed Telecommunications Companies of Nigeria (ALTON), have called for the implementation of the suspended data price floor.

Speaking at a Breakfast meeting with journalists in Lagos, the Chairman of ALTON, Gbenga Adeayo, said the price floor is a partial price control measure, which is the lower limit price to check unhealthy practices, but foster healthy competition among players.

Adebayo, an engineer noted that the price floor is a means of controlling anti-competitive behaviours by operators considered to have attained the dominant status in the industry.

He explained that earlier, there was a limit to how low Internet Service Providers (ISPs) could charge for data services, saying the regulator in October 2015, approved the removal of data price floor, giving ISPs the opportunity to drop their data prices as low as they can in order to survive.

“However, before then, National Communications Commission (NCC), had set the data price floor limit as a way of ensuring smaller ISPs and ‘upcoming’ telcos had the chance to compete favourably with the bigger, and already established ones. The ISPs could compete for customers with lower prices, but this has now hurt the industry very badly. The smaller operators are finding it difficult in a recessed economy to survive due to the ‘heavy weight’ of the bigger players, who are able to cross-subsidise the array of services they offer,” he said.

According to Adebayo, available statistics has shown that bigger players lost some market share when the price floor was set, and smaller operators got some space in the market place. As a result, the ISPs have been badly hurt by the non-determination of a price floor, as they are left to compete at prices below their costs.

“Demand for data have increased in recent times following a rapid growth of mobile phone subscribers in the country as there has been an influx of smartphones and other data consuming gadgets into the Nigerian market in recent years,” Adebayo noted.

The ALTON boss revealed that the social media Over the Top (OTT) like the Facebook, Whatapp, Instagram, among others have taken over the voice revenues, stressing that the activities of the social media operators have greatly eroded the revenue of the legacy operators.

According to him, the industry is going through a lot of challenges, “it is now inevitable for the NCC to review the Data Price Floor that was suspended. This is necessary to save the industry. Mobile data revenue is growing while the growth of mobile voice revenue is declining.

“More subscribers are dropping the voice call to embrace the over-the-top (OTT) operations, which are offered free of charge on data services. Since the OTT operators do not have any regulatory obligations, no taxes and no operational levy, there is the need to revisit the suspended Data Floor Price in order to save the telecom industry.”

Already, some Tier II operators are of the opinion that without data price floor, they may die.The Chief Executive Officer (CEO) of nTel, Kamar Abass, said: “Increasing the data price floor ensures that operators can provide better services. It also ensures that they can get adequate returns on investments.”

To the CEO OF Spectranet, David Venn, “we need sanity and a data floor because there is a lot of anti-competitive behaviour in the market.” He added that “Quality of Service  has fallen in the past six months because of Nigeria’s huge data hunger,” a state of affairs that has seen Tier II telecom companies offering unlimited packages in a bid to stay ahead of competition.

Providing another perspective to the issue at a Broadband forum in Lagos, the Director, Strategy and Performance Management at Airtel, a Tier I player, Tenu Awoonor, said there is a misconception which must be corrected.  He said: “reinstating the data price floor will not necessarily make broadband more expensive, rather it will help with penetration. We need better pricing to help ensure that operators stay afloat.”

The President, Association of Telecommunication Companies of Nigeria (ATCON), Olushola Teniola, also harped on the data price floor, saying: “Without a review of the data services provisioning market structure, there is a serious risk of market failure with the resultant ripple effect. Current evidence suggests that with inflation at 17 per cent, input costs at a per unit per Mb level, retail data prices available in the market are unsustainable even with economies of scale, hence a serious distortion exists that needs immediate regulatory intervention.”

Also commenting on the issue, Academic Director, Lagos Business School, Dr. Olayinka David-West, noted that for operators to continue to deliver value and ensure optimal Quality of Service to customers, there must be the right balance of “affordability and value. Else, they won’t be able to provide the right services in a broadband world.”