Data price reduction call: How not to solve regulatory issues with emotional decisions

By Prince Osuagwu, Hitech Editor

The Minister of Communications and Digital Economy, Dr Isa Ali Ibrahim Pantami, last week directed the Nigerian Communications Commission, NCC to review downwards, the price of data within five days.

Pantami issued the directive during the presentation of the new board member and Executive Commissioner, Mr Adeleke Adewolu. Adewolu replaced Mr Sunday Dare who left the board to become the sports minister. After the presentation, the minister pointed to numerous complaints from Nigerians regarding illegal data deduction and high price of data, adding that he had personally experienced illegal data deduction.

Apparently irked by that frustration, the minister fired a directive: “I am urging the management of NCC to work towards reducing the price of data in Nigeria. It is too costly and people are complaining every day. If you go to other countries, even countries that are not as largely populated as Nigeria, data prices are not this high. I am also a victim of some of the infractions that are so common in the industry. You load your data but you barely use 20 per cent of it and the entire data is wiped off.

“Please go, sit down and review that issue. It is very important and I want to get your feedback with that report in the next five working days with the decision on it because the complaint from Nigerians is beyond what I can handle as it is today, people are complaining,” This is not the first time Pantami had issued such emotional directives.

When MTN Nigeria recently issued a notice to  subscribers of its intention to commence charges on Unstructured Supplementary Service Data,USSD, on mobile transfers, the minister also  directed the NCC to ask MTN to suspend the decision, because he was not earlier informed. Ordinarily, these are the kinds of intervention governments should make to deliver dividends of democracy to its citizens.

On that basis, the tendency to applaud Pantami’s calls could be high. However, interventions made outside the law or in total disregard of constitutional provisions and set rules, have very grave implications. Some,can erode  progress.

The telecom industry has been one of the strongest pillars of the Nigeria’s economic growth since about two decades the sector was liberalised. It has attracted Foreign Direct Investment, FDI investment of well over $70 billion and contributed more than 10.11 percent to the country’s Gross Domestic Product, GDP in 2019, surpassing oil, the mainstay of the economy.

These achievements were made possible by adhering to standard principles and international best practices. It is apparently why Pantami’s recent calls appear to have irked Information and Communications Technology, ICT professionals. They are described as not only arbitrary but also capable of negating the standard principles upon which the sector has blossomed so far.

The NCC is guided by the Nigerian Communications Act 2003, and Section 108 of the Act forbids the commission to prescribe retail prices by fiat. It only allows it to ensure that tariffs reflect costs of providing services. It means that the NCC is mandated to carry out cost-based studies from time to time and as may be deemed fit to fix price floors and /or ceilings. That way, no operator can under-price to kill competition.

Section 108 of the Act, sub section(1) says: “ Holders of individual licences shall not impose any tariff or charges for the provision of any service until the Commission has approved such tariff rates and charges except as otherwise provided in this Part.

(2) The licensees specified in subsection (1) of this section shall provide services at the tariff rates and charges so approved by the Commission and shall not depart therefrom without prior written approval by the Commission of such proposed changes in tariff rates and charges.

(3) All licensees mentioned in subsection (1) of this section shall publish the tariff rates charged to customers for their respective services and the modifications thereto as may be approved from time to time by the Commission.

(4) The tariff rates established by a licensee mentioned in subsection (1) of this section shall be on the basis of such principles as the Commission may from time to time stipulate in its guidelines or regulation including the following—

(a) tariff rates shall be fair and, for similarly situated persons not discriminatory ;

(b) tariff rates shall be cost-oriented and, in general, cross-subsidies shall be eliminated ;

(c) tariff rates shall not contain discounts that unreasonably prejudice the competitive opportunities of other providers ;

(d) tariff rates shall be structured and levels set to attract investments into the communications industry ; and

(e) tariff rates shall take account of the regulations and recommendations of the international organisations of which Nigeria is a member.”

Meanwhile, a survey recently released by Cable.co.uk indicated that 10 of the top 50 cheapest countries in the world for mobile data were in Sub-Saharan Africa.

Also, seven North African countries included in the report appeared higher up in the table than majority of countries in Sub-Saharan Africa. The report included data from 6,313 mobile data plans in 230 countries around the world between October 23 and November 28, 2018.

It however shows Nigeria is not the worst hit, contrary to the allegation of the minister. In Africa, countries in the south pay the most for 1GB of data. South Africa pays $7.19,  Namibia, $11.2  and Botswana, $14.12. The survey says that in West Africa, Nigeria’s 1GB of data is obtained at $3.22, while in Chad it is $23. 3.

In Cameroon, it goes for $1.71. It goes for  $4.1 in Ivory Cost and $2.92 in Niger. In the North African region, Algeria’s 1GB goes for $5.15; Egypt’s IGB goes for $1.49, Libya’s $4.87and in Sudan it cost $0.6.

The survey said India had the world’s cheapest data plan at $0.10 for 1GB, adding that in the US, it goes for $12.37 and $6.66 in UK. The global average of 1GB data plan is $8.53.

Zimbabwe pays the highest price in the world at $75.20 per 1GB, followed closely by Equatorial Guinea at $65.83, Saint Helena at $55.47 and Djibouti at $37.92.

Interestingly, the Executive Vice Chairman of the NCC, Prof Umar Danbatta, at an event in Lagos recently, revealed that even before the minister’s call, the commission had consulted the KPMG to carry out cost based study to determine if the price of data consumers currently enjoy will be increased or reduced in line with the reality of the markets.

Industry experts believe that if this is already ongoing, the five day ultimatum by the minister will only spell doom because the outcome will not be supported by scientific data. They warned the commission to be careful how it panders to the whims of the ministry before it loses its independence status.

Chairman of the Association of Licensed Operators in Nigeria, ALTON, umbrella body of the telcos, Engr Gbenga Adebayo has expressed shock at the call, describing it as unrealisable.

Adebayo said that the call amounts to forcing the commission to destroy the gains it made over the years that has made the sector a beautiful bride constantly toasted by global investors.

According to him, such arbitrary price reduction calls are unfair to operators who suffer consistent cases of vandalism, multiple taxation and regulations, indiscriminate shutdown of their base stations, high cost of RoW, among other things hindering service delivery. A telecom lawyer, Mr Chukwu Umeoha, berated Pantami’s call, saying it was borne of little knowledge of the oversight functions of a minister to an independent agency.

He advised ministers to arm themselves with the Public Service rules to avoid abuse of their oversight functions.

Hi-Tech’s check, actually reveals that Pantami’s calls appear to run fowl of the federal government’s gazetted Public Service Rules. Chapter 16 of the rule, section 1, describes a  Parastatal as  “a government-owned organization established by statute to render specified services(s) to the public. It is structured and operates according to the instrument establishing it and also comes under the policy directives of Government.

Section 2 (a) says “Statutory Boards/ Councils shall set operational and administrative policies in accordance with government policy directives and supervises the implementation of such policies. The administrative policies may include those relating to appointment, promotion and discipline of staff.

(b) A Board shall not be involved directly in the day-to-day management of a Parastatal.

(c) A Minister exercises control of Parastatals at policy level through the Board of the Parastatal only.

This means that even the monthly briefing which the NCC has subjected itself to, at the ministry is a distraction that will not benefit the industry.

Vanguard