Nigeria GSM - The Tariff Revolution & The Questions
Sometime in 2008, I cornered a top official of the Nigerian Communications Commission (NCC) for an exclusive interview.
I had wanted the interview to be focused on his personal life. I did not want to play up the over-flogged, controversial issue of NCC's regulation of the operations of the Global System of Mobile (GSM) telecommunications service providers.
The man spoke freely and extensively on his achievements, his family and his employer, the NCC. The interview went very smoothly until I sailed perilously close to firing the journalistic equivalent of a Scud missile. My principal had not told me there were "no-go-areas" in the interview. So, I felt I could ask any question. He, however, became edgy when I fired a question on why GSM tariff was higher in Nigeria than neighbouring West African states. He gave me a stern look and ordered that I shut down my tape recorder if I wanted an honest answer to the question. I had argued that the networks had the advantage of economy of scale with Nigeria's population of 150 million, and an oral culture that keeps people chattering away their sorrows on phones rather than reading or writing.
My principal was not impressed by my seemingly uninformed position. He insisted I shut down the tape recorders. I obeyed. The two tape recorders used for the interview were placed on pause. After the tapes were shut down, he spoke for 20 minutes on why the network operators could not reduce their tariffs.
He argued that each of the cell sites of the networks has two back-up generators which actually do the job of providing power while the Power Holding Company of Nigeria (PHCN), the nation's behemoth public power monopoly, remains on standby. He said the networks spent billions of naira annually fueling and maintaining the generators.
Security, he said, was the next challenge facing the networks. All the cell sites (even the ones inside the forest) are protected round the clock by security men at very high cost, he argued. Even at that, the incidents of pilfering of fuel and outright stealing of generators were rampant.
The long and short of his argument was that the cost of doing business in Nigeria was atrociously high. Consequently, for the government's inability to provide power, security and other critical infrastructure, the Nigerian people have to pay through the nose for the services of the networks.
I was shocked at the seeming robust defence put up by a top official of the regulatory agency of the nation's telecommunication network. Ironically, the regulator had become an avid defender of the cruel and selfish exploits of the operator. The consumers he was paid to protect are fleeced and thrown about like sheep without shepherds. The reverse is the case in civilized climes.
From my encounter with the NCC boss, I did not take Dora Akunyili seriously when at her inaugural media briefing at the Lagos Sheraton Hotel as minister of information, she vowed to crash GSM tariff. I knew she would be stepping on the toes of the men at NCC at a very sore point and that there was going to be a grueling duel.
A few months after the briefing, Akunyili came back to the media to complain bitterly that the NCC had sabotaged her moves to bring down GSM tariffs. I called my contacts at NCC to verify the minister's claims. What I got was a fresh barrage of defence bordering on why the telecoms industry was different from the National Agency for Food, Drug Administration and Control (NAFDAC), where Akunyili successfully wrestled fake drug barons to the ground. I was told that the process of reducing GSM tariff was a very lengthy one, starting with the cumbersome negotiation of interconnectivity rates among the networks. The process went on for more than one year and very little came out of it.
Today GSM call rates have changed dramatically without reckoning with NCC's endless negotiation with the networks for inconsequential drops in interconnectivity rates. Someone just woke up one morning and crashed the rates and everyone in competition had no option than to toe the line or back out.
My little understanding of the industry tells me that the final spark that ignited the tariff war which Nigerian consumers are now savouring, was eventually torched off by what is now known as Airtel, a hitherto embattled network that has changed its name five times since the emergence of the GSM networks in Nigeria.
Airtel has a chequered history rocked by torrential boardroom quarrels over share ownership and control. It has danced with all kinds of technical partners from the mercurial Zimbabwean, Strive Masawiyi to shrewd Arab business men. The Indians are now in charge.
Etisalat actually started the tariff war about two years ago. When the established networks were still charging anything from N40 per minute, the new network rolled out the lines at a paltry N15 per minute.
The big networks ignored the battle cry because Etisalat's shallow coverage of the country was too insignificant to rattle the Titans. The marketing gimmick of the new network was dismissed by the Titans as the antics of an inconsequential radical.
However, everything came crashing down when the Indians bought into an under-capitalised network hitherto known as Zain. The network had its capital beefed up by the new investors who eventually blasted off the tariff war.
Airtel's tariff now is anything from N12 to N15 per minute. Airtel is Nigeria's third largest network after MTN and Globacom. With its considerably wide coverage of the country and a menacing new capital base, the move to crash tariff could not be ignored by the two giants in the industry.
MTN, the South African network is still the arrogant bully it was at the beginning. It still maintains the highest tariff in the land. However, it could not but cower under the menace of a tariff war. It has grudgingly dropped tariff just to remain in business. Again, competition, not the regulator, has conjured an earthquake in Nigeria's gold mine.
It was Globacom, a Nigerian network operator, not the NCC, that sent MTN and the then Econet back to the drawing board to fashion out a new strategy for the introduction of per second billing which they all dismissed as impracticable in Nigeria.
The regulator had sheepishly agreed with the operators at the beginning that it would take at least 10 years to introduce per second billing in Nigeria. Globacom proved them wrong and forced the system on the industry. NCC helplessly watched it happen.
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Even if the current tariff crash is a temporary marketing gimmick, someone among the operators has confirmed everyone's fears; the network operators were profiteering and fleecing Nigerian consumers with the regulator stoutly defending them. The current crash in tariff is not engendered by a drop in the cost of doing business in Nigeria. If anything, it has become even more expensive and risky to do business in the land.
Power supply is more epileptic than it was at the inception of the networks on August 2001. With the emergence of kidnapping as a booming business in the country, the security situation is more challenging now than it was in 2001.
The simple truth is that NCC as a regulator has failed the consumer. It is more of the defender of the operator than the protector of the hapless consumer. The new leadership of NCC can redeem what is left of its image by compelling the operators to expand their networks and halt the recurring decimal of call drops and toady receptions.
Source:Leadership Newspaper.
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Originally Posted by TY-Lala
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