Telecoms tariff increments, regulatory affairs and consumer protection

*The Nigerian Communications Commission restates the telecoms sector regulator remains more committed to its central mandate of ensuring subscribers get greater value for money spent on telecoms products and services in the West African country

Gbenga Kayode | ConsumerConnect

The prompt regulatory intervention of the Nigerian Communications Commission (NCC) in the recent proposed tariff hikes by the telecoms operators may have doused the growing anxiety being expressed by telecoms consumers across the country.

It is recalled the telecoms firms under the Association of Licensed Telecoms Operators of Nigeria (ALTON) had announced its proposal to jack up tariffs of telecoms products and services by 40 percent in the economy.

Telecoms consumers

Though the professional group’s approach to effecting the suggested price hikes in telecoms products and services by communicating same to the Nigerian Communications Commission (NCC) has been considered appropriate by some, the move apparently, has created much anxiety among millions of telecoms consumers.

Some analysts have described the move as “really ridiculous” while others argued that Nigerians as of now pay one of the highest telecoms tariffs in Africa, and that “these companies (Telcos) make high profits in Nigeria than in any other African country.”

ALTON’s justifications for proposed tariff price hikes

Earlier in the Association’s official letter stating its concerns and addressed to the Nigerian Communications Commission (NCC), ALTON had attributed the projected telecoms price hike regime to the current inflationary trend and attendant rising costs of running a typical business in the country.

The Telcos, among others, had requested the telecoms sector regulator for upward reviews in Voice Calls, Short Message Services (SMS) and Data Costs.

Specifically, the leading industry Association proposed an upward review of the price of calls to increase from N6.4 to N8.95, while the price cap of SMS would increase from N4 to N5.61.

Expatiating further on the The group said this had increased energy costs, increasing their operating expenses by 35 percent.

ALTON also contended that the introduction of the recent Excise Duty of five percent on telecoms services had further increased the burden of multiple taxes and levies on the industry in Nigeria.

It stated in its letter to NCC: “As the Commission may be aware, the power sector under the supervision of its Nigerian Electricity Regulatory Commission in November 2020 undertook a review of electricity tariffs to cater for the economic headwinds reported above.

“In view of the foregoing, ALTON considers it expedient for the telecommunications sector to undergo periodic cost adjustments through the Commission’s intervention to minimise the impact of the challenging economic issues faced by our members. Details are hereunder:

“Upward review of the price determination for voice and data and SMS.

“Given the state of the economy and the circa 40 percent increase in the cost of doing business, we wish to request an interim administrative review of the mobile (voice) termination rate for voice; administrative data floor price, and cost of SMS as reflected in extant instruments.”

The Association further said: “With respect to Voice and SMS cost, ALTON respectfully requests the Commission to consider a mark-up approach to address the upward price adjustment desirable for the industry.

“We have enclosed herein and marked ‘Annexure 1’our proposal in that regard.

“For data services, we wish to request that the Commission implements the recommendations in the August 2020 KPMG report on the determination of cost-based pricing for wholesale and retail broadband service in Nigeria. Excerpts from the report are attached and marked ‘Annexure 2’ to provide a further illustration.

“In implementing the said recommendations, however, we recommend that the 40 percent increase in the cost of doing business be factored in to arrive at a cost price per GB in view of the current economic situation.”

Activating Executive Order on telecoms infrastructure as CNIs in Nigeria

The Association, among other demands, as well petitioned the regulatory Commission to explore other penalties for telecoms operators other than “punitive monetary sanctions”, extend payment timeline of relevant regulatory levies and fees, prevail on the Federal Government to sign the Executive Order declaring telecoms infrastructure as a critical national infrastructure to mitigate cost spent replacing damaged and stolen infrastructure, among others.

ALTON noted that the Mobile (Voice) Termination Rate (MTR) for voice, administrative data floor price and cost of SMS as reflected in extant instruments should also be increased.

It also wrote: “For large operators, a new interim MTR of N5.46 from N3.90 reflecting 40 percent increase in the cost of business.

“For small operators, the new interim MTR of N6.58 from N4.70 reflects a 40 percent increase in the cost of business.”

Telecoms tariff increments long overdue, says ATCON

Aligning its position with ALTON’s, the Association of Telecommunications Companies of Nigeria (ATCON) has said the former’s latest proposal to increase tariffs for telecoms products and services is justified.

Mr. Ajibola Olude, Executive of ATCON, while featuring on a Channels TV programme recently, stated there is a need for telecoms tariff increases in view of the rising costs of diesel, Right of Way (RoW), and security of telecoms infrastructure.

Olude also stressed the tariff increments are the way to go for the Telcos, especially in relation to the recent introduction of excise duty of five percent on telecoms services, and increased burden of multiple taxes and levies on the telecoms industry.

Telecoms firms may price themselves out of consumers’ reach ─Nigerians, CSOs

Besides the NCC’s position on the matter, and sequel to ALTON’s latest announcement of its proposal to raise costs of telecoms products and services, several Nigerians and Civil Society Organisations (CSOs) have complained that millions of consumers may soon be priced out of the telecoms products and services market by the Telcos.

