In a bold step aimed at ensuring appropriate pricing of retail broadband and data services in the country, telecom sector regulator, the Nigerian Communications Commission (NCC), has rallied industry stakeholders to an initial forum on cost study for the determination of cost based pricing for retail broadband and data services in the country.
The forum held Tuesday, January 16, 2018, at the Digital Bridge Institute (DBI) Oshodi, Lagos, is largely perceived by telecom analysts as a move to strengthen the principle of participatoryregulation, a tradition the Commission has maintained since inception.
The Commission has severally characterized broadband as critical to the socio-economic development of the country. Director, Policy, Competition, Research and Analysis at the Commission, Mrs. Josephine Amuwa, said the cost based study became necessary to address stakeholder concerns to an earlier study on the wholesale segment of the market and to checkmate predatory pricing and pricing wars between and among operators.
The cost based approach, Mrs. Amuwa explained, resonates with international best practices in the industry as well as the International Telecommunications Union (ITU) recommendations. While extolling the cost based pricing model, she emphasized that actualizing the study was the collective responsibility of industry stakeholders, adding all views are to be respected and taken into consideration in the final regulatory response.
Reacting to a question from Africa Telecom & IT on whether the study outcome would excite an increase in the current pricing regime for retail broadband and data services, Mrs. Amuwa said there is no cause for consumers to be apprehensive of the study outcome, saying pricing is not the only option available to the regulator. Said she: “What if the study result shows there is no need for price review? Pricing is not the only option. We are looking at the market in totality. We will settle for the best option for operators, consumers and other stakeholders.”
She called for stakeholder patience until the result of the study is released by the consultants. Said she: “ We are not anticipating any results. The results will come from the study.” Partner at KPMG, who led two of his colleagues at the presentation of the project and description of the project methodology, alluded to a 2013 study that was focused on the wholesale segment of the market that threw up market realities such as excessive pricing, customer lock-inas well as no logical basis underlying pricing et cetera.
As per KPMG, the market is currently characterized by increased access to data services as well as increasing usage but decreasingaverage revenue per user (ARPU). Part of the scope for the study lists collating of relevant data from industry stakeholders, developing a comprehensive market assessment of the broadband transmission value, use a combination- costs modeling output, industry benchmarks and other data to build picture of costs, draw inference from the cost model and market assessment and engage industry stakeholders and support the NCC to develop appropriate regulatory requirements.
On the project approach and methodology for the study, KPMG noted the Internet/broadband usage is becoming an important part of the modern economy. “The bottom-up (BU) methodology will be adopted in developing the cost model which entails building up costs from many detailed components and from the costs of each.”
What are some of the principles of the BU model? KPMG explains that the model is widely used by telcos and regulators and is the most appropriate to reflect the real economics of Nigeria, the data collected will be fed into the model and analysed to deliver the end-results, there are several network architectures possible: only one should be modeled.KPMG hailed the forum as a laudable process saying its idea is not to be descriptive inthe exercise.
Welcoming stakeholders to the forum, the Executive Vice Chairman/Chief Executive of NCC, Professor Umar GarbaDambatta, underscored the imperative for appropriate pricing of retail broadband and data services in the country.
Captains of the ICT industry in both the public and private sectors, the academia and media, including the President of the Association of Telecommunications Companies of Nigeria (ATCON), OlusolaTeniola, attended the forum.
The Commission expects the Consultants to release the report of the study before the end of April, 2018.
By Clifford Agugoesi and Chimezie Ndubisihappy wheels