NCC Explains The Real Reason Behind The New Data Charges

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”, according to an internal working document as received by TheCable.

In a letter to the big operators, the commission had directed that the floor plan for data should be 0.90k/MB effective December 1, 2016 “pending the finalisation of the study on the determination of cost-based pricing for retail broadband and data services in Nigeria”.

As virtually all the big operators were already charging below the new floor rate, the directive meant an automatic increase in charges for data services.

However, small operators and new entrants in the data market, such as Spectranet, Ntel and Smile, are still allowed to charge below 0.90k/MB.

NCC defines “small operator” as one that has less than 7.5% market share and “new entrant” as one that has operated for less than three years.

The regulator is of the opinion that without a price floor, the dominant operators can engage in predatory pricing to drive down other operators, meaning the industry could be moving towards a monopoly.

DATA CHARGES BEFORE NOW FOR BIG OPERATORS

1. MTN.      = 45 kobo
2. Glo         = 21 kobo
3. Etisalat = 94 kobo
4. Airtel     =  52 kobo

DATA CHARGES BEFORE NOW FOR SMALL OPERATORS/NEW ENTRANT

1.  Smile         = 84 kobo
2. Spectranet = 58 kobo
3. Natcom      = 72 kobo

A senior NCC official told said that CDMA operators – such as Multilinks and Starcomms – were muscled out of the by the Big Four because of their market power.

“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,” the official said.

Globacom currently charges 21k/MB apparently because of the economies of scale advantage, compared to Smile which charges 84k/MB, or four times Glo’s rate, in order to break even.

Under the new tariff regime, Smile can continue to charge 84k but Glo will have to move up to 90k/MB – a 328% increase.

Culled from TheCable