The Centre for Digital Economy and Innovation (CeDEI) has urged the Senate to rescind its decision to halt the introduction of  price floor for data services by the Nigerian Communications commission (NCC), arguing that price floor was needed in the marketplace to protect both the operators and consumers.

The Centre said that establishing a price floor means that no operator will go lower than the agreed floor thereby making market dominance by one or two operators which will lead to the promotion of monopoly impossible.

The Nigerian Senate had last week asked the NCC to immediately halt the proposed data tariff hike. The new data tariff regime which was billed to commence Thursday, December 1, was arrived at after consultation between the regulator and the operators where it was agreed that there was need to create a level field for robust competition in the industry by allowing both the old and new operators ample space to co-exist.

According to CeDEI, the Nigerian telecom regulator acted within the limit of the regulatory rules which empowers it to set the data tariff floor in exercise of its statutory responsibility to promote healthy competition by periodically reviewing voice and data tariffs in the industry and ensuring the sustainability of the market.

But last Wednesday, the Senate, following a motion under matter of urgent importance by Senator Bala N’ Allah, the Senate Deputy Leader, condemned the planned introduction of price floor, and asked the NCC to halt the increase immediately. The motion was unanimously endorsed.

But CeDEI has urged caution and introspection among the lawmakers and Nigerians who condemned the new tariff, adding that there was obvious misunderstanding of the concept of price floor.

The Centre said in a statement: “We have carefully studied the arguments against the introduction of price floor for data and we can categorically say that there is not enough understanding of the issues by the public.

“Nigerian telecom industry needs a price floor for data services because it is the only way to engender robust competition. It means that no operator will go below a prescribed price, meaning that big operators will not muzzle the smaller operators out of existence”, the Centre said in a statement signed by its Coordinator, Mr. Chris Agafe .

There have been concerns about how some operators have been crashing their data prices in a manner that undermined competition. The Association of Licensed Telecommunications Operators of Nigeria (ALTON) has expressed its disappointment at the suspension of the price floor regime.

According to ALTON, if the issue is left unaddressed, it could result in a sustained deterioration in the quality of data services across all networks and the attendant poor quality of service experienced by users.

“We are aware that the NCC introduced the minimum price for data services to help ensure cost recovery and drive the continued investment in the telecommunications sector necessary for the provision of world-class data services for the overall benefit of the Nigerian subscriber and the Nigerian economy. It is our belief that interventions such as these are in keeping with the NCC’s tradition of implementing customer-centric regulatory initiatives such as the Do-Not-Disturb Service and the Mobile Number Portability Scheme which were introduced to enhance customer satisfaction with telecommunications services”, ATCON said.

According to the Centre, the Senate may have scored popular endorsement from the public but not having a price floor now will come back to hurt the same public when quality of service worsens and when consumers are left with fewer option of choices among operators.

“We urge the Senate to consider the plight of the smaller operators as they face the risk of extinction if they are not protected to grow and provide options of choice for telecom consumers. The operators have said they need a price floor for sustainability of their operations, we advise that the relevant authorities listen to them to avoid a squeeze in an industry in which the country has made so much gain”, the Centre said.