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Nigeria’s telecoms regulator engages KPMG to study Cost Based Pricing for retail broadband, data services

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In search of the best Cost Based Pricing options beneficial to stakeholders in the Nigerian retail broadband and data services sub-market, the Nigerian Communications Commission (NCC) has engaged KPMG (Nigeria), a globally known professional service company, to study the situation and provide insights for appropriate interventions.

This was disclosed, on Tuesday by the Executive Vice Chairman and CEO of NCC, Prof. Umar Danbatta, at Stakeholders’ Forum on Cost Based Pricing for Retail Broadband and Data Services, in Lagos.

The gesture falls within the NCC’s regulatory mandate, the Strategic Management Plan (SMP 2014-2018) and the 8-Point Agenda and the Commission’s drive towards determining affordable broadband prices based on costing in the country.

The event held at the Digital Bridge Institute (DBI) Cappa, Oshodi, Lagos is in part one of the Commission’s ways of engaging with industry players and stakeholders for participatory regulation to come up with a cost based price regime that will lead to a win-win industry, economic development and growth of the nation.

The Consultant KPMG group that conducted the study presented very insightful findings setting up the ground for open interactive deliberations yielding valuable inputs from the participants.

The event is expected to continue till 18th January, 2018 at the NCC Lagos Zonal Office with the Operators, the KPMG team, the NCC team and some relevant stakeholders to provide the best options and approaches to cost based pricing for retail broadband and data services in Nigeria.

The forum is in line with the Commission’s 8-point agenda to promote Accessibility, Availability and Affordability for pervasive broadband penetration for the attainment of the 30% broadband penetration by 2018 as envisaged in the National Broadband plan.

The EVC noted that the impact of broadband as a key enabler of national productivity, economic growth and development, social inclusion and cultural enrichment cannot be overestimated and, called upon all stakeholders to be part of this historic and heroic undertaking.

“Whilst the Commission is happy with this phenomenal growth recorded in the industry, especially in active voice subscriptions, we believe that the next critical phase is to ensure  that  everyone  –  wherever  they  live,  and  whatever  their  circumstances – have access to the benefits of broadband and this can only happen with the pervasive deployment of broadband infrastructure and services across the country considering the potential of broadband as a key enabler of national productivity, economic growth and development, social inclusion and cultural enrichment.

(L-R: Sean Whiteman Kennedy, Regulatory Expert (KPMG); Josephine Amuwa, Director PCEA NCC; Prof. Danbatta, EVC/CEO NCC; Segun Sowande, Partner and Head Management Consulting (KPMG) and Olusola Teniola, ATCON President, during the NCC Stakeholders’ Forum in Lagos on Tuesday.

“The  affordability  and  accessibility  of  broadband  services however is largely  determined  by  the  prices  that  are  charged  for  those  services.  Therefore ensuring that prices charged for retail broadband and data services are cost based in line with international best practice is critical to the deployment and uptake of broadband and data services in Nigeria.

“Whilst addressing  market  dominance  issues  in  the  upstream  wholesale  markets  is one of the ways to facilitate competitive price levels in retail broadband access  and service markets, it is possible that such action may not be a sufficient constraint on pricing in all segments of a retail broadband market, as such some form of ex-ante regulation of retail prices is appropriate or even necessary.

“In line with the Commission’s mandate of creating an enabling environment and promoting fair competition in the telecoms industry and in line with the strategic objectives of the National Broadband Plan, it has therefore become imperative to develop a proper pricing structure for broadband in Nigeria. This will not only ensure the affordability and availability of Broadband but also ensure fair competition by checking price discrimination, excessive pricing, predatory pricing, margin squeeze and price fixing amongst other things.

“This has therefore necessitated the conduct of the Study on the Determination of Cost Based Pricing for Retail Broadband and Data Services Nigeria”, the EVC said.

During his Presentation, Partner and Head Management Consulting (KPMG), Segun Sowande, said that they followed the terms of reference as provided by NCC.

The study, he said, will help set guidelines for the regulation of the pricing of retail broadband and data services in Nigeria and specifically determine Price cap and floor where necessary; develop a regulatory pricing model based on the peculiarity of the Nigerian broadband and data services market coupled with international best practices and to design the framework for collation of data that will be used for the Determination.

Others are to determine the appropriate cost modeling technique and methodology to be adopted;  to determine the appropriate pricing regulatory measures to be adopted; to determine need for ex-ante and ex-post regulation with respect to pricing in the retail broadband and data market segments; among others.

Some of the operators present at the Forum sought NCC’s understanding to conduct a general assessment of the retail broadband/ data market segment with a view of determining the appropriate methodology to be adopted; and to design a cost model that is suitable for determining retail prices for broadband and data services taking into cognizance the macro-economic, technology and technical relevant factors.

It is therefore expected that the outcome of this study will result in: the determination of a uniform pricing structure within the broadband and data segment; ensuring effective competition in the broadband and data market segment; guaranteeing affordability and accessibility of broadband and data services in Nigeria; facilitating inflow, development and growth of the broadband market segment; and the stimulation of further economic growth considering the catalytic role broadband services plays.

The Committee is expected to present its outcome for implementation by April 2018.