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NCC needs to review data price floor to encourage sustainable competition—David Venn

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That the Senators had some months ago rushed in and created an intimidating scenario that unfortunately built fears on and compelled the regulator, Nigeria Communications Commission (NCC) to abandon its ongoing data price floor review, is no more news.

But stakeholders’ are worried, saying it’s time for the NCC to do the needful so as to encourage more investment in the market segment; an investment that will deepen quality of service after all.

In this exclusive interview with Business Hilights Editors, the managing director of Spectranet 4G LTE Limited, Mr. David Venn presents clinical analysis of the current challenge frustrating the needed investment and quality of the data services in Nigeria.

Excerpts;

 

Sir, during the delivery of Goodwill Messages mainly by telecoms operators at the recent launch of ‘2017: The Year of Telecoms Consumer’, in Lagos by the NCC, you were trying to explain certain issue bordering on choices for consumers in the data market, but it seemed there was not enough time to do just that. Could you give us more insights on what actually you were driving at?

 

Thank you very much.

I think it’s in the consumers’ interest to have as much choice as possible.

Then the more choices you have got, the harder operators try to maintain relevance within the regime of competition driven service delivery.

The matter is very straight; you only get choice, when there is healthy competition.

If competition is removed or suppressed, it’s very rare to get choice.

The pivot my remark was that quality is important, and quality determines competition which will drive choice. Now, it’s important to understand that from quality of service to competition and finally choice, all of them are driven by investments in networks.

I think Nigerians do appreciate quality very well. And we are all aware that quality costs money.

But if you are offering a very cheap service, you cannot expect it to be good quality.

However, if you are offering expensive service, it may not mean that its good quality.

What is very hard to achieve is good quality service at the very lowest price.

Now, if the market is not managed well, and the competition disappears, there will room for fewer choices.

Pricing is a very critical issue to operators because we cannot control it. There is the regulation matter, there is the affordability issue on the side of consumers and there is also the cost of maintenance and service delivery borne by operators. All these come together to determine price.

It is important to find out what is a cost to an operator to provide service? This is important because if we price it less than it costs us to provide, it is not sustainable as a business.

If you keep doing that, you will go out of business.

So, if the market is not properly managed, competitors will not be compelled to provide a quality service.

Operators need to be encouraged to remain in business by policies that can drive quality service driven competition.

 

Now, from your experience in the industry, can we say that there is fair competition in the data market segment?

 

My answer is no.

At the moment, the way data is priced is way below cost of delivery. But it is being cross subsidied by voice revenue for the major GSM operators who are dominating the market.

The GSM operators are charging higher prices for voice and funny enough, they are all charging the same. The secret is that they are subsidizing data to make data cheaper, thus frustrating the same market for those that are only in data segment.

So now, if you are only in data, the competition is not fair because you have only from data revenue to cover cost.

What the scenario actually means is that when you look at the data, it will not be making business sense to rollout in a new city and price your service too low beyond cost of delivery. If you do this, you will never get return on your investment. The next thing is close shop.

This is one of the key reasons that caused several telecoms companies to close businesses and park up.

The regulator must regulate the price floor in a way it will encourage more investments so that competition will be healthy. But a situation whereby some service providers are using what they are reaping from another market segment to drive cheap service delivery in data is not sustainable and will lead to poor investments in the segment.

I must say, Nigeria needs serious investments in data networks so that the target ICT driven diversification and drive to knowledge economy can work.

The whole world and major businesses are getting data-centric rather than voice, but the country is not meeting the data demand because of no encouragement on the side of operators to rollout.

The question Nigerians will ask now to understand what am saying is that where are the CDMA operators? They have all gone because they cannot cope.

At the moment, investment climate in Nigeria is not very encouraging because of forex accessibility is still limited to critical section of the IT/telecoms sector.