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Data Floor Plan: ALTON Cries Out “ISPs Selling Below Cost”

peter oluka

Association of Licensed Telecommunication Companies of Nigeria (ALTON) has called on the National Assembly to urgently review the position on the telecommunications Data Floor Plan. 

To save the ‘smaller’ internet service providers (ISPs) from imminent shutdown, the Association lamented that most of the ISPs are operating under harsh economic conditions, and forced to sell data to subscribers at ‘unprofitable costs’.

According to the Association, there is urgent need for the National Assembly to allow the Nigerian Communications Commission (NCC) and other stakeholders to immediately revisit the suspended Data Floor Price.

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.

However,  there is 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. 

But, this was vehemently opposed by Nigerians, which led to the National Assembly ordering the NCC to back off the process.

Speaking at a recent ICT Journalists’ organised breakfast discussion, Engineer Gbenga Adebayo, president of ATCON said, “It is an issue we have treated extensively, but the way it’s perceived by the public is as though the operators have come to take something away from them. Reality of the matter is there is a cost and there is price. Cost is how much it takes to provide the service.

“Price is the cost plus your margin. It is a basic economics. What it means some of the service offerings today, providers are selling at cost and in some cases, below cost. When I came on this role, we had 35 members; some of you know them- Reltel, Intercellular, Mobitel, VGComs, Starcomms, Multilinks, MonaCom and the rest of them. Before then, these people have done other businesses and were successful, but when they came to the telecoms, due to the circumstances, so to say, they didn’t succeed. Where are they today. So, we have today, the big and mega big. It’s only the small provider that changes the rules of the game”.

He said that the present data floor plan gives room for the emergence of monopoly in the data segment of the market.

“If we do not allow the small providers to survive, competition will not thrive. Let me remind us where we are coming from: the bigger operator told us per second billing was not possible and we believed it. But while a smaller operators in those days, came and said ‘from today I will start with per second billing. it changed the rules of the game.

“Imagine if a situation never allowed a small player to compete, what would have happened? Recently, I was asking, where are the ISPs? Do we still have ISPs? The story is a very simple one: you approach NCC and apply for licence as internet service provider. They give you this license; you approach the operator to buy bandwidth to resell and redistribute to your customers.

“The day your service is commissioned on SAT, the Big operator comes with the mega package; half your package. How will you survive. So, we are saying, unless we are allowed for a minimum level of price, it will be very difficult for the small players to survive. Someone said to me: if you people think you cannot make profit and then you want to increase rate, you people should leave that business.

“Our answer: no problem! It is a simple story. But when the small players leave, the big player will still decide on what they want to do. The truth: the small player will leave in the first day; if the circumstances don’t change, the big players will leave the second day. It is only a matter of time.

“Some stories I read few days ago, I read similar stories 10 years ago. We remember the story of late Laba Joseph. What led to his death? Bank debt! In those days, it was for a small player. The society didn’t attach much meanings to it; today, it has become the topic of the day, because it happens to them, they are one of the mega players”, he said.