Nigeria’s telecom revolution is acclaimed worldwide. It is on record that within eight years Nigeria’s teledensity shot up from a mere 0.4 to over 50 percent. Nigeria is acknowledged to have the highest number of connected lines anywhere in Africa, including South Africa, with a subscriber base currently numbering over 74 million from barely 400, 000 in the year 2000. Nigeria has achieved telephone network coverage of over 90 percent of her population with digital mobile network spread across the six geopolitical zones and the 36 states of the federation including the FCT, Abuja, according to the industry regulator, Nigeria Communications Commission (NCC).
No one doubts the immense contribution made to national development by the telecom revolution, often called GSM revolution because digital mobile telephony (or Global System of Mobile communication – GSM) has been the main driver of market growth in Nigeria’s telecom sector. Over $12 billion worth of foreign direct investment has been made in the sector. Another $6 billion investment has come from within. Over the years telecom companies (telcos) have generated huge amounts of revenue for government through fees paid for their operating licences, company taxes, PAYE from employees, VAT from the consuming public, etc.
Telcos have created thousands of jobs for professionals whose remunerations are arguably higher than those of their colleagues in the banking sector and rank second only to their counterparts in the oil and gas sector. It is largely to these three sectors that we owe the so-called re-emergence of the middle class and the attendant growth in consumerism and ostentatious lifestyles, and the return of social/night life.
A whole new set of related economic activities have resulted from the telecom revolution: tens of thousands of youths engaged as telephone call operators or recharge card sellers; small-scale firms printing recharge cards; cybercafés operating with Internet data card supplied by the telcos; and unending multi-million-naira-worth consumer promos that create instant millionaires (even though the shortcut process undermines societal values of hard work and patience).
We have also seen massive expenditure by the telcos in corporate social responsibility (CSR) initiatives in the forms of media-hyped donations to charity, educational sponsorships, contributions to health care, provision of basic social amenities and sponsorship of popular TV programmes, sport tournaments and other mass-appeal events. The revolution has also boosted other sectors such as the media, marketing communications, sports, arts, culture and entertainment through advertising, event and programme sponsorship.
It is hard to imagine that a little less than a decade ago, you had to travel all the way to another location because you needed to make a simple enquiry that could have been done via phone calls, but for the inadequate and inefficient telephone system operating then. It terrorises our minds to remember that then you had to physically be at a location anytime you wanted to have a meaningful discussion or make any meaningful enquiries. We cannot be unthankful for the numerous troubles and heartaches we have been saved by a phone call or text message informing us of a meeting cancellation, an interview or board meeting brought forward or, otherwise, alerting us of a traffic bottleneck or danger ahead.
However, even in our gratitude we cannot help but feel that we are being taken for granted. We have found ourselves hapless victims of exploitation by GSM operators and other telcos whose greed to make quick and outrageous profits is horrendous. Telecom tariffs have been a talking point from the inception of GSM in Nigeria in 2001. Call tariffs, especially tariffs for domestic calls, have always been inordinately high. For example, I am able to use a landline from Nigeria to call another landline in United States, Canada, London or Hong Kong among other international locations at N10 or N12 per minute and a mobile line in any of those locations at N25, but I pay the same N10 for a local intra-network landline call, at least N18 for calling a landline on another local network and N30 for landline to a local mobile line. (Let me not bother you with the details of the average costs for your local intra- and inter-network mobile-to-mobile calls.)
Telecom operators had always blamed high tariffs on heavy fees paid for operating licences and high cost of doing business in Nigeria. Now that everyone knows that the initial operators have since recovered the acquisition cost of their licences and their initial capital outlay, the companies claim that they are still incurring huge costs in their bid to expand coverage and in powering and securing their installations across the country. While the public sympathises with the operators for having to bear burdens that should have been borne by the state, people are irked by the continued high tariffs charged by telcos while they continue to post outrageous profits every year.
Sometimes I wonder whether the telcos think that it makes good business sense in the long term for them to continue to maintain high tariffs with the plan of expending a tiny fraction of their annual outrageous profits to try to buy public goodwill through their so-called giving-back-to-society programmes (i.e. CSR). Is it not rather obvious that lowering of tariffs would win them the goodwill that they need for long-term business sustainability? It seems that our telcos have a short-term view. Does that mean that they don’t believe in the future of Nigeria hence the hurry to make all the money they can before…?
