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 service providers”, this is according to
an internal working document.
In a letter to the big operators, the NCC 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.
NCC believes that without a price floor, the big operators can engage
in predatory pricing to drive down other operators, meaning the
industry could be moving towards a monopoly.
DATA CHARGES BEFORE NOW:
Big operators average price/MB
MTN 45 kobo
Glo 21 kobo
Etisalat 94 kobo
Airtel 52 kobo
= Average 53 kobo
Small operators/new entrants average price/MB
Spectranet 58 kobo
Natcom 72 kobo
= Average 71 kobo
A senior NCC official told The Cable that CDMA operators – such as
Multilinks and Starcomms – were muscled out of the data business 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.
EXAMPLE: 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.