The Nigerian Communications Commission (NCC) has initiated a study to develop a model for determining retail prices of broadband and data services to make the services affordable and accessible to Nigerians.
Speaking at a stakeholders’ forum on the study in Lagos, the Executive Vice Chairman, Prof. Umaru Danbatta, said though addressing dominance issues in the upstream wholesale markets was one of the ways to facilitate competitive price levels, it might not be sufficient in all segments of the retail broadband services market.
He said, “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, amongst other things.
“While the commission is happy with this phenomenal growth recorded in the industry, especially in active voice subscriptions, we believe that the next critical phase is to ensure that everyone – wherever they live, and whatever their circumstances – has access to the benefits of broadband and this can 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.”
According to him, the KPMG has been selected to design the framework for collation of data that will be used to determine the appropriate cost-modelling technique and methodology to be adopted.
He added that the framework would be used to determine the appropriate pricing regulatory measures; the need for ex-ante and ex-post regulation with respect to pricing in the retail broadband and data market segments.
The expected outcomes, according to Danbatta, are “the determination of a uniform pricing structure within the broadband and data segment; ensuring effective competition in the broadband and data market segment; and guaranteeing affordability and accessibility of broadband and data services in Nigeria.”
He added that the model would facilitate inflow, development and growth of the broadband market segment; and the stimulation of further economic growth considering the catalytic role of broadband services.
A representative from the KPMG, Mr. Segun Showande, in his presentation, explained that a bottom-up methodology would be adopted in developing the cost model.
He said the method, which was widely used by telcos and regulators, would factor in the cost of capital, staffing and overhead costs, volume changes over time and price trends.
He said information regarding the state of play of the market; the structure of the industry with focus on the current technologies; the underlying costs of the leased line market; and the difference in costs by type of operators and geography would be sourced from stakeholders.
