The decision taken last week by the Nigerian Communications Commission to disapprove of the planned increase in tariffs by the country’s telecom operators is unlikely to calm the raw nerves in the sector until the operators’ demands are met. re-examined, taking into account the realities of operating environment, writes Emma Okonji
In what can be described as a landmark decision, the Nigerian Communications Commission (NCC) last week halted a planned increase in voice and short messaging (SMS) service tariffs by a certain percentage by telecom operators. (telcos) under the Association of Licensed Telecommunications Operators of Nigeria (ALTON).
In the letter informing the regulatory commission of their intention to raise tariffs, the telecom operators had cited the high cost of running their operations as the main reason for their proposed tariff hike.
However, by denying the request contained in ALTON’s letter, the NCC assured subscribers that telecommunications operators could not collectively or unilaterally increase the cost of telecommunications services without due process. The commission explained that it ensures that its regulatory activities are guided by regular empirical and cost-based studies to determine the appropriate cost (upper price and floor) in which service providers are allowed to charge their subscribers for the services provided.
Telecom industry observers felt that the NCC’s action was largely political, explaining that it would be politically suicidal for any government agency to approve a further rate increase on the eve of a general election.
They explained that given the current rise in the cost of goods and services, with consequent frustration and complaints from members of the public, the approval of a new tariff regime for telecom operators will exacerbate the economic strain. current. However, they argued that Nigerians must choose between paying for better services with a reasonable tariff hike or maintaining the status quo in the price regime with its unreliable services.
In a statement released by NCC and signed by its Director of Public Affairs, Dr. Ikechukwu Adinde, NCC allayed subscriber fears over a projected 40% rise in the cost of voice calls, text messages and data services.
According to the statement, “For the avoidance of doubt, and contrary to MNO agitation to increase voice and short message service (SMS) rates by a certain percentage, the commission wishes to emphatically inform telecom subscribers and appease Nigerians fear that no tariff increases will be made by operators without proper regulatory approval from the commission.
The statement read: “The request made by MNOs under the auspices of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), citing the high cost of running their operations as the main reason for their proposed upgrade tariff, is contained in a letter to the commission.
“Consistent with international best practice and established regulatory procedures, the NCC ensures that its regulatory activities are guided by regular empirical and cost-based studies to determine the appropriate cost (top price and floor) within which service providers services are allowed to charge their subscribers for the services. delivered.
“The commission ensures that any cost determined, as a result of such transparent studies, is fair enough to enhance healthy competition among operators, provide wider choices to subscribers and ensure the sustainability of the Nigerian telecommunications industry. “
The NCC noted that the tariff regulations and determinations were made by the commission in accordance with the provisions of Sections 4, 90 and 92 of the Nigerian Communications Act (NCA) 2003, which entrusts the commission with the protection and promotion of interests of subscribers against unfair practices, including but not limited to; questions relating to tariffs and charges.
NCC said the current tariff regime administered by service providers was the product of NCC’s determination for both voice and SMS in the past.
The planned hike of 40%
In ALTON’s letter to the NCC, the telecom operators called for an upward revision of the SMS cost from N4 to N5.61k and the voice call termination rate from N6.40k per minute to N8. 95k per minute. The operators said that the decision to increase the cost of telecommunications services had become necessary due to the high cost of providing telecommunications services over the networks, coupled with the difficult business environment and the continuous increase in the cost of various items in various sectors of the Nigerian economy.
They expressed concern over the negative impact of economic and security issues on the Nigerian telecommunications industry, which they said had negatively impacted the cost of providing telecommunications services over the networks.
Telecom operators have noted that the telecom industry is financially heavily impacted following the economic recession in Nigeria in 2020 and the effect of the ongoing crisis between Ukraine and Russia. According to the letter to the NCC, “This has resulted in increased energy costs, which constitute a significant 35% of ALTON members’ operating expenses.
“As a result, the cost of diesel needed to power towers, base stations and operator offices has increased by 233%, from N225 per liter in January 2022 to over N750 per liter in March 2022. Moreover, the introduction of new lines of tax liability via the recent 5% excise duty on telecommunications services further aggravates the burden of multiple taxes and levies on the sector.As the commission may be aware, the electricity sector, under the supervision of the Nigerian Electricity Regulatory Commission (“NERC”), in November 2020 undertook a review of electricity tariffs to address the economic headwinds flagged above.
The letter further stated: “In light of the above, ALTON considers it appropriate that the telecommunications industry undergo periodic cost adjustments through the intervention of the commission in order to minimize the impact of difficult economic problems. faced by our members.”
According to them, “Given the state of the economy and the approximately 40% increase in the cost of doing business, we wish to request an interim administrative review of the mobile termination (voice) rate for voice; Administrative Data Floor price and SMS cost as reflected in existing instruments With respect to the cost of voice and SMS, ALTON respectfully requests that the commission consider a mark-up approach to address the adjustment to the desirable price increase for the industry.
For data services, they asked the commission to implement the recommendations of the August 2020 KPMG report on determining cost-based pricing for wholesale and retail broadband services in Nigeria.
They also called for the suspension of punitive monetary penalties; extension of the deadline for payment of relevant regulatory levies/fees in accordance with the mandate of the commission by at least three months from the date of execution stipulated.
They also want the commission to prevail over the federal government to sign the executive order declaring telecommunications infrastructure as critical national infrastructure for proper infrastructure protection and to mitigate costs spent to replace damaged infrastructure/ fly and other amenities.
They want the reduction or exemption from duties, taxes and other charges and the suspension or reduction of sector fees and other levies. In order to mitigate the impact of the difficult operating environment, we respectfully request that the proposed upward revision of the Frequency Pricing Regulations and the current administrative fee regime for services such as numbering fees, type approval fees, promotion fees and tariff modification/revalidation fees be suspended, the operators said.
“We hope the above proposals will support our members and improve the difficult economic situation facing the telecommunications industry,” ALTON added.
Initial complaints from telecommunications operators
Some industry players continued to react to the telecom operator’s letter to NCC, which called for an upgrade of telecom service offerings. While some industry players justified the call for an upward revision to the cost of telecommunications services, most telecommunications subscribers who felt differently said the call for higher cost of services telecommunications will further add to the challenges of the masses who are already complaining about the high cost of data which limits their activities in cyberspace while browsing.
Industry stakeholders who substantiated the call for an upward revision said that since the rollout of telecommunications services began in 2001, the cost of telecommunications services has continued to decline without an iota of increase. , even though the cost of items in other sectors of the Nigerian economy continues to fall. increase year by year.
National Association of Telecommunications Subscribers (NATCOMS) Chairman, Chief Deolu Ogunbanjo, who spoke on behalf of telecommunications subscribers, told THISDAY there is no need to increase the cost of telecommunications telecommunications services, at a time when Nigerian subscribers are facing serious financial challenges. . “The planned increase will only be justified if the federal government solves the country’s economic problems. It will be out of order to increase the cost of telecom services as Nigerians are still grappling with increasing fuel, transport and food items in the market,” Ogunbanjo said.
Telecom subscribers who spoke to THISDAY said the NCC needs to rise to the occasion and convene an industry stakeholder meeting that will include telecom operators and their subscribers to discuss and resolve issues on field.
“Operators may be right to demand an upward revision to the cost of telecommunications services, but dialogue with telecommunications subscribers is key to resolving the problem,” said Mr Johnson Temitope, a civil servant and network subscriber MTN.