Yes, you read that right. The data wars we have come to love, that have in the past few months ushered a wave of cuts in the cost of data plans across board (MTN, Airtel, Glo, Etisalat) are about