Telecommunications operators have urged Nigerian Communications Commission (NCC) to as a matter of urgency revisit the suspended data floor price in order to save them from distress.
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.
Engr. Gbenga Adebayo, chairman Association of Licensed Telecommunications Operators of Nigeria (ALTON) stated this at breakfast meeting organized by the Nigeria Information Technology Reporters' Association (NITRA), in Lagos, at the weekend
He explained that floor 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. Earlier, there was 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.”
He added: “before then, NCC had set the data floor price limit as a way of ensuring smaller ISPs and ‘upcoming’ telcos had the chance to compete with the bigger, already established ones. The ISPs could compete for customers with low prices. This has now come to hurt the industry very badly, as the smaller operators are finding difficult in a recessed economy to survive due to the ‘heavy weight of the bigger players who are able to cross-subsidize the array of services they offer.”
According to him, ‘statistics available has shown that bigger players lost some market share when the floor price was set and smaller operators got some space in the market place.
The Internet service providers have been badly hurt by none determination of a floor price as they are left to compete at prices below their costs.’
He noted that demand for data have increased in recent times following a rapid growth of mobile phone subscribers in the country as there has been an influx of smartphones and other data consuming gadgets into the Nigerian market in recent years.
“The social media Over the Top (OTT) like the Facebook, Whatapp, Instagram, etc have taken over the voice revenues. The activities of the social media operators have greatly eroded the revenue of the legacy operators. The industry is going through a lot of challenges; it is now inevitable for the NCC to review the Data Floor Price that was suspended. This is necessary to save the industry. Mobile data revenue is growing while the growth of mobile voice revenue is declining.”
“More subscribers are dropping the voice call to embrace the OTT operations which are offered free of charge on data services. Since the OTT operators do not have any regulatory obligations, no taxes and no operational levy, there is the need to revisit the suspended Data Floor Price in order to save the telecom industry.”
Adebayo also decried the challenge operators are facing in purchasing foreign exchange to fulfil their contractual obligations to equipment suppliers and foreign vendors.
“This situation is adversely impacting our network operations and also some recent developments in the industry have alluded very clearly to the risks at hand. The prevailing scarcity of FX has occasioned a situation where the Banks are unable to obtain FX for an upward period of six months.”