Cheap data may be more expensive than you think

June 12, 2017
3 min read

The Nigerian Communications Commission(NCC) lifted the data price floor in November 2015. Its removal gave telcos and internet service providers the power to reduce data prices in a competitive manner. Telcos fought dirty in a data war reducing prices to the lowest.

The development has had a direct impact on the consumer--data users. Considering low internet penetration in Nigeria and even at present, Nigerian telcos still lose internet users by the millions, removal of the data floor makes perfects sense.

Exactly one year later, the NCC sought to sneak back data price floors under the feet of Nigerian internet users. The outcry of the general populace forced a retraction of the directive by the NCC.

But for all the joy that comes with a non-existent price floor, smaller ISPs and telcos suffer. The data price floor was set to allow smaller players and new entrants in the industry compete favorably with bigger and more established players, but since it was established there has not been any visible benefits. No new telcos or ISPs have emerged since its introduction, and the existing players have not made any headway.


Considering the aforementioned factors, since the data price floor was not benefiting the smaller players and the price point not favoring consumers, removing it was a good thing. Maybe not.

According to the Nigerian Communications Week, David Venn CEO of Spectranet an ISP in Nigeria decries the removal of the data price floor and what he calls an “anti competitive behavior" in the market. Speaking further, he says;

Since the botched data floor policy of Nigerian Communications Commission, it has become difficult for ISPs and Telcos delivering internet service to operate profitably. We are seeking the review of that policy by the authorities to enable operators deliver quality service and continue to be in business.

It is not really our business if Spectranet breaks even or not, all we want is affordable data, whether the ISPs die in the process or not, we should REALLY not care.

But let us examine why it is not in our best interest to give the giant telcos the monopoly they so desire.

The long term play

When the data price floor is suspended, telcos will fight data in terms of price, diving to unimaginable (and exciting) lows to outdo competition. Considering the fact that big telcos offer other services apart from data subscription, they can afford to give subscribers 1 gigabyte free monthly data without feeling anything.

But the smaller ISPs whose cash cow is data cannot afford to keep fighting dirty in the price arena, so at some point in the future, they will die. Following their exit from the market, a monopoly will come into play forcing the customers to bow to the whims and caprices of the bigger market players.

Monopoly in some industries can be outright evil as the telcos will do whatever they deem fit. God forbid we are stripped of voice for a lack of alternatives to our existing telecommunication providers.

If data price floors are removed, smaller ISPs will suffer and probably die and then we end up with whatever bad service the existing players deem fit for us. When (and if) these prices are reintroduced, the ISPs are able to compete favourably to the immediate detriment of the customers, a paradox indeed.

From a consumer’s standpoint, I want cheap data forever, but not as a sacrifice on the altar of quality and the right to assert my right as a paying customer.

On one hand, the NCC should give ISPs an equal playing field in other areas apart from price. For example, because of infrastructural challenges, ISPs reportedly  rent network towers for up to $2,000 monthly as against $300 in India, this should be remedied.

Telecom Tower

What will it be for you, cheap data now or a future devoid of telco monopoly?

tech. media. startups. africa. vc | Twitter: @victor_ekwealor
tech. media. startups. africa. vc | Twitter: @victor_ekwealor
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tech. media. startups. africa. vc | Twitter: @victor_ekwealor

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