Nigerians pay more for data services as hardship hits operators

Nigeria’s 100 million Internet users will begin to pay more for data services tomorrow as continuing economic slowdown slashes telecoms sector growth to an all-time low.

The Nigerian Communications Commission (NCC), the government agency that regulates telecommunication services, last month directed service providers to increase data subscription by almost 100 per cent beginning from December 1, 2016. A data plan of N1,000 for 1.5 gigabytes will now cost N3,000 at N1,000 per 500 megabytes.

Increase in cost of data services from MTN, Airtel, Etisalat Globacom and other fringe service providers by as much as 100 per cent will cut off a large chunk of youths and other low-income adults from the social media and undermine Nigeria’s two-year plan for 30-per cent increase in broadband penetration. It could also worsen the country’s security challenges, according to Mr. Deolu Ogunbanjo, President of the National Association of Telecoms Subscribers of Nigeria (NATCOMS), the umbrella body for telecoms service users, who together with the Trade Union Congress (TUC) rejected the plan.

Service providers, especially the MTN Nigeria, have in text messages to subscribers confirmed readiness to implement the directive of the NCC. “Dear customer, please be informed that from 1st of December, some MTN data tariffs will be increased to reflect the new rates set by the NCC for operators. Thank you,” MTN informed its customers.

But telecoms services consumers and Nigerian workers yesterday said the plan would not only impoverish the people but also smacks of undue censorship of freedom of expression through the “backdoor.”

“It could actually be a plot by the Federal Government ‎to reduce access to the social media through the back door; government has been complaining of late about abuse that has become the order of the day on the social media platform,” Ogunbanjo told The Guardian.

Ogunbanjo said subscribers would completely reject the proposed increase, especially because it is coming at a time Nigeria is targeting a 30 per cent increase in broadband penetration by 2018.

The TUC also warned against what it said was an “on-going conspiracy” between the Federal Government through the NCC and some major telecommunication companies, especially MTN, to increase data rates. The organised labour union, which described the act as startling decried the extent government and its capitalist’s cronies would go to frustrate the lives of Nigerians.

President of the TUC, Comrade Bobboi Kaigama, said it was awful that Federal Government could make such a move “because data is one of the cheapest ways to empower the teaming youths.  This move if allowed would make it unaffordable.

“Any call for increase in anything for now is most unreasonable, uncalled for and a calculated attempt to record more suicide cases and insecurity in our already tension-soaked country,” the workers union said.

Explaining the rationale behind NCC’s directive on increase in data plan, Director of Spectrum Administration, Austine Nwaulune, at a post-event interview with The Guardian in Lagos, yesterday, said the move was because of the current economic situation in the country.

The National Bureau of Statistics’ (NBS’) data on Gross Domestic Product (GDP) — one of the primary indicators used to gauge the health of the economy — for the third quarter ending September 2016 showed a sharp drop in the sector’s contribution to growth. The GDP represents the total dollar value of all goods and services produced over a specific time period.

The sector grew by 1.11 per cent in real terms, year on year in the Q3 of 2016 from the recorded rate in the period of 2015, which was 4.16 per cent point lower and also lower by 0.25 per cent points when compared with the rate recorded in the second quarter of 2016.

NBS numbers showed that from the N1.59 trillion the sector added to growth (GDP) in second quarter (Q2), the figure dropped to N1.39trillion, representing a decrease of about 1.8 per cent. The data agency said the figures reflect the signs of the times in the country.

The NCC claimed that the slash in the sector’s contribution to the GDP could have come from the inability of service providers to have access to foreign exchange, as well as from the prevailing uncertainty in the economy. “Investors are becoming skeptical about the situation with the Nigerian economy,” he said.

“The contribution is also going down because voice revenue has dropped significantly; subscribers now use the Over The Top (OTT) platforms including Skype, Whatsapp, Facebook, among others to make cheaper and even free calls. So all these summed up are seriously limiting contribution of the sector to GDP.”

Corroborating the claims by the NBS and the NCC sources, President, of the Association of Telecommunications Companies of Nigeria (ATCON), Olushola Teniola, said members of the association were seriously finding it difficult to get access to foreign exchange, stressing that so many equipment that would encourage faster roll-out of services could not be purchased because, “the operators are not having access to forex. The economy is seriously challenged. We are in deep recession and I pray we don’t enter an era of depression,” he said.

“This is for economic reasons. What you don’t want is to kill an industry. People are talking about erosion on Return of Investment; erosion of Average Revenue Per User, what you don’t want is to put a car on the road and fail to make provision to replace it.

“What that means is that if the car stops working, you stop being a car owner. But if you put a car on the road and you know that it will have a problem; once you begin to prevent such, it means you will be a car owner for a long time.”

In a letter to the mobile operators dated November 1, NCC said the interim floor price for data services was 0.90k/MB for the five big operators.

Already, MTN, Glo, Etisalat and Airtel had alerted their customers on the impending increase in data tariff  by December 1, 2016 and the issue is generating public outcry.

Another source at the NCC, in response to an enquiry by The Guardian, explained that the directive to increase tariffs was given because the big telecoms companies were charging below cost price.

“If the operators are providing services below the cost price, you can’t get quality service because they are just doing it in an anti-competitive manner;, that is what is called controlled-competition,” he said.

According to the senior management personnel of the NCC: “Initially, there was floor which was N3.90k per kilobyte, but after a while, that floor was removed and some networks were charging below the cost price. This means that smaller networks will not be able to compete in the market and the natural thing for them is to fold up.”

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