It was recently gathered that the Nigerian Communications Commission (NCC) issued a minimum pricing for data services by big mobile operators. The commission demanded that the floor plan for data should be 0.90k/MB as from December 1st, 2016.
This resulted in an automatic increase in charges for data services, as all the big operators were already charging below the new minimum rate.
However, small operators as well as new entrants in the data market, are still allowed to charge below 0.90k/MB. NCC defines “small operator” as one with less than 7.5% market share and “new entrant” as one that has operated for less than three years. Some examples are Spectranet, Ntel and Smile.
NCC believes that the dominant operators can engage in predatory pricing to drive down other operators.
Globacom apparently charges 21k/MB 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. With the new tariff regime, Smile is permitted to carry on charging 84k/MB but Glo will have to increase their charges to 90k/MB – a 328% increase.
A senior NCC official told TheCable, “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”.
NCC, according to sources, informed operators it was necessary to create a balance by ensuring that the price floor is not too low in order to provide a cushion for smaller operators and new entrants to offer competitive products.
It also said the price floor should not be too high to ensure consumers are still able to afford data. The rate is to be fixed at a level that should encourage growth and ultimately attract new investments into the telecommunication sector.