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FG seeks support for NCC, operators over data hike

By Azimazi MomohJimoh, Abuja and Adeyemi Adepetun (Lagos)
09 December 2016   |   4:17 am
CommunicationS Minister, Adebayo Shittu, has called on Nigerians to support investors in the telecommunication industry as a way of reviving the ailing economy.

Communication Minister, Adebayo Shittu, has called on Nigerians to support investors in the telecommunication industry as a way of reviving the ailing economy.

He also declared that the decision by the Nigeria Communications Commission (NCC) to re-introduce the price floor regime that was exploited by some service providers to attempt to hike the price of data was a statutory technical decision.

Shittu, who spoke at a meeting convened by the Senate adhoc committee investigating the hike in data prices, cautioned against too much interventions in the activities of the NCC.

“This is one area that I believe that we all must face the reality. The government in its wisdom and I am happy the National Assembly promulgated the National Communications Act which required that there be established an NCC. If you look at the NCC law, it is positioned to reflect experiences, expertise and all of that and I want to believe that there must not be too many interventions in the activities of the NCC.”

“I am a political office holder, I am not an expert, so I cannot venture to say whether they did wrong or right except to say that the constitution has granted them the role of a supervisor of a direct regulatory authorities particularly relating to the activities in the telecoms industry.”

Seeking support for Service Providers, Shittu said: “It is also important to say that operators in Nigeria are really operating on a very harsh situation which is not known in other advanced countries. For instance over the years, the Nigerian state has not succeeded in fixing electricity over the last 20 years. This industry relies on electricity and because Nigerians have failed in providing reliable electricity, it means they have to rely on extra budgetary provisions to provide electricity 24 hours, seven days a week with additional expenditure which does not operate in other countries which we seek to copy. This is one challenge that we must look at.”

In his submission, the Executive Vice Chairman, NCC, Umar Danmbatta, explained that the re-introduction of price floor was to prevent a situation that could produce monopoly in the telecommunication sector.

He insisted that the regulatory agency did not at any time increase or instruct telecommunication companies in the country to hike price of data for users.

He said what NCC did was to introduce an interim price floor of 90 kobo per mega byte below which telecommunication companies are not allowed to sell, a reduction from an initial price floor of N3:11k, which was suspended in 2015.

Danbatta said the absence of price floor created a “price war” in the telecommunication sector, which was becoming unhealthy for competition.

He said NCC as a regulatory agency could not just fold its arms and watch the situation degenerate and quickly had to move in with the interim price floor of 90k per data mega byte to protect the consumer and prevent the emergence of a powerful monopoly in the data sector.

The declaration came as the MTN Chief Executive Officer, Ferdi Moolman, disclosed that between 2007 and 2016, telecommunications tariffs have declined significantly by over 67 per cent in Nigeria.

Moolman identified a number of factors that impact the sector’s sustainability, including the rise of headline inflation to about 17.9 per cent; the depletion of operator revenues by unlicensed providers of “over-the-top” telecoms services. These are those who do not have any physical presence; nor pay any taxes; nor make any significant contribution to employment or other socio-economic objectives of government in Nigeria. There is also the inability of operators to access foreign exchange (this is particularly debilitating given that cost of our inputs are sourced off-shore), which has significantly increased both operating and capital expenses.

“Despite these macro-economic challenges, telecom tariffs have declined significantly (over 67 per cent between 2007 and 2016) and data prices are amongst the lowest on the continent,” he said.