Consumer, NCC Hold Solution to ‘Crying’ Telcos, Bleeding Industry– Allen

The consumer and the Nigerian Communications Commission (NCC) are the principal actors that can save telecom operators and the industry from imminent collapse.

This is the view of Tom Allen, a highly experienced telecom consultant and currently, managing partner at CUBE Consulting (CubeUltra Ltd.).

Allen who was reacting to the recent news story where Broadband companies- Tier II telecoms operators, literally, cried to the Nigerian Communications Commission (NCC), urging the regulator to save the industry from imminent collapse, said unequivocally that the regulators have no power to determine quality of service versus price.

Recall the Broadband companies- Tier II telecoms operators recently sent a Save-Our-Soul message, and warned that factors crippling their operations could also derail the National Broadband Plan (NBP) of the federal government, if not addressed.

The operators made this known when they visited Prof. Umar Garba Danbatta, executive vice chairman of the NCC, in Abuja recently.

The operators therefore asked the NCC, to take immediate and decisive steps to avert the looming threat of strangulation, which its members currently face.

In the delegation were, Mr. Godfrey Efeurhobo, managing director, Smile Communications; David Venn,  managing director, Spectranet; Mr. Osondu Nwokoro, director Regulatory and External Affairs of nTel;  and  Mr. Chuma Okoye, chief commercial officer, Swift Networks,.

They warned the regulator of a looming systemic industry failure which will have catastrophic effect on the socio-economic development of the country.

According to them, the industry is in a situation where all operators are finding it difficult to justify the required investment case for additional capital expenditure (capex) for network capacity expansion to improve quality of service to customers.

They further noted that the network operating expenditure (opex) of operations have sky rocketed in the last 15 months by over 85 per cent with revenues remaining relatively flat.  Most operators, they lamented, are currently struggling with meeting obligations to their suppliers particularly network vendors, tower firms and servicing loan obligations.

This worrisome trend, they noted, extend to even some of the Tier I Operators.

According to them, a storm is raging in the industry which if unchecked, will result in the collapse of key players in the industry.

“This is because the domino effect of bankruptcy of any of the Tier I or Tier II Operators on the entire ecosystem particularly, banking, employment, corporate and SMEs constitutes a major threat to the Economic Recovery and Growth Plan (ERGP) of the current administration. Such bankruptcy and consequent collapse will also substantially lessen competition with its attendant deleterious impact on consumer choice and attainment of the Broadband objectives of the country,” they warned in a statement yesterday.

But commenting on the matter via LinkedIn, Allen, who played key role as Group COO of Smile Communications for four years, said, “The answer is in the hands of the consumer, buy cheap and get nasty service or pay the fair price for a quality service. “Unfortunately regulators have no power to determine quality of service versus price. The major MNOs have put the price of data at less than the cost to produce it in order to protect their voice subscriber numbers. It is only the consumer that can force a change by paying a sensible price for a good service, rather than a cheap price for an almost unusable service”.

He warned that Nigeria will continue to fall behind in terms of the application of data related services as the operators are all unable to generate revenues to invest in the data services which the country desperately needs and deserves.

“The answer is in the hands of the consumer, buy cheap and get nasty service or pay the fair price for a quality service. The regulator could put in a floor data price that protects the small players, but that was tried and reversed within a day. If it was me..... I would merge some of the smaller players to give them a spectrum holding that would match or exceed the big MNOs, reduce costs through a larger scale, finally find the price somewhere between the current MNOs and the good service providers.

“That price being one that will tip most of the subscribers stuck with the MNOs poor service over to a great service provider.... instead of divide and conquer, combine and conquer”.

Also, the CEOs stated that the NCC’s declaration of 2017 as the Year of the Telecoms Consumer can be derailed by failure of operators to deliver on the expected quality of service particularly on data throughput and experience due to the weak investment case to support additional capex as a result of deteriorating market conditions.