But, pray, how significant is the fraction or percentage of telcos’ profits that is going to be affected should they implement a lower tariff regime? What is the size of the proportion of their profits that they are willing to exchange for our good will through lower tariffs? Each telecom company should seriously consider doing a business analysis of the gains of lowering tariffs accompanied by reduced CSR expenditure/jumbo consumer promos vis-a-vis maintaining the existing high tariff regime with the current level of CSR expenditure/jumbo consumer promos. It is doubtful if any telco’s long-term sustainability will be favoured by any business case for the latter.
We know telcos are business concerns set up to make profit and are not not-for-profit charities or NGOs (non-governmental organisations). But they, like every other going concern, exist to meet the need of the customer and can only succeed by putting the customer need at the core of their operations. Has it ever occurred to telcos that they could have put the issue in a referendum to their customers: 1. ‘Would you rather have lower tariffs from us which could mean that we may not have much to spend on CSR and consumer promos?’ Or 2. ‘Would you have us maintain the status quo – high tariffs accompanied by expenditure on CSR and jumbo consumer promos?’
Let me be the first to send in my vote: Capital YES to Question 1 and a definite NO to Question 2. It is almost certain that no widespread campaigning may be needed to get an overwhelming majority of the telecom consuming public to vote in the same pattern with me.
Like me, other people are beginning to wonder if the seeming cut-throat competition between the telecom operators is not a subterfuge or camouflage designed to keep the public from noticing the obvious. Do we describe petrol dealers – major marketers or independent petroleum marketers – as stiff competitors when they create conditions for profiteering in the oil and gas sector? No. We usually allege that there is a cabal. People are beginning to suspect that there is a cabal in the telecom sector or some form of collusion by telcos to keep tariffs as high as possible. This is something our anti-competition authorities should investigate.
While at it, there may be need for the industry regulator to also re-examine its attitude to tariffs charged by telecom operators. I honestly think NCC has often sided with the GSM operators and other telcos in matters of tariffs. One wonders if it is not out of compunction arising from the heavy fees the Commission collects from the telecom operators. NCC collected hefty sums from the operators for their operating licences and expects to do so again during licence renewals. Then there are fees for a new numbering plan and sundry other things. Trust telcos, they have no qualms in passing all those costs plus jara to their customers.
Another factor of note is interconnect rates – charges paid between telcos for inter-network calls or SMS made and received by subscribers. It is the industry regulator that sets these rates. Recently, the Commission announced a reduction of the rate from N11.55 to N8.20 with effect from 31 December, 2009, expressing the hope that call tariffs would be reduced by as much as 50%. NCC did not consider it wise to reduce the interconnect rates by 50% but it was hoping telcos would be that generous. Trust telcos again, they will take advantage of the reduced interconnect rates to maximise profits. As I write I am still waiting to benefit meaningfully from the new rates. None of the two telephone networks I use has deemed it fit to pass on to me a commensurate reduction in tariffs since the new interconnect rates took effect.
Judging by NCC’s current unhelpful attitude, it is difficult to begin to take a sanguine view that a lower tariff regime is around the corner. At the recently held Economists Conference in Lagos, the executive vice chairman of the Commission argued that subscribers in Nigeria were not being over-charged. He asserted that, ‘subscribers in Nigeria are paying market rates comparable elsewhere in Africa…It is a thing of perception. We are in a highly competitive market and prices would go down with time.’
That argument no longer impresses. It is the same kind of reasoning that has promoted high tariffs over the years. NCC should explain to Nigerians the basis for comparing our tariffs with those paid elsewhere in Africa and concluding that we are not paying way too more. We will like to know why eight years after the telecom revolution began tariffs have remained on the high side and tariffs for domestic calls have been higher than those for international calls in a number of instances.
NCC (or someone in Abuja with supervisory and oversight responsibility over NCC) should ensure that our telecom operators adopt whatever ‘magic’ operators in other climes have used to keep their tariffs low and enable us in Nigeria connect with relatives, friends and business partners residing in those countries at rates unbelievably lower than our own local tariffs. Engineer Earnest Ndukwe, Executive Vice Chairman of NCC, should consider as his parting gift to Nigerians a new tariff regime that substantially reduces local call rates. This is the one critical area that our telecom revolution missed out. This is the new revolution Nigerians want in the telecom sector – a price revolution.