Real Reasons Why Data Price Hike Is Happening And The New Proposed Prices

In a move that has shocked most Nigerians and is still being hotly debated, the NCC has approved a new price floor for data which is 90kobo/MB. Under the new price regimes, 1.5GB which previously sold for 1000Naira may now be sold for 3000Naira. The general populace is not happy with it, mostly because of the progress that has been recorded in the technology space as a result of the price crash of data and the present situation of the economy.

Nevertheless, these are the official reasons given for the price floor, according to the NCC via a document obtained by The Cable:

  1. Providers were actually pricing their services below cost, a situation which could spell doom for the industry.
  2. Dominant Operators in the wholesale leased line market, who also operate in the retail market embarked on massive predatory pricing, a conduct capable of substantially lessening competition.
  3. The removal of floor price for data resulted in eroding value in the market.
  4. The need to safeguard investment and ensure growth, development and sustainability of the telecoms industry.
  5. It is important to maintain the integrity of the network as operators lack capacity to accommodate the volume of transaction.

This is quite understandable as we have seen from past and current experiences that while this may not be a good move at this moment, given the current hardship being felt all over the country, as a regulator, NCC is doing what is right for the sector. Let’s touch a few examples.

Globacom which currently has the lowest price per MB (21kobo/MB) is actually the worst network in the country right now because a lot of people migrated to the network as a result of the low cost but they can’t sustain the load and people are complaining about the quality of the data despite the price. The removal of the price floor has worked for them because their subscriber base has consistently been on the increase since November last year.

In the not too far distant past, a few CDMA networks had to close shop because they were not breaking even despite their constant efforts to stay relevant. Even Visafone had to eventually sell to MTN but before that, they had to introduce a 1000Naira for 10TB (yes, Terabyte) plan for people to consider using them. Starcomms, Multilinks and the likes could simply not cope in the face of the continuous onslaught by the big four as MTN, Airtel, Etisalat and Glo are referred to.

This move by NCC is targeted at the big four and that is very obvious because every other telco with less than 7.5% of the total subscribers are exempted and with GSM subscribers taking about 99% of the entire telephony base, it doesn’t take a genius to figure this out. Etisalat which is the least of them has about 15% of the entire subscriber base and may not be too affected as they never really crashed their prices and still charged about 94kobo/MB.

So we understand but we also have to ask that is there no smarter way to ensure that the smaller players are not crushed by the big players without pissing off the entire Nigerian data populace because this is definitely not a popular move, especially at a time when the Nigerian government is not exactly scoring high in popular ratings. Meanwhile, there is the other rumour that new entrant, Ntel, somehow influenced this move. There is no empirical evidence to prove this but it is not impossible either, until the very recent past, Ntel belonged to the government.

This is not conclusive and we are still monitoring how things play out but we are sure this is not the end of the entire data drama. Did we mention that while the buck stops at the President’s table, this is not his fault and actually better for the good of the telcos generally and data prices in the long term? The more telcos that are thriving, the better for everyone.

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