The Nigerian Communications Commission (NCC) approved a new “floor plan”, or minimum pricing, for data services by mobile operators “to address market distortions, unhealthy price wars and value erosion that could threaten the going concern of the service providers”, reports The Cable.
According to the Commission, the increase is pending the “pending the finalisation of the study on the determination of cost-based pricing for retail broadband and data services in Nigeria”. The NCC thus took the action as they believed that the main telecom operators MTN, Globacom, Aitel and Etisalat were practically making it impossible for new entrants and small operators to penetrate the market.
Globacom will be the worst hit as it has to mandate a 328% price increase, which subscribers are likely to frown at.
“At the rate they are crashing data tariffs, there is every chance that they will soon kill all the small operators and new entrants. Part of the functions and duties of NCC is to check monopolistic and oligopolistic behaviours in the telecom market,” an NCC senior official was quoted as saying.
The five reasons given by the NCC are as follows
- Some service providers were actually pricing their services below cost, a situation which could spell doom for the industry.
- Dominant Operators in the wholesale leased line market, who also operate in the retail market embarked on massive predatory pricing, a conduct capable of substantially lessening competition.
- The removal of floor price for data resulted in eroding value in the market.
- The need to safeguard investment and ensure growth, development and sustainability of the telecommunications industry.
- It is important to maintain the integrity of the network as operators lack capacity to accommodate the volume of transaction on their network.
The Cable reports that a stakeholders’ meeting with service providers was held in October to discuss “anti-competitive practices” in the data market and to get their comments and inputs on what the price floor should be, with emphasis on a balance between affordability and healthy competition.