09 Dec The role of the Nigerian Communications Commission (‘NCC’) in determining pricing of services in the Telecommunications Industry
The NCC engaged the Mobile Network Operators (“MNOs”) on the 1st November 2016 on the determination of an interim price floor for data services after a stakeholder’s consultative meeting held on 19th October 2016. The ambit of these discussions was a proposed increase in the price of data services being offered by MNO’s effective from 1st December 2016.
The decision by the NCC to have a price floor is to promote a level playing field for all operators in the industry, prohibit anti-competitive practices, eliminate possible price fixing and encourage small operators/new entrants.
The NCC has since suspended any further action regarding the aforementioned price hike sighting the need for more consultation with industry stakeholders and general complaints by consumers across the country. Consequently, the NCC has requested that all MNO’s maintain the status quo until the determination of studies being carried out in respect of retail prices for broadband and data services in Nigeria.
From a legal perspective, it is germane to consider the role of the NCC in determining pricing and charges for telecommunication services in Nigeria under the Nigerian Communications Act (“the Act”).
Section 4 of the Act provides for functions of the NCC which includes “the protection and promotion of the interests of consumers against unfair practices including but not limited to matters relating to tariffs and charges for and the availability and quality of communication services, equipment and facilities”.
Conversely, the Act (Section 108) imposes an obligation on licensed MNO’s to seek the approval of the NCC prior to imposing any tariffs or charges for the provision of any services and not depart from same without the prior written consent of the NCC.
In determining such tariff rates, the Act stipulates that licensed MNO’s shall set tariffs on the basis of such principles as the NCC may from time to time prescribe in any regulation or guideline including:
- Tariff rates shall be fair and, for similarly stipulated persons not discriminatory;
- Tariff rates shall be cost-oriented and, in general, cross-subsidies shall be eliminated;
- Tariff rates shall not contain discounts that unreasonably prejudice the competitive opportunities of other providers;
- Tariff rates shall be structured and levels set to attract investments into communications industry; and
- Tariff rates shall take account of the regulations and recommendations of the international organisations of which Nigeria is a member.
Based on the foregoing, although the Act does not confer absolute powers on the NCC to unilaterally fix tariffs and charges, the provisions of the Act presuppose that the NCC does indeed play a significant role in determining such tariffs and charges by mandating licensed MNO’s to seek the prior consent of the NCC prior to fixing tariffs and charges.
The above position was clarified by the NCC when it issued its statement suspending its directive on the data segment price floor proposal which asserted, “this statement clarifies the insinuation in some quarters that the regulator has fixed prices for data services. This is not true because the NCC does not fix prices but provides regulatory guidelines to protect consumers deepen investments and safeguard the industry from imminent collapse”. The NCC went a step further to express that the price floor was not an increase in price but a regulatory safeguard put in place by the telecommunications regulator to check anti-competitive practices by dominant operators which is within its powers.
The Federal Government has since advised that consumers should indeed expect a price increase in data services but did not stipulate when this would occur and the details of such hikes. Our Firm will continue to monitor this issue and provide regular updates as an when further directives or information is provided by the NCC or the Federal Government.