The suspended NCC data tariff hike

LESS than 20 hours to the commencement of its proposed new data tariff on the GSM network, the National Communications Commission (NCC) announced the suspension of the plan. According to the plan, the tariff hike was to commence on December 1, 2016. The proposed hike in data tariff was to protect small companies and new entrants into the market by setting a floor price for data services. No provider was expected to sell below the floor price.

A small operator is one that has less than 7.5 per cent market share and a new entrant is an operator that has operated for less than three years in the market. The ultimate goal was to prevent oligopolistic or monopolistic behaviour on the part of the big players. Currently, some service providers charge as low as N0.24 per kilobyte. The average rate was N0.55 per kilobyte, but the NCC proposed to set a floor price of N0.90 per kilobyte. If it had gone ahead with the proposed tariff hike, a data plan of N1,000 for 1.5 Gigabytes would have been increased to N3,000 at N1,000 per 500 megabyte.

We think that the fear of oligopolistic practices was unfounded. It would be recalled that GSM entered the Nigerian market with Econet’s roll out in 2001. Since then, the dominant players have never been accused of price fixing. Indeed, competition among the service providers has been very keen. This is why the market continues to witness a downward movement in the call and data rates. That sector has indeed been so successful that it has become the poster boy of the government in terms of competitiveness.

The downward trend in the pricing shows that customers are responding to it. Given the situation, any interference by the government would be most unproductive. In a competitive economy, new entrants must seek to disrupt the existing technology with innovation if they are to break into the market, rather than seek the protection of government. They are not running a charity. The government’s move to hike data price would have amounted to stultifying innovation by protecting inefficiency and laziness.

In addition, protecting the companies would have been at the expense of Nigerians. It would have amounted to robbing peter to pay Paul. It would not only have made the cost of data exorbitant, it would have amounted to further squeezing an already impoverished citizenry, no thanks to the ongoing recession. The Internet and the social media have become part of Nigerian lives and shrinking access by high data tariff would reduce participation. Some have even argued that it is part of a long-time, callous plan to raise tax through GSM lines in the spirited effort to increase government revenue.

Still, the internet is not about social media alone. It is central to many businesses, including start-ups and small to medium scale industries. It is central to research and higher education in the contemporary world. Raising the cost of data would raise the cost of production that is already challenging enough for start-ups and established companies, given the energy situation in the country. Electricity is still in short supply and the prices of petrol and diesel have made independent power generation at the firm level a tall order. The implications for internet-based concerns are very grave.

That the data tariff hike plan has been suspended does not absolve those who proposed the plan of culpability in thoughtlessness. Indeed, the gaffe is so serious that it shows lack of understanding of the nature and environment of the GSM economy. They should resign. Indeed, it is not just sufficient to suspend the plan; it should be discarded altogether. The move is insensitive to the plight of Nigerians. It is not just based on poor reasoning, it is an embarrassment to the government, and those who contrived the plan have put the government into disrepute. Given the unreason behind the proposal, not a few think that there is a touch of self-interest in it.