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If the current suspension of the review of Data Price Floor (DPF) by the regulator, the Nigerian Communications Commission (NCC) continues, chances are that more Internet Service Providers (ISPs) will shut down and go out of business.
Investigations by Business Hilights Economic Research Team (BHERT) show that all the ISPs in Nigeria are operating below profit line and may close down if the floorlessness of the data price remains as it.
Technically, Data Floor Plan Price is a partial price control measure, which is the lower limit price to check unhealthy but foster healthy competition among players.
The price floor is a means of controlling anti-competitive behaviors by operators considered to have attained the dominant status in the industry.
In data market, there is a limit to how low ISPs could charge for data services; the regulator in October 2015, approved the removal of data floor price, giving internet service providers opportunity to drop their data prices as low as they can in order to survive.
However, efforts of the regulator to reintroduce the DPF earlier in the year was said to be strongly opposed by one of the leading GSM data masters (name with held) and some Nigerians which spurred the National Assembly to compel the NCC to halt the review.
In an interview with the managing director of the leading ISP, Spectranet 4G LTE, Mr. David Venn, he said leaving data floor unregulated is another form of frustrating ease of doing business but it is discouraging investments and network expansion.
According to him, “lack of data floor is killing healthy competition in the data segment of the industry”.
“Now, when there is no competition, there will be poor investments to deepen network and this will lead to poor Quality of Service (QoS),” Venn said.
As it is, industry experts say it will be very inimical on the side of the NCC to raise issues of recalling the position of the chairman of the Association of Licensed Telecommunication Companies of Nigeria (ALTON), Engineer Gbena Adebayo during a media interaction with journalists in Lagos, he called on the National Assembly to urgently rethink its position on the telecommunications Data Floor Plan.
He said “There is urgent need for the National Assembly to allow the NCC and other stakeholders to immediately revisit the suspended Data Floor Price in other to drive competition which will trigger off massive investments in network and QoS”.
In his further arguments, Adebayo averred that “It is an issue we have treated extensively, but the way it’s perceived by the public is as though the operators have come to take something away from them. Reality of the matter is there is a cost and there is price. Cost is how much it takes to provide the service”.
“Price is the cost plus your margin. It is a basic economics. What it means some of the service offerings today, providers are selling at cost and in some cases, below cost. When I came on this role, we had 35 members; some of you know them- Reltel, Intercellular, Mobitel, VGComs, Starcomms, Multilinks, MonaCom and the rest of them. Before then, these people have done other businesses and were successful, but when they came to the telecoms, due to the circumstances, so to say, they didn’t succeed. Where are they today”. So, we have today, the big and mega big. It’s only the small provider that changes the rules of the game”.
According to him, “If we do not allow the small providers to survive, competition will not thrive. Let me remind us where we are coming from: the bigger operator told us per second billing was not possible and we believed it. But while a smaller operators in those days, came and said ‘from today I will start with per second billing. it changed the rules of the game”.
“Imagine if a situation never allowed a small player to compete, what would have happened? Recently, I was asking, where are the ISPs? Do we still have ISPs? The story is a very simple one: you approach NCC and apply for licence as internet service provider. They give you this license; you approach the operator to buy bandwidth to resell and redistribute to your customers.
“The day your service is commissioned on SAT, the Big operator comes with the mega package; half your package. How will you survive? So, we are saying, unless we are allowed for a minimum level of price, it will be very difficult for the small players to survive. Someone said to me: if you people think you cannot make profit and then you want to increase rate, you people should leave that business.
“Our answer: no problem! It is a simple story. But when the small players leave, the big player will still decide on what they want to do. The truth: the small player will leave in the first day; if the circumstances don’t change, the big players will leave the second day. It is only a matter of time,” ALTON boss, Adebayo summed.
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