Predatory Pricing Hurts Telecoms Sector, Says Dambatta

• Predatory Pricing Hurts Telecoms Sector, Says Dambatta

The Nigerian Communications Commission (NCC) has said predatory, discriminatory and excessive pricing will hamper the development of the telecoms sector. It warned that margin squeeze and price fixing among others, will also stultify growth of the telecoms sector.

Its Chief Executive Officer, Prof Umar Dambatta, who spoke at the Digital Bridge Institute (DBI) Lagos Campus, Cappa, Oshodi, at a forum organised by the commission on Cost-based Pricing for Retail Broadband and Data Services, said the Commission was happy with the phenomenal growth recorded in the industry, especially in active voice subscriptions, stressing that the next critical phase is to ensure that everyone – wherever they live and whatever their circumstances – have access to the benefits of broadband.

He said this could only happen with the pervasive deployment of broadband infrastructure and services across the country considering the potential of broadband as a key enabler of national productivity, economic growth and development, social inclusion and cultural enrichment.

“The affordability and accessibility of broadband services, however, is largely determined by the prices that are charged for those services. Therefore, ensuring that prices charged for retail broadband and data services are cost based in line with international best practices is critical to the deployment and uptake of broadband and data services in Nigeria.

“While addressing market dominance issues in the upstream, wholesale markets is one of the ways to facilitate competitive price levels in retail broadband access and service markets, it is possible that such action may not be a sufficient constraint on pricing in all segments of a retail broadband market, as such some form of ex-ante regulation of retail prices is appropriate or even necessary,” he said.

Prof Dambatta said in line with the Commission’s mandate of creating an enabling environment and promoting fair competition in the telecoms industry and in line with the strategic objectives of the National Broadband Plan (NBP), it has therefore, become imperative to develop a proper pricing structure for broadband in Nigeria.

According to him, this will not only ensure the affordability and availability of broadband, but also ensure fair competition by checking price discrimination, excessive pricing, predatory pricing, margin squeeze and price fixing among other things.

He said this has therefore, necessitated the conduct of the study on the determination of cost based pricing for retail broadband and data services in Nigeria.

The Commission, he said, carried out a thorough selection process and appointed Messrs’ KPMG to, among other things, set guidelines for the regulation of the pricing of retail broadband and data services in Nigeria and specifically determine price cap and floor where necessary; develop a regulatory pricing model based on the peculiarity of the Nigerian broadband and data services market coupled with international best practices; design the framework for collation of data that will be used for the determination; determine the appropriate cost modeling technique and methodology to be adopted and determine the appropriate pricing regulatory measures to be adopted.

Others are to determine the need for ex-ante and ex-post regulation with respect to pricing in the retail broadband and data market segments; develop a suitable definition of big and new entrant/small operators, if necessary; conduct a general assessment of the retail broadband/data market segment with a view of determining the appropriate methodology to be adopted and design a cost model that is suitable for determining retail prices for broadband and data services, taking into cognisance the macro-economic, technology and technical relevant factors.