Nigeria: Of Data Pricing and Production Costs in Telecoms

14 November 2019

Data pricing and cost of production are two conflicting issues in telecommunications service offerings that need to be addressed through collaboration between the federal government and the telecoms regulator.

The dust raised as a result of the recent directive given by the Minister of Communications and Digital Economy, Dr. Isa Ibrahim Pantami that the telecoms regulator, the Nigerian Communications Commission (NCC), should within a space of five days, reduce the cost of data, is yet to settle. Although NCC has begun implementation of the directive, telecoms operators, under the aegis of the Association of Licensed Telecoms Operators of Nigeria (ALTON), are kicking against the directive. They explaining that such directive is not only harsh and inimical to telecoms growth, but also impossible to implement, except the minister is able to address the differences between data reduction and cost of production in the telecoms industry.

Minister's directive

Pantami had on November 5, 2019, directed the NCC to resolve the issues of illegal data deduction and review downwards, the price of data in the country within five days.

The minister gave the directive during the presentation of Barrister Adeleke Morofolu Adewolu, the new Board Member/Executive Commissioner by the Chairman of the Board of Commission at NCC, Senator Olabiyi Durojaiye at the Ministry's headquarters in Abuja. The minister pointed out that there were numerous complaints from Nigerians regarding illegal data deduction and high price of data, adding that he had personally experienced illegal data deduction. He charged NCC to facilitate the penetration and expansion of 3G and 4G and urged the Commission to design a target on how mobile operators can expand penetration of 3G and 4G in the country.

Pantami said: "The main agenda of NCC is to protect the interest of customers and our priority is to protect Nigerians. It is our collective responsibility to make sure we give 100 per cent support to Mr. President to deliver his key mandate."

The minister noted that the mandate of the Ministry has been expanded towards improving the economy of the country through ICT, hence, there is a need to work together for the progress of Nigeria.

Telcos kick

Following the directive of the minister, telecoms operators (Telcos) have said such directive would not be feasible because of the high cost of production and service delivery in the telecoms sector. Speaking on the directive, the Chairman of ALTON, Gbenga Adebayo, said enforcing reduction in data cost without addressing the challenges of doing telecoms business in Nigeria, would make the directive practically unrealistic. According to him, cost of production and service offerings in the telecoms sector is on the high side and the current data price reflects current cost of production. He advised that the minister must first reduce the cost of production before enforcing implementation of reduction of cost of data.

"The few remaining telecoms operators are only struggling to survive because of harsh business environment, which in my view, must be addressed first before conceiving the idea of data reduction," Adebayo said.

He spoke about the challenges of licensed Infrastructure Companies (InfraCos), who were supposed to provide telecoms infrastructure for broadband penetration, and explained that majority of the InfraCos were to rollout their services because of the harsh business environment.

Adebayo wondered how the directive would work without a good framework that will save the huge investments made by the telecom operators.

"I don't know how the government is going to achieve data reduction in five days without putting into consideration the high cost of operating our businesses and the very harsh operating environment we are in. Why are they trying to muzzle the NCC and stampede it into doing what is unrealistic? Do they know that operators don't just sit down and fix tariffs. They, with NCC, rely on so many things before coming up with tariffs. We do not know under what circumstances the directive was given, and to be honest with you, we don't know how that is going to be achieved. We have said it several times that when policies interfere with commercial matters, the industry will be jeopardised. Government needs to be careful not to whittle down the powers of the regulator. To arrive at data prices NCC normally conducts survey and research, and after all that, it will benchmark the country's tariffs based on what is obtained in other jurisdictions," Adebayo said.

He insisted that NCC needed autonomy to carry out its regulatory functions perfectly, according to the telecoms Act 2003. "Compromising the autonomy of the regulator will jeopardise the efforts of the regulator as well as the gains of the telecoms industry since its inception," Adebayo said.

Compliance

In spite of the agitation from the telecoms operators, THISDAY gathered that the NCC has commenced implementation of the minister's directive.

According to the minister's spokesperson, Mrs. Uwa Suleiman, "NCC has risen up to the task and efforts are in top gear to carry out the minister's directives."

According to Suleiman, "In a letter from the Executive Vice Chairman (EVC), received by the office of the Honourable Minister on the 8th of November 2019, the telecommunications regulator, intimated the minister of the strategies been taken to stem the tide of short changing subscribers by Mobile Network Operators (MNOs). In its earlier attempts to tackle the challenges, the Commission informed the Honourable Minister that it had issued a directive to all MNOs on the attendant penalties associated with automatic renewal and forceful subscription to data and value added services. The penalties include considerable financial sanctions on the erring operator."

The letter stated that, in response to the directive of the Minister, the Commission reviewed the Nigerian Communications Act of 2003 on its rule-making powers and process. The Commission is in the process of carrying out a study on the end-of-session notification for data services and depending on the outcome, may issue a direction in accordance with the Act.

Suleiman further said the Commission also notified the minister of their regulation of the initial directive to include refunds to the consumer in established cases of unauthorised subscription.

She said NCC also assured the minister that it had been working assiduously round the clock to enforce the federal government's directives and has requested the good graces of the minister to extend the deadline for the directive, which expired 8th November 2019, to enable it properly re-strategise and fully implement long term solutions as directed, to the challenges.

