Data Hike: Here is why NCC asked big operators to raise data tariffs

The Nigerian Communications Commission (NCC) has directed mobile telephone operators in the country to jerk up data tariffs with effect from December 1.

In a letter to the big operators, NCC said: “The Commission has carefully reviewed all submissions and hereby make the following Determinations: the interim price floor for Data Services is No.90k/MB for big operators.

This rate will subsist pending the finalisation of the study on the Determination of Cost Based Pricing for Retail Broadband and Data Services in Nigeria; in order to promote a level playing field for all operators in the industry, encourage small operators and new entrant to acquire market share and operate profitably.

Small operators and new entrants are hereby exempted from price floor for data services; for avoidance of doubt, a small operator is one that has less than 7.5% of market share and a new entrant is an operator that has operated less than three years in the market.”

NCC is of the opinion that without a price floor, the dominant operators can engage in predatory pricing to drive down other operators, meaning the industry could be moving towards a monopoly.

A senior NCC official told TheCable that CDMA operators – such as Multilinks and Starcomms – were muscled out of the by the Big Four because of their market power.

“At the rate they are crashing data tariffs, there is every chance that they will soon kill all the small operators and new entrants. Part of the functions and duties of NCC is to check monopolistic and oligopolistic behaviours in the telecom market,” the official said.

Globacom currently charges 21k/MB apparently because of the economies of scale advantage, compared to Smile which charges 84k/MB, in order to break even.

Under the new tariff regime, Smile can continue to charge 84k but Glo will have to move up to 90k/MB – a 328% increase.