Jason Njoku: NCC. Are they an enemy of progress?

by Jason Njoku

NCC have decided to promote competition in Nigeria. Just in a very Nigerian way. At the expense of customers, macro economics and reality. Voice and SMS revenue will, and is, disappearing. Fast. Regulation can’t/won’t change that. We are in a new age. Everyone is climbing over the top. Whatsapp/Facebook/Messenger/SnapChat/Instagram are the new norms for communications. Netflix, ShowMax and irokotv will be the new norms for the hundreds of millions who are not in the PayTV universe.

Europe, India and the US have seen the future and the regulators are supporting this new reality.

Free Mobile sparks Telecoms war in France (FT)

Xavier Niel, the French billionaire, has embarked on an aggressive price war against France Telecom, Vivendi’s SFR and Bouygues Telecom to try to break their stranglehold over one of Europe’s most expensive mobile phone markets.

At an event in Paris to launch his Free Mobile service that drew inspiration from the late Steve Jobs at Apple — with its cheering geeks and a promise to “liberate” the French consumer — the founder of Free Telecom announced a pricing strategy that he claimed would undercut the incumbents.

Mr Niel had promised to halve French mobile phone bills by entering the market. On Tuesday, he said Free would charge €19.99 a month for a service with unlimited texts, domestic calls and data and free calls to 40 countries in Europe and North America. This compares with €49.40 for a similar offer atFrance Telecom’s new low-cost service, SoSh.

When I first started visiting France in 2012, a young hyper aggressive new entrant called Free Mobile was bruising the decades-long incumbents and exciting the customers. Xavier Niel and his vehicle Iliad (worth €10.46B on the Euronext) changed the game. In response, Orange, SFR and others had to cut their prices >60% to stay in the game. Customers won. See the customer growth of Free mobile below.

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Free Mobile reached 5,205,000 customers, an 8% market share, in its first year. (Compared to 27.0 million mobile customers for Orange, 20.7 millions for SFR and 11.3 millions for Bouygues Télécom.) Free Mobile currently holds an 18% market share. Its long-term goal is a 25% market share. A market disrupted.

Further reading | How The Telecom Company Free Disrupted The Mobile Landscape in France

In India

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Reliance declares mobile data price war in India with Jio (FT)

India’s richest man, Mukesh Ambani, has taken this playbook and done the exact same thing in one of the already most brutal and competitive telecoms markets in the world. Launch offer = Free voice, sms and data for 3 months. You know what? Customers won and turned out in their millions to line up (for hours) for the sim card. Reliance Jio’s goal is to acquire 100m customers as soon as possible. What we need are revolutionists that drive the cost of data down for all.

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SKY, a relative dinosaur, did the same thing in the UK a few years ago.

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They ignited a broadband price war with BT, Virgin Mobile and Talk Talk.
SKY Marches into fibre broadband pricing war as BT proves most expensive customers cheered. My mother has had BT, Talk Talk and now SKY over the last three years. Competition is creating choice and a new reality.

Regulation.

The Nigerian Communications Commission (NCC) approved a new “floor plan”, or minimum pricing, for data services by mobile operators “to address market distortions, unhealthy price wars and value erosion that could threaten the going concern of the service providers”, according to an internal working document seen by The Cable.

In a letter to the big operators, the commission had directed that the floor plan for data should be 0.90k/MB effective December 1, 2016 “pending the finalisation of the study on the determination of cost-based pricing for retail broadband and data services in Nigeria”.

As virtually all the big operators were already charging below the new floor rate, the directive meant an automatic increase in charges for data services.

However, small operators and new entrants in the data market, such as Spectranet, Ntel and Smile, are still allowed to charge below 0.90k/MB.

NCC defines “small operator” as one that has less than 7.5% market share and “new entrant” as one that has operated for less than three years.

The regulator is of the opinion that without a price floor, the dominant operators can engage in predatory pricing to drive down other operators, meaning the industry could be moving towards a monopoly.

What we are getting is something which protects businesses and their investors. Our consumer protection laws are a joke (if they exist). What we are desperately screaming out for is something which protects customers. But we are protecting investors. Right. When Netflix came to Nigeria, many people on social media were calling out for protection. Protection? Protection for who? From whom? Next year will see the introduction of ShowMax, Nuvu, Iflix and other Internet TV services into Nigeria. If irokotv can’t compete, then irokotv should die. Simple. When I started this journey, I had seen x10 of my other companies die, so I am very used to that reality. If something is a failure then it should just fail. It’s the noble and honourable way any consumer internet or technology company should accept. That is capitalism.

Ntel, Smile, Spectranet, Swift etc are still relatively expensive for the masses. They have their markets and segments, but I believe they should be allowed to find and play their position. If we can migrate tens of millions of people to 1Gb/month usage then Nigeria will be better for it. Predatory pricing is bad for whom exactly? Customers. I see them enjoying Bobrisky scandals on snapchat everyday. Do we believe they can still do that when you increase the data 300%? A nation without information is in the dark. We are literally regressing back to the dark ages. If this was in the UK or US, there would be lobbying and street protests etc. But the regulator is regulating.

There is no version of reality where harming customers and market growth results in a better market. This isn’t the way to lead a nation in distress. Like I have always said about the massive MTN fine, the regulators were solving yesterday’s problem. Whatsapp / Facebook / Messenger are all end to end encrypted now. The case for the penalising MTN was silly. Because the world has moved on. If a kidnapper is using Whatsapp, he doesn’t need to be teethed to an actual gsm line. He can just run it over wifi with a GSM number he got from [who cares].

I knew things would get worst before they could better. I accepted that. I still feel Nigeria is a better place today than it was 5 or 10 years ago. But the reason is our young have been empowered with smart phones and technology. They have formed habits foreign to our mothers and fathers. That’s a great thing. In the normal world, they call that progress. Our nation is poor. On one hand we create monopolies like Dangote who strangle entire industries, and even here, there has been no innovation in cement for like 200 years. On the other hand, we strangle new industries as they are attempting to grow. If you spoke to any customers in Nigeria about the big cuts in data, most would be super happy. Yet here we are.

NCC is an enemy of progress.

Oh. NCC have halted the proposed data hike. Great. I still spent an hour writing this article. So here we go…


Op–ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija

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