Without data price floor Tier 2 operators will die
The immediate reinstatement of the data floor price has returned to the front burner of discussions within the telecom industry especially within the ranks of Tier II players who are defined by the Nigerian Communications Commission(NCC) as having less than 7.5% of the market share or have been in operation for less than three years.
The issue was front and center at the recently concluded BusinessDay Broadband Summit which held on Thursday June 2, 2017 at the Wheatbaker Hotel, Ikoyi.
During a panel discussion, which proceeded under the theme, “Broadband for All by 20178: Where are we?” Funke Opeke, CEO of MainOne had raised the question: “are there alternatives to raising the data price floor especially in this recession?” This was after she had already made the point that “broadband deployment is capital and infrastructure intensive. We need govt support.”
Her poser had elicited passionate responses from chief executives and top management staff of telecoms companies present.
Kamar Abass, CEO ntel, was unequivocal in his response. “Increasing the data price floor ensures that operators can provide better services. It also ensures that they can get adequate returns on investments.”
David Venn, CEO, Spectranet was no less direct “we need sanity and a data floor because there is a lot of anti-competitive behaviour in the market.” Continuing with his submission, Venn added that “Quality of Service has fallen in the past 6 months because of Nigeria’s huge data hunger,” a state of affairs that has seen Tier II telecom companies offering unlimited packages in a bid to stay ahead of competition.
Providing another perspective to the issue, Tenu Awoonor, Director Strategy and performance Management at Airtel, a Tier I player, said there is a misconception which must be corrected. According to Awoonor, “reinstating the data price floor will not necessarily make broadband more expensive, rather it will help with penetration. We need better pricing to help ensure that operators stay afloat.”
The second panel which had the theme “Impact of Broadband on the Business Community” did not waste any time in returning to the topic.
Echoing Kamar Abass’ view from the first panel discussion, Gbenga Adebayo, President of Association of Licenced Telecoms Operators (ALTON) said “we need to revisit the issue of data price floor especially now that we are talking about broadband for all because there is a minimum price a telco must charge in order to stay in business. Where are the old players & ISPs?”
Adebayo went on to add that over 21 ISPs and pioneer Tier II CDMA operators had gone out of business because of the capital-intensive nature of the industry, predatory pricing by bigger operators and lack of commensurate returns on investment.
Olushola Teniola, president of another industry advocacy group, Association of Telecommunication Companies of Nigeria (ATCON) also harped on the data price floor issue where he said that “Without a review of the data services provisioning market structure, there is a serious risk of market failure with the resultant ripple effect. Current evidence suggests that with inflation at 17%, input costs at a per unit per Mb level, that retail data prices available on the market are unsustainable even with economies of scale, hence a serious distortion exists that needs immediate regulatory intervention
Commenting further on the issue, Dr. Olayinka David-West, Academic Director at the Lagos Business School, said in order for telcos to continue to deliver value and ensure optimal Quality of Service to customers there must be the right balance of “affordability and value or else they won’t be able to provide the right services in a broadband world.”
At the end of the discussions, the overwhelming consensus was that for services to improve telcos need to stay stable and profitable and these would depend a whole lot on the reinstatement of the data price floor which would guarantee better quality of service and value for the customers.