Small Internet service providers face extinction threat over data pricing


The absence of a minimum data price floor for Internet services in the telecommunications industry is threatening the survival of small players, IFE OGUNFUWA writes

The absence of a regulated data pricing mechanism has created an unhealthy competition among big players offering multiple retail services and small players offering only Internet services in the nation’s telecommunication industry.

Stakeholders in the sector are of the opinion that the non-existence of a data price floor has greatly affected the ability of the firms to offer competitive prices for data plans, making it unprofitable for smaller ISPs to stay in business.

The President, Association of Licensed Telecommunications Operators of Nigeria, Gbenga Adebayo, said in a conversation with our correspondent that the absence of a regulated price was putting the smaller players at risk because they were unable to offer prices beyond a minimum threshold without affecting their investments.

Out of the 182 licensed ISPs in the country, recent statistics from the Nigerian Communications Commission showed that only 87 of them were actively providing Internet services for 390,794 subscribers, excluding mobile network operators like MTN, Airtel, Glo and 9mobile, which also provide Internet services.

This shows that about 52 per cent of them are not in operation. The NCC recently complained that many of the ISPs had refused to renew their licences after the expiration of the initial five-year period and threatened to revoke the licences of 112 of them.

A price floor is a minimum price on a commodity or service that serves as a regulatory safeguard to check anti-competitive practices of dominant players in an industry.

Adebayo expressed concern that the issue of data price floor had not been revisited after an attempt to review it a year ago.

He said, “We are concerned that the smaller operators are badly affected by this non-regulation of the data floor plan. It is a big problem for the industry and demands urgent attention. Those who actually change the rules of the game are the smaller players. They can introduce flexible pricing.

“In order to protect the players who are able to change the rules of the game and challenge the big operators, there must be a minimum floor price.

“We are not saying regulators should be involved in commercial issues; we are just saying there is a minimum healthy price floor, which nobody should go below. Otherwise, it will be race to the bottom. Everyone will try to under-price the other. It favours the big players and put the small players at risk.”

According to him, the big payers are already at an advantage due to the large number of subscribers and wide coverage of their networks.

MTN Nigeria, with 49,763,224 subscribers, offers data rates at five kobo per kilobyte; Airtel at five kobo/kB to its 34,111,094 subscribers; while the 37,242,918 subscribers of Glo buy data at N1,000/Gigabyte and 9mobile’s 17,614,362 subscribers get it for N1000/gB.

However, in the area of quality of services, the President, National Association of Telecoms Subscribers, Adeolu Ogunbanjo, said the quality of services was extremely bad compared with what was being offered in other regions of the world.

He advocated a compensation plan for subscribers to cushion the effect of bad services and encouraged operators to improve on the quality of their equipment and provide more base stations.

Ogunbanjo stated, “The quality of services is bad and that is why we are saying the NCC should look at ways operators can compensate subscribers. Key Performance Indicators are done for operators every three months and if any network is found wanting, they should compensate all subscribers with free data for poor quality of service.

“Operators should improve on the quality of their equipment and more base stations should be provided.”

The NATCOMS president said before the data price floor could be reviewed, a stakeholders’ forum should be organised to examine the issues and proffer solutions to them.

According to Ogunbanjo, operators often flout the regulator’s directive, especially in the area of rolling over unused data to the following month.

“They are flouting the minister’s directive to roll over unused data to the following month, but the subscribers are given a condition in which operators roll over the data only when subscription is done within the initial 30 days. They should be looking at a situation where even if it is one week later, subscribers can still get their unused data,” he said.

When contacted, the Director, Public Affairs, NCC, Mr. Tony Ojobo, said there were no plans for a review of the data price floor.

The Executive Vice Chairman, NCC, Umar Danbatta, had said in June that a cost-based research was being conducted in order to determine the data price floor.


Please enter your comment!
Please enter your name here