NCC: Regulatory capture, timidity or incompetence?

A major drawback of regulatory institutions in post-colonies like Nigeria is for differing reasons, they just end up doing the exact opposite of what they are supposed to do. Although the view that regulators are motivated solely by the desire to protect the public interest is no longer popular, regulatory institutions still strive to ensure that the players in the industry they regulate provide better and efficient services and enhance better competition, which has the salutary effect of driving down prices. The Nigerian case however continues to be different as regulatory capture, corruption, timidity, succumbing to special interest or even incompetence seems to be the norm.

We are at a loss as to why the Nigerian Communications Commission (NCC), a body that has been acting compulsively lately, decided to reintroduce a price floor for the data segment of the telecommunications sector even after it was successfully removed in 2015 and aggressive competition is driving down cost of data across board.

Researches globally have shown that increased access to bandwidth stimulates economic growth. More specifically, access to bandwidth increases productivity, leads to greater price transparency and efficiencies in the supply chain. It also lowers communication costs, leads to development of major new industries including telemedicine and connected homes, results in higher levels of education through access to online resources, leads to more efficient work and use of public infrastructure through telecommuting, and leads to more efficient labour allocation through better job advertising.

The trend the world over therefore, is to drive competition in the data segment, and consequently lower prices to achieve universal coverage and access. Lo and behold, the NCC wanted to officially and compulsorily raise the price of data by ordering the major telcos to charge a minimum of N0.90k/MB. Before then, some telcos were charging as low as N0.21k/MB.

The argument by the NCC that “the decision to have a price floor was primarily to promote a level playing field for all operators in the industry, encourage small operators and new entrants” is bunkum: How can you increase data price by as much as 300 percent for telcos who have a 95% share of the market just to protect small operators with about 5% of the market? Is that not punishing the majority of the country just so that some small operators in the industry can survive? What message is the NCC sending to telcos and investors that have carefully planned and invested billions of dollars  to land cables (passing through different continents) just to be able to deliver cheaper data to Nigerians? Is it not sending a subtle message to companies and investors that long term strategy in Nigeria is virtually useless and that all that matters is just politics, knowing someone in government or the regulatory institution that will turn things in your favour?

It beggars belief that the NCC was attempting to throw millions of Nigerians under the bus, derail Nigeria’s economic and educational progress and growth just to pander to the whims of some people who rely on regulatory help to survive a competitive environment!

This has confirmed Prof Stigler’s view that sometimes regulators end up being captured by the firms in the industry they sought to control.

Sometimes, beyond being captured, it may be about the competencies of people appointed to regulatory institutions. In other climes, leading industry experts are usually appointed to regulatory institutions and such institutions are at the cutting edge of knowledge and innovations in the industry. But this is not so in Nigeria. Here, appointment to regulatory institutions are seen as providing job for the boys and firms or companies being regulated, sometimes, out of genuine concern, have to finance the training of regulatory personnel to, at least, help them to even understand some concepts and dynamics in the industry.

Whatever the case is, it is clear the NCC is out of sync with happenings in the global telecommunications space and is badly in need of reputable and or competent personnel to be able to effectively discharge its duties.

We salute the Nigerian people who relentlessly assailed the commission and the government which lead to a reversal of the order increase data price effective December 1 2016.