Suleiman, however, said the minister graciously granted an extension with the understanding that the commission would resolve these issues within the shortest time possible.

Data pricing

NCC had on November 1, 2016, written to Mobile Network Operators on the determination of an interim price floor for data services after the stakeholders' consultative meeting of October 19, 2016.

According to NCC, the decision to have a price floor was primarily to promote a level playing field for all operators in the industry, encourage small operators and new entrants, and not necessarily to hike price.

The data price floor is a regulatory safeguard put in place by the telecommunications regulator to check anti-competitive practices by dominant operators.

The price floor in 2014 was N3.11k/MB but was removed in 2015, and further reintroduced at N0.53k/MB. But even at that, operators were charging different rates. While Etisalat (now 9mobile) offered N0.94k/MB, Airtel offered N0.52k/MB, MTN offered N0.45k/MB and Globacom offered N0.21k/MB.

The smaller operators/ new entrants also charged at different rates. Smile Communications charged N0.84k/MB, Spectranet charged N0.58k/MB and NATCOMS, which operates as ntel, charged N0.72k/MB.

Based on the differentials in data price floor among telecoms service providers, NCC decided to introduce a new price floor of N0.90k/MB, but subscribers opposed to it for the fear that it would increase cost of data services.

The differentials in the cost of data by different operators, did not go down well with subscribers who protested the high cost of data as at 2016. And till date, subscribers still complain about high cost of data, hence their decision to commend the minister for the directive to reduce cost of data across all networks.

Based on several agitations and opposition that greeted the directive to introduce price floor for data segment of the telecommunications sector, the NCC, on November 30, 2016, suspended directive, which was supposed to take effect from December 1, 2016.

According to NCC, the decision to suspend the directive was taken after due consultation with industry stakeholders and the general complaints by consumers across the country.

"The commission weighed all of this and consequently asked all operators to maintain the status quo until the conclusion of study to determine retail prices for broadband and data services in Nigeria," NCC said.

But seven months after suspension of the proposed data price floor by the NCC, industry stakeholders called on the telecoms industry regulator to revisit it for the benefit of operators and the subscribers. The stakeholders said the need to revisit the suspended price floor became necessary in order to maintain business continuity in the telecoms sector.

The operators were of the view that upward review of data price floor would enhance quality service delivery.

Regulatory moves

In all of these, the NCC, as a regulator, had long been making efforts to stabilise the telecoms industry to an appreciable level. Danbatta, in a recent presentation of the final review report of the complaints categories and service level agreement, to the telecoms industry operators, said: "The protection information, education and empowerment of consumers is one of the central elements of the 8-Point Agenda or vision strategy my leadership adopted to guide our regulatory activities when I assumed office as the EVC of the NCC in August 2015. Other elements of the vision strategy include the promotion of competition and inclusive growth; ensuring regulatory excellence and operational efficiency; the optimisation of the usage and benefits of spectrum; as well as the promotion of ICT innovation and investment opportunities. All of these elements serve one principal purpose, and that is to ensure that all elements of the service ecosystem work seamlessly to ensure that consumers get best-in-class service at the most affordable price points without being unduly taken advantage of."

"Over the years, the commission has demonstrated utmost fidelity to the principles encapsulated in that vision statement, which partly gave rise to the need for the review of the existing complaints categories and the Service Level Agreements (SLAs) which were agreed and set in 2008 and had become increasingly inadequate to serve the need of the industry," Danbatta said, adding that as a regulator, the commission promises not to relent in enforcing compliance to every agreement.

The Executive Commissioner, Stakeholder Management at NCC, Adeleke Adewolu, who also spoke at the presentation of the report of the reversed consumer complaints categories and service level agreements, said there was need as a regulator to put customer satisfaction at the very heart of service delivery by all licensees of the commission.

According to him, "whilst we know that service failures can arise despite best efforts and intentions, the Commission will not compromise its commitment to always ensure that consumer's rights are upheld at all times. As such, customers must be promptly informed of service-impacting failures, faults must be resolved with the least possible delay, and customers should be appropriately compensated for service failures and delays where applicable."

"One of the ways by which these objectives can be achieved is to have a set of comprehensive list of complaints categories, clear fault resolution times and mandatory compensation regimes which are binding on service providers. The revised consumers complaint categories and consequent SLAs which are being presented, provide such a framework," Adewolu said.

On her part, the Director, Consumer Affairs Bureau at NCC, Mrs. Felicia Onwuegbuchulam, said: "The Consumer Affairs Bureau (CAB) of the NCC is saddled with the responsibility of managing Consumer Complaints by providing access to dissatisfied telecom consumers across the Country. This is carried out through channels like NCC 622 Toll Free Contact Centre, NCC Consumer Portal, and the NCC Online Channels.

According to her, the department also receives written complaints from telecom consumers across the country and the complaints are channeled to the respective service providers for efficient resolution.

"In 2008, the commission, in a bid to strengthen its regulatory function of protecting and empowering Nigerian telecom consumers, set up the Second Level Support (SLS) to give dissatisfied consumers an avenue to seek redress; in so doing came up with Complaint Categories and SLAs, which was jointly agreed upon by both the service providers and the commission," Onwuegbuchulam said.

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