Data price: Why communications ministry is not winning the battle
Ono of the major issues that headlined the country’s telecommunications sector in 2019 was the directive handed Mobile Network Operators (MNOs) by the Minister of Communications and Digital Economy, Dr. Isa Pantami, for a downward review of data prices within five days.Even though, the directive was celebrated on the streets, it never went down well with operators, and other industry stakeholders. Not because the industry hated the minister, but on the basis that there are rules and regulations guiding some directives, which shouldn’t be by fiat, as demonstrated by Pantami.
The directive on data tariff review first came up on October 20, 2019, after Pantami received a progress report on the implementation of Short-Term Performance Targets set for the Nigerian Communications Commission (NCC) in Abuja.The issue reverberated two weeks after, precisely on November 5, 2019, when the NCC board presented a new member and executive commissioner at the Commission, Mr. Adeleke Moronfolu Adewolu, to the minister.Pantami, who at the presentation, expressed worries that Nigerians were paying so much for data, but without enjoying value for money spent, pointed out that there were numerous complaints regarding illegal data deduction and high price of data, just as he claimed that even as a minister, he has experienced illegal data deduction.
“I am urging the management of NCC to work towards reducing the price of data in Nigeria. It is too costly and people are complaining every day,” the minister said.“If you go to other countries, even countries that are not as largely populated as Nigeria, data prices are not this high. I am also a victim of some of the infractions that are so common in the industry. You load your data but you barely use 20 per cent of it and the entire data is wiped off.
“The last time I commented on the issue of illegal data deduction… This is one of the issues that worry me badly today. Engr. Wakil making a presentation on behalf of EVC (Executive Vice Chairman), tried to defend the operators on one hand and the Commission on the other, “but I was not fully convinced with the explanation.“Please go, sit down and review that issue. It is very important and I want to get your feedback with that report in the next five working days with the decision on it because the complaint from Nigerians is beyond what I can handle as it is today, people are complaining,” he said.
According to the minister, the main agenda of NCC is to protect the interest of customers and Nigerians. “It is our collective responsibility to make sure that we give 100 per cent support to Mr. President to deliver his key mandate.” The minister noted that the mandate of the ministry has been expanded to include improving the economy of the country through ICT.
AS stated, the minister’s directive was celebrated quite well on the streets, with many describing him as the ‘messiah’.According to subscribers, the directive was long overdue. Two subscribers, Stanley Ndubuisi and Toyin Adebisi are some of those who described the minister as a “messiah” even as they insisted that the directive was long overdue.Ndubuisi said although telecoms operators often come up with palliatives in the form of promos to reduce cost of data and increase data gigabytes for enhanced browsing experience, the rate at which such data depletes remains alarming, thereby making it impossible for subscribers to actually stay long on the Internet.
Adebisi, who patronises all the major networks in the country, commended the minister for the move, while also alleging that that Nigeria has the highest rate in data billing in the world.She called on the NCC to ensure that all telecoms operators comply with the directive by reducing the cost of data across all networks.
Cost Of Data In Other Climes
CONTRARY to Adebisi and Pantami’s claim that data prices in the country were on the high side, checks by The Guardian, however, revealed that they were not the highest on the continent. In fact, Nigeria ranks 10th country with the cheapest data price in Africa.Indeed, data pricing remains a contentious issue in Africa, where average incomes are low, and where a significant portion of paychecks are often spent on mobile communication costs, including data. A survey carried out by Research ICT Africa, a think tank policy and regulation organisation found Egypt and Tunisia leading the pack with the cheapest data cost in the region. Swaziland, now eSwatini has the most expensive mobile data prices in Africa, followed by Zimbabwe.
According to Connecting Africa, the quarterly comparison by Research ICT Africa buying one gigabyte of mobile data in eSwatini costs $21.39 in the third quarter of 2019, while one gigabyte in Zimbabwe cost $20. The next highest was the Seychelles at $17.87, followed by Guinea-Bissau at $16.95. The fifth most expensive country in gigabyte sale on the continent is Chad, and it stands at $11.87.These prices, according to the report, may seem high, but they have actually dropped a lot during the past few years. It noted that at the end of 2015, anyone who lived in the Seychelles would have paid $47.39 for one gigabyte of data, while the cost was as high as $58.29 in Guinea-Bissau in mid 2017, and a whopping $133.70 per gigabyte in South Sudan at the end of 2016.
In stark contrast, the country with the cheapest data in the third quarter of 2019 was Egypt, where one gigabyte of mobile data costs just $1.21. North African peer Tunisia is not far behind, at $1.78 per gigabyte. Mozambique is the third cheapest country to buy data, with one gigabyte costing $1.97 on the average.East Africa’s prices were amongst the cheapest on the continent with Tanzania ($2.18) and Rwanda ($2.20) in fourth and fifth place, while Kenya ($2.44) and Uganda ($2.73) were also at the lower end of the scale.
Gigabyte prices vary in West Africa with low prices holding sway in Guinea ($2.20), Nigeria ($2.78) Burundi stays at $3.02, while in Benin Republic, Niger and Senegal it stands at $3.39 for one Gbyte. But the price for one gigabyte of data is higher in countries such as Sierra Leone ($6.56) and Togo ($8.48), while some of the most expensive prices across the continent are obtained in this region. For example, it is $16.95 in Guinea-Bissau, $11.87 in Chad, and $9.78 Mauritania.
South Africa ranks 16th, out of the 45 countries researched in terms of the most expensive data. A gigabyte there goes for $6.81. However, this is a lot cheaper than it was in early 2014, when one gigabyte of data cost $14.06, more than double today’s rate.According to Research ICT Africa’s statistics, southern Africa has a mix of the cheapest prices. In Mozambique ($1.97) and Zambia ($2.70), and the most expensive being $21.39 in eSwatini and $20 in Zimbabwe. South Africa is average in the Southern African region coming in slightly cheaper than neighbours Botswana ($8.87) and Namibia ($10.89), but more expensive than Lesotho at $4.09.
Research ICT Africa’s statistics show that between the first quarter of 2015 and the first quarter of 2016, one gigabyte of data would have cost $12, but that dropped to $5 in the second quarter of 2016 and remained so till the end of 2018. In the first quarter of 2019, it jumped up to $5.75 and the following quarter, it plummeted to $0.03 per gigabyte.Nigeria’s $2.78 (over N1, 000) is in tandem with checks carried out by The Guardian, when comparing the prices.
The checks equally revealed that most MNOs have slashed their prices by half. For instance, 1.5GB, which was sold for as much as N3, 000 some six months back in the country now goes for between N1, 200 to N1, 500 depending on the network. In fact, on the MTN networks, subscribers can get 4.5GB for N2, 500; 8GB for N3, 000, depending on the plan.
Globacom has a number of data plans suited to different groups of individuals on Android, iPhone, Blackberry and other smartphones. They include N100 for 100MB, which last for two days, especially for students. It also has the same plan for daily users for one day.Apparently because of its submarine cable system huge bandwidth capacity, Glo also offers 2GB for N1, 000 for 30 days. On the network, subscribers, who are willing to pay N2, 500 can get 7.2GB data valid for 30 days.
Airtel has various plans, from daily data plan of 50MB for N100, to 16GB for N8, 000 with a validity of 30 days, among others. 9Mobile customers enjoy 10MB and 40MB for N50 and N100 respectively. The telecommunications firm, which used to be the toast of data services before it encountered some challenges about two years ago, also offers 11.5GB for N8, 000 and 15GB for N10, 000.Internet Service Providers (ISPs) are not left out. For instance, Spectranet sells eight gigabyte for N3, 000; 10GB for N3, 500; 14GB for N5, 000, and 30GB for N7, 000. Smile Communications offers 1GB for N1, 000; 2GB for N2, 000; 10GB for N9, 000 and 15GB for N10, 000. Interestingly, while the prices continue to vary, customers satisfaction is also nose diving, and this can be adequately traced to the level of satisfaction derivable from the services offerings.
Pantami’s Directive As Timely Intervention
WITHIN the context of incessant complaints by subscribers regarding frequent data depletion; inability to roll over; slow connectivity, as well as other unpleasant experiences as far as uploading and downloading are concerned, the minister’s directive, analysts insist, is appropriate and a welcome development as it would force the Commission to address consumers’ complaints about unsatisfactory services.
The Commission, which has sanctioned some operators on several occasions due to poor service delivery, recently concluded work on its revised Consumer Complaints and Service Level Agreements (CC/SLAs) to further strengthen consumer protection. The revised consumer complaint management document unveiled in Abuja, a copy of which was obtained by The Guardian, showed that there over 19, 997 complaints were lodged by subscribers against telecoms operators between March and December 2019. It, however, showed an improvement in the handling of consumer complaints by the service providers during the period compared to what was recorded during the same period in 2018.
In the 18 complaints categories listed on the document, issues related to early data depletion, inability to roll over and slow connectivity, formed part of the 19, 997 complaints made directly to the operators, or through the NCC’s second level consumer compliant toll-free number 622.While experts maintain that the call by the minister for the Commission to redouble effort in addressing issues around data depletion, data disappearance, slow connectivity and wrong data bundle billing, they, however, disagreed that a similar directive should be issued by the minister to operators or the regulator to reduce data price, without an evidence-based determination.
Can NCC Arbitrarily Determine Retail Price
PART of the directive, which asked the regulator/operators to crash data price without any recourse to legal procedure, as enshrined in the telecoms laws have been described as being antithetical to proper regulation of the industry to ensure sustained growth, a fact industry experts said the minister failed to “acknowledge to demonstrate his understanding of the sector he is supervising.”For instance, findings by The Guardian showed that the NCC has no unilateral power under Section 108-110 of the Nigerian Communications Act 2003 to prescribe retail price.
An analysis of sections of the Act showed that the NCC does not have powers to determine the price contrary to the minister’s directive, as the Commission is guided by the Act, and in line with International telecommunication Union (ITU) recommendations.However, the law allows the Commission to ensure that tariffs reflect the costs of providing services. This explains why the NCC, according to industry experts, is mandated to carry out cost-based studies from time-to-time, and as may be deemed fit to fix prices floors and /or ceilings as this also helps the regulator to ensure that no operator underprices to kill its competitors.
The Guardian reliably gathered that a cost-based study is currently ongoing to once again determine if the price of data that consumers currently pay will be increased, or decreased in line with the reality of the market (that is after operators’ cost elements have been scientifically factored into consideration). The Policy Competition and Economic Analysis Department of the NCC said it has been working with KPMG, a global consulting firm, to determine this.
While noting that the ongoing data price determination process actually started before Pantami came on board, showing the Commission has been regulating the telecoms industry for sustainability, industry experts have said that the “hasty directive by the minister is capable of distorting the on-going regulatory process of determining data pricing.”
According to a telecoms expert, Kehinde Aluko, it would, therefore, be catastrophic if the NCC embark on actions not supported by science/data. Aluko said the commission would completely lose its credibility as well if it panders to the whims of the minister, “who is yet to understand the industry and that price determination must be based on scientifically-based evidence, as recommended by the International Telecommunications Union (ITU).”Aluko said this means that if the NCC heed the minister’s call for an arbitrary reduction in the cost of data, the Commission will definitely lose in court if/when operators challenge its action, and that will be unfortunate for a regulator.
He also revealed that if the NCC lowers data prices (assuming it has the power), the big/foreign-funded operators can manage, but smaller operators will be sent to their early graves because of their inability to compete.According to him, both the NCC and operators need to aggressively inform/educate consumers on the things that their mobile phones do behind their back, which deplete their data. Aluko pointed out that there are free apps that measure data usage, which consumers can use in this era of 3G and 4G where faster data speed means more data consumption and early data depletion.
“Consumers can use this to monitor their data usage. They should also be encouraged to use them, rather than complaining about early data depletion. In the era of 3G and 4G, speed is key and more speed means more prices to the consumers, since operators spend so much to maintain their networks to be able to offer higher speed, which consumers crave for,” he stressed.
TO the Association of Licensed Telecommunications Operators of Nigeria (ALTON), telecom regulation all over the world is a process and Nigeria shouldn’t be an exception.That explains why the Chairman of ALTON, Gbenga Adebayo, noted that the minister’s directive appeared dictatorial and capable of eroding the gains of the telecom sector by scaring away investors, who have invested in the industry.
“Reduction not possible! NCC should be allowed some level of independence to do its work of regulating the telecom industry,” he said.Bewildered by the directive, Adebayo wondered how it would work, without first putting in place a good framework that would save the huge investments made by the telecom operators. “I don’t know how the government is going to achieve data reduction any time soon. Has it put into consideration the high cost of operating our businesses and the very harsh operating environment in Nigeria?
“We do not know under what circumstances the directive was given, and to be honest with you, we don’t know how that is going to be achieved. We have said it several times that when policies interfere with commercial matters, the industry will be jeopardised. Government needs to be careful in order not to whittle down the powers of the regulator. To arrive at prices, the NCC normally conducts surveys and researches, and after all that, it would benchmark the country’s tariffs based on what is obtained in other jurisdictions,” Adebayo said.He advised the minister “to stop muzzling the regulator, but allow it to do its regulatory functions, disclosing that NCC does not just sit and fix tariffs.”
From his perspective, the President, Association of Telecoms Companies of Nigeria (ATCON), Olusola Teniola, said, “we cannot expect the minister to know everything,” suggesting the need for the minister to take time to learn and understand the industry before giving directives.Teniola said that it would take some time for Pantami to be aware that, in fact, Nigeria has one of the cheapest rates of data in Africa.“So, when we work more with the minister, we can provide the evidence that seeks to ensure that the industry is regulated to achieve high quality services in a cost-effective manner.”
Balancing The Act In Telecoms Regulation
TENIOLA further explained that there are many people who still do not have access to the Internet. “We have to be cognizant of that and that requires investments. So, the balance between attracting investments has to be measured against the reality of consumers wanting very cheap prices for data. If you make the data so cheap that consumers can afford it, an example that the poor can afford it, then it will require the necessary investments for infrastructure to be able to give them the service.
“So you know what comes first, the investments or data prices reduction? But you can’t have data prices reduced without the investments. The regulator needs time to ascertain how best to do this. And we encourage the NCC to continue to regulate the industry in the manner that is a win-win for everyone,” he noted.