Expressing their concern over the telecoms operators’ proposal to increase costs, the CSOs appealed for Federal Government’s intervention on stated moves by the Association to increase tariffs on Voice Calls, SMS, and Data by 40 percent respectively.

Ariyo-Dare Atoye, Executive Director, Adopt a Goal Initiative (AGI), sought a close scrutiny of the ALTON proposal, urging the Federal Government to intervene before several Nigerian subscribers would be cut off the communication space with telecoms products and services priced beyond their reach.

Atoye reportedly said: “While the demands of the telecoms must be subjected to a thorough evaluation before any approval is made, it would, however, be difficult to dismiss their concerns because they could force them to downsize.

The AGI Executive Director, however, sympathised with ALTON as he stated “it must also be noted that just as the cost of operating businesses in Nigeria has become prohibitive, the government’s policy on NIN has also significantly affected revenue generation for these firms, as thousands of subscribers are barred.”

‘Nigerians pay one of the highest telecoms tariffs in Africa’: Group

In his reaction to ALTON’s proposal for 40 percent telecoms tariff hikes in the country, Ene Obi, Country Director of ActionAid Nigeria, said currently, Nigerian consumers pay one of the highest telecoms tariffs on the African continent.

Obi stated the telecoms operators make high profits in Nigeria than in any other African country, according to report.

The ActionAid Nigeria Chief also remarked: “I think the Nigerian system is just looking at class, for you to even think you want to increase the rate of the telecoms by 40 percent. Are we in this world together?

“It is really ridiculous because Nigerians pay one of the highest rates in the continent of Africa.”

He further noted: “It is easier to call within Nigeria than to call within here and other countries than the countries of origin where these companies are coming from.

“And in this ridiculous environment, they are declaring their surplus now and then and you want to make money from the poor people, and people are trying to make ends meet by communicating with each other.”

Obi as well stated: “The world has gone hitech and instead of making it cheaper they wan to make it more expensive.

“In other parts of Africa if you load N3000 they give you another extra 120 minutes of time call, and you use your money and the data is on and those who don’t have jobs could survive with that.

“Here we are having where nobody checks on how things are expensive in Nigeria, and you want to get things more expensive and inflation in Nigeria and making more money from voice calls, SMS, and data. They need to look at the plight of Nigerians, they need to be checked.

“Let the Ministry of Communications (and Digital Economy) give us the analysis on why these companies want to increase their rates.”

According to him, “we need to ask for accountability, performance and why they want to increase tariffs.”

Protection of consumers’ rights and interest in telecoms ecosystem

As the foremost telecoms sector regulator in the West African country, and against the backdrop of the telecoms companies’ (Telcos) recent agitation to effect tariff hikes, the NCC had stated that it keenly monitored the deluge of the media reportage of the Mobile Network Operators’ (MNOs) decision to increase tariffs of telecoms services.

The regulator also noted that it actually observed subsequent fears being expressed by telecoms subscribers on the ALTON agitation to jack up prices across Nigeria.

Though the country’s telecoms sector regulatory Commission has duly acknowledged the demand being made by MNOs under the auspices of ALTON in view of the operators’ stated factors for the move, the NCC in a recent statement noted that in line with international best practice and established regulatory procedures, the Commission ensures its regulatory activities are guided by “regular cost-based and empirical studies to determine appropriate cost (upper and floor price)” within which service providers are allowed to charge their subscribers for services delivered.

Dr. Ikechukwu Adinde, Director of Public Affairs (DPA) at NCC, in dousing the growing anxiety among telecoms consumers had explained the “Commission ensures that any cost determined, as an outcome of such transparent studies is fair enough as to enhance healthy competition among operators, provide wider choices for the subscribers as well as ensure sustainability of the Nigerian telecoms industry.”

In restating the centrality of its mandate to protect Nigerian consumers, the regulator also said: “For the avoidance of any doubt, and contrary to MNOs’ agitation to increase tariffs for voice and Short Messaging Services (SMS) by a certain percentage, the Commission wishes to categorically inform telecoms subscribers and allay the fears of Nigerians that no tariff increase will be effected by the operators without due regulatory approval by the Commission.”

The regulator also validated its position on the issue when it re-emphasised that “tariff regulations and determinations are made by the Commission in line with the provisions of Sections 4, 90 and 92 of the Nigerian Communications Act (NCA) 2003.”

According to NCC, the regulatory instrument entrusts the Commission with the protection and promotion of telecoms consumers’ interest against “unfair practices, including but not limited to matters relating to tariffs and charges.”

As the Nigerian telecoms industry, the NCC further said after all “the current tariff regime being administered by the service providers is a product of NCC’s determination both for voice and SMS in the past.”

The Commission restated whereas there could be justifiable reasons for MNOs’ demand for tariff increase in the economy, “they are not allowed to do such either individually or collectively without recourse to NCC, following the outcome of a cost study. This is not the case for now.”

In line with the expressed commitment of the telecoms regulator to ensure consumer welfare, the Commission stated it is focused on engendering healthy competition among the licensees towards making the cost of services become more affordable for Nigerian subscribers.

“The regulator is even more committed to this cause to ensure subscribers get greater value for money spent on telecoms services,” the NCC assured consumers.