Contrary to the general perception that the Nigerian Communications Commission (NCC) gave network providers the directive to increase data tariffs, the executive Vice Chairman of the Commission, Professor Umar Danbatta yesterday said the commission never gave such a directive.
According to him, their directive to telecommunication companies was on price floor aimed at stabilising the sector, not about data price hike.
The commission, which made the disclosure at an investigative hearing organised by the Senate Committee on Communications at the National Assembly, Abuja, said all it did was to establish a price floor for all telecoms operators for the purpose of price regulation.
Professor Dambatta, further explained that the price floor was first introduced in 2014 to serve as a check against “anti-competitive practices particularly by dominant operators”.
He said NCC in 2014 imposed a price floor of N3.11 per megabyte for data services, but eventually lifted the price floor in October 2015 following the request by service providers to waive the price floor for data services “to enable a roll-out of infrastructure and growth of the data market segment”.
He added that in accordance with its mandate to promote fair competition in the telecommunications industry and avert monopoly by major operators, it took a decision to re-introduce the price floor with effect from December 1, 2016 following the commission’s discovery that “some service providers were actually pricing their services below cost, a situation which could spell doom for the industry”.
Thus, disclosing that the rumour that NCC gave the directive for the increase in data tariffs was borne out of pure misunderstanding of its intentions, explaining that it only introduced a price floor of N0.90 kobo per megabyte which was considerably lower than the price floor of N3.11 kobo introduced in 2014.
Dambatta further explained that the need to re-introduce the price floor was meant to avert a price war between major telecoms players and smaller ones, adding that the telecoms sector contributes N1.4 trillion to the economy every quarter.