The Chairman Association of Licensed Telecommunications Companies of Nigeria (ALTON), Gbenga Adebayo in this interview with ADEYEMI ADEPETUN, explained that price determination in telecoms sector is not determined by political intervention.
How are licensed operators reacting to the Minister of Communications and Digital Economy, Dr. Isa Pantami’s directive on data tariff review?
Let me start by saying that in telecoms sector, prices are not determined by political intervention. We defer to our regulator, the Nigerian Communications Commission (NCC) as required by the Communications Act on all such matters. I must say that prices are determined by operators’ cost and thereafter, regulatory approval. No one fixes prices; prices are determined by cost plus reflecting the operating environment and a reasonably fair margin of profit. These factors are presented to the regulator (NCC) which, with the right instruments of determination, and as provided by law, after review, approves as considered appropriate.
What are the factors that can bring down prices?
I will say market and forces of competition. From my perspectives, price reviews do not have specific timing. It’s based on the dynamics of the market and competition.
Subscribers have lauded the minister on this directive, what is your advice to them?
We appreciate the pressure to reduce prices, but such pressure must also reflect the reality of the operating environment and follow the provisions of the Communications Act on such matters
Will the suspended Data Floor Price have any impact on tariff reviews?
Time will tell. I think the minister should visit that issue. Introduction of data price floor will ensure that telcos price data remains profitable irrespective of activities carried out by data customers.
How would you describe the impact of the Over The Top (OTT) players on the operations of operators?
Increasing usage of OTT services by customers is adversely impacting on traditional telecoms platforms. According to Ovum, the independent analyst and consultancy, the growing adoption of OTT services by customers, instead of traditional telecoms services occasioned a global revenue loss of $386b over a period of six years (2012 – 2018) for the traditional telecom operators, thus endangering network development.
From investigations that we have carried out as an association, OTT services in Nigeria have had some displacement effect. Data shows that voice minutes have been declining due to their impact. Also, voice minutes have been declining while VoIP has been increasing. OTT data flux has been increasing as shown with the 2016 data.
Telecoms operators are losing money due to this trend. So, urgent action is required to save operators from further loss due to activities of OTT players, who do not invest in infrastructure. We appeal to the minister to look into this issue.OTT operators offer the same services as the operators (voice, SMS, content, etc.), but are neither subject to licensing under the NCA, nor have any contractual obligation with telecommunication operators in terms of interconnection, but despite this, Mobile Network Operators (MNOs) have strong presence in the country, and have attracted over $38b Foreign Direct Investment (FDIs) in the past 16 years.
The industry is a catalyst for telecoms infrastructural development in the country, and also a major employer of labour, having created over 30, 000 direct job opportunities and over 500, 000 indirect job opportunities. I can also say that telecommunications have paid over N300b into government coffers in taxes and levies yearly.We recommend that OTT players should enter into agreement with telcos for revenue share or payment of a kind of interconnect fee.
How true is the allegation that telcos are over-taxed in the country?
Very correct! The Schedule to the Taxes and Levies (Approved List for Collection) Act (Amendment) Order 2015 has further engendered the institution of multiplicity of taxes across different tiers of government, which has a been perennial challenge for industry. The Taxes and Levies Order of 2015 introduced additional tax items and permitted states to apply their discretion in the fixing of tax rates resulting in the imposition of arbitrary levies and charges at the states’ level. Specifically, item 3(b) of the Amended Schedule to the Taxes and Levies (Approved List for Collection) Act introduced new levies and taxes under items 12 – 25. Most of these taxes and levies were hitherto contested by our members, on the ground that they were not applicable to telecommunications operations.
Furthermore, pursuant to Taxes and Levies Order of 2015, states and local government councils have been enacting internally generated revenue-based legislations targeted at our members. We find that most of these legislations are at variance with fundamental tax principles such as neutrality and certainty. Some examples of the taxes being imposed are: ecology tax for gaseous emission, sewage, sanitation and public convenience levy for base stations, and fumigation levies. It will interest you to note that some states demand for the payment of fumigation charges of base stations.
Other taxes include sanitation and refuse effluent tax for base stations; business premises tax for base stations, while tenements rates charged per base station in some states is far higher than rates per square metre charged by the same state for residential and commercial buildings when the infrastructure occupies the same land.
Service quality also depends on available infrastructure, and it appears that operators are no more investing in infrastructure. What is actually the challenge?
Supporting infrastructure such as energy, road, security and vandalisation of active elements on telecom sites remains a major challenge and unless these problems are solved, sustenance of good quality service will continue to be challenging.ALTON respectfully states that without adequate infrastructure, the provision of qualitative telecommunications services cannot be guaranteed. Let me bring this in. There is refusal on the part of the Federal Capital Development Authority (FCDA) to Grant Building Permit for infrastructure roll-out in the territory.
