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NCC plans fresh scientific study on data pricing, explains tariff hike confusion

The leadership of Nigerian Communications Commission (NCC) has given more insights to what actually transpired on the botched data tariff changes.

Explaining the development at a Senate Committee hearing Tuesday, the Executive Vice Chairman, Prof. Umar Danbatta said the choice of words and language in the announcement by some networks on the increase may have been wrongly presented to mean another thing, saying “NCC only introduced a price floor of N0.90 kobo per megabyte which was considerably lower than the price floor of N3.11 kobo introduced in 2014.

He noted that the need to re-introduce the price floor was meant to avert a price war between major telecoms players and smaller ones, adding that the telecoms sector contributes N1.4 trillion to the economy every quarter.

NCC disclosed further that what it did was to promote fair competition in the telecommunications industry and avert monopoly by major operators, stressing that “some service providers were actually pricing their services below cost, a situation which could spell doom for the industry”.

Professor Dambatta recalled that the price floor was first introduced in 2014 to serve as a check against “anti-competitive practices particularly by dominant operators,” explaining that the price floor is a minimum price placed on a good, commodity or service to prevent dominant operators from engaging in “predatory pricing to drive down prices and drive out other operators from the market”.

It would be recalled that NCC in 2014 imposed a price floor of N3.11 per megabyte for data services, but eventually lifted the price floor in October 2015 following the request by service providers to waive the price floor for data services “to enable a roll-out of infrastructure and growth of the data market segment”.

MTN in its narrative argued before the Senate that the text messages it sent were meant to affect only its subscribers who patronise its products at a rate lower than the 0.90 kobo price floor. The MTN’s messages to such subscribers had stated that the price of data would go up in line with NCC directive on December 1.

However, the angry reaction which trailed NCC’s announcement of a new price floor by the general public was triggered by the text messages sent by MTN to its subscribers that data prices would go up in compliance with the NCC directive.

The CEO of MTN, Ferdi Moolman, however, denied deliberately causing shocks in the market, saying telecoms is an industry that is technologically-driven it needs to apply new technologies, a trend he said was affected by Nigeria’s rising inflation rate.

While arguing that a situation where the price floor has now been suspended might not be the best for the industry, the Chief Executive Officer of Etisalat, Mathew Willsher, said the lifting of the price floor in 2015 lead to data tariffs drop by 80 per cent.

Airtel, represented by its Director of Legal Services, Sola Adeyemi, said that telecoms operators would abide by the suspension of the price floor, saying operators would adjust prices to fit the price floor fixed by the NCC.

In his ruling, Vice chairman of the committee and Senator representing Lagos West, Chief Adeola Olamilekan, who chaired the meeting, picked holes on poor consultations and explanations on the side of the regulator, NCC.

In his remarks, the Minister of Communication, Adebayo Shittu called on the lawmakers to give NCC the necessary support to drive the telecoms sector of Nigeria to success.

He called on lawmakers to assist NCC in the area of holding the balance between the interest of operators and the interest of the Nigerian masses so that we can be seen to be providing the best, saying “we should encourage NCC, we should also encourage operators and we should also encourage Nigerians to appreciate the reality on ground. My information is that in the West Africa region our tariff is the lowest…