ATCON Seeks Urgent Review of Data Services Market Structure

Telecom companies in Nigeria have expressed frustrations with the current data services provisioning market structure in the country.

The Companies under the auspices of Association of Telecommunication Companies of Nigeria (ATCON) are of the view that without a review of the data, there is a serious risk of market failure with the resultant ripple effect.

Mr. Olusola Teniola, president of the Association reechoed the call for the review during a presentation at public function in Lagos recently, adding that retail data prices available on the market are unsustainable.

According to him, even with the economies of scale, the inflation rate at 17% inputs costs at a per unit of megabyte level negates the current data service market structure.

Recall, the Nigerian Communications Commission (NCC) had indicated interest to implement new data service market structure in response to prayers by the industry players.

However, subscribers’ outcry led to the National Assembly intervention with a call on the NCC to indefinitely suspend the moves. 

But, Mr. Teniola warns “Current evidence suggests that with inflation at 17%, input costs at a per unit per Mb level, that retail data prices available on the market are unsustainable even with economies of scale, hence a serious distortion exists that needs immediate regulatory intervention”

Outside the inflation, he said that he counted multiple taxation as one of the challenges the telecommunications sector in Nigeria is faced with. “This is not helping the industry to grow as the sector is being taxed by all tiers of government and the direct resultant effect of this is any Profit After Tax (PAT) being eroded which does not encourage the direct investment needed in the country”.

The ATCON President also listed “Multiple forex” windows as creates uncertainty among the members.

“The cost of capital involved in setting up a full fledge telecommunication outfit is very high as the interest rates in Nigeria are typically  double digits and FDI relies on a guaranteed ROI. The current forex window mechanism structure needs to be unified with a smaller spread to encourage investors to fund capital intensive CAPEX programmes

On infrastructure sharing, he said, “There is a need for more of this to happen at both the passive and active infrastructure layer both on a fair basis policy. Already non-infrastructure players without wet capacity or national backbone fiber are competing in the same market as those that own the infrastructure (and collect rent from the non-infrastructure players) – this doesn’t encourage full network coverage obligations into un-served or under-served communities within States and/or Local Government Areas

“Others are; very low incidence of 3G coverage across all parts of Nigeria; multiple regulation on the same infrastructure; long delays in the issuance of permits for new infrastructure; prohibitive charges to secure Right of Way; Under-utilized Right of Way by way of limited access; high incidence of vandalization of ICT infrastructure and severe power challenges for communication infrastructure.

Emphasizing on the impact of Broadband in Nigeria, Mr. Teniola described broadband as an enabler of economic growth.

“In the 21st century, it is impossible to imagine our lives without the web. It has proven to be tremendously useful for all facets of life.

Regrettably, a study carried out by NCC shows, “Nigeria Broadband Penetration in 2014 was 6%, 2015 was 10% and in 2016 was less than 16%. “If we are to go by the trend we can safely conclude that the target set for 2018 may not be met”.

He lamented that the recent launch of 4G technologies by new/late entrants and the eco-system created is now threatened by aforementioned challenges and uncertainties in the economy.

However, Professor Umar Danbatta, executive vice chairman of NCC remains committed to bridging the gap among stakeholders towards solving challenges faced by either the operators of the subscriber, Mr. Tony Ojobo, director Public Affairs at NCC told Nigeria CommunicationsWeek on telephone. 

He said that the Commission understands the calls by the operators to review the data services market structure, however, “discussions are ongoing on how best solutions such that neither the operators nor the subscribers feel short-changed”.