Encouraging Monopoly: The NCC Way -By Jare Oladunmoye

Filed under: Economic Issues |
Jare Oladunmoye

Jare Oladunmoye

 

Before I launch into the main issue, let me state clearly that I hold no brief for any of Nigeria’s telecommunications companies. I’m neither their staff nor a contractor. I’m concerned about a fair, level playing field for all the operators because such a field makes the consumer, which I am, the KING.

Having failed to discharge his responsibility properly by not treating all the players fairly, I am tempted to call for the head of Engineer Eugene Juwah who heads the Nigerian Communications Commission (NCC), the regulator of Africa’s fastest growing telecommunications industry. I am angry with Juwah because the NCC, which he heads, is unwittingly leading Nigeria’s telecommunications sector back to the sorry age of monopoly.

Three years ago, NCC commissioned a study to assess the level of competition in the Nigerian telecommunications industry. Several stakeholder engagements were organised. Thereafter, it issued a regulation known as the Determination of Dominance in Selected Communications Markets in Nigeria (DDSCMN) dated April 25, 2013. As a result of that, MTN Nigeria was declared the “Dominant Operator in the Retail Mobile Voice Market” segment. The Nigerian telecommunications market is segmented into voice, data, upstream and downstream services. The voice market and the data market have mobile and fixed sub-segments.

Having being granted the DDSCMN status, NCC directed MTN Nigeria to immediately collapse the differential between the on-net and off-net retail voice tariffs. NCC further instructed that both tariffs should be at par to encourage competition.

Understandably, the consumer, who will bear the brunt of high costs and inefficient service delivery if a monopoly is encouraged to emerge and thrive, is at the heart of that policy. The nightmare that was telephony operation pre-GSM era is better left in the realm of receding memory. Then, the state-run Nigerian Telecommunications Limited (NITEL) reversed the role of engagement in the market – the service provider turned the king, while the customer was at its mercy.

With a level playing field provided by DDSCMN and its attendant benefits, the other operators rolled out strategies to compete for market share and provide the consumer options. But now, the NCC has suddenly reversed itself, throwing the market – players, consumers and all – into a tailspin.

Shortly before the general elections this year, NCC granted MTN concessions which were contrary to its earlier directive. What is worse, while DDSCMN came about in 2013 as a result of an industry-wide consultation that lasted nine months, the commission failed to conform to the same rule in the process of swallowing its vomit three months ago. Unilaterally, NCC approved a 30 percent differential between on-net and off-net retail voice tariffs to MTN, a decision that ran contrary to the NCC’s regulation on dominance. Up till now, the NCC had not published the basis for the policy reversal.

The failure of the NCC to follow due process to curtail a looming monopoly by an industry player raises concerns, as it is obligated to promote fair competition and prevent the misuse of market power or anti-competitive practices by any licensee.

NCC’s 2012-13 study to assess the level of competition in the Nigeria’s telecommunications industry had revealed that MTN Nigeria had undue advantage over its competitors in Nigeria’s telecommunications industry. It is curious that the regulatory agency would make a U-turn on an issue that has dire consequences for the consumer and the thriving sector.

Is the NCC playing its statutory role as the industry regulator or is it acting a prepared script to favour a particular opeartor and put the Nigerian consumer at risk of a monopoly? Whose interest is Juwah pursuing – that of MTN or the Nigerian consumer? In addition to affecting investor relations, the change of the rules in the middle of the game has a wider implication for the consumer.

Already, MTN runs the ICT backbone of Nigeria, including the platforms for the operations of financial institutions. And with other players in the telecommunications sector being stifled by the policies of the regulatory authority, the road to the return of the behemoth is being charted. When we have a single company being encouraged to dominate the market, when we shut out competition, which often results in high prices and inferior products, we are putting the end user in dire straight.

When MTN Nigeria was declared a dominant player in mobile voice segment, specific obligations were imposed on the company to ensure it desisted from anti-competitive behaviour and also to ensure the sustenance of long term competition in the telecommunications industry. But these obligations have been observed largely in the breach.

For the economy to thrive, we must say ‘Yes’ to free market, to a level-playing field, to competition and to free choice by the consumer. We cannot afford to go back to the era when the monopolist bullied the consumer into submission. Investors seeking adherence to regulations to guide their decisions are bound to be disturbed where the industry regulator undertakes far reaching policies without any form of engagement with the industry stakeholders.

The Nigerian consumer’s ability to choose and the opportunities to expand the Nigerian economy via the survival of multiple businesses is no doubt under threat. The regulator cannot afford to stand by and watch as other operators wriggle in pains.

If NCC’s revision of its decision on the DDSCMN is not reversed, dominance may spell monopoly sooner than later.

Oladunmoye is an Abuja-based concerned telecommunications services consumer.

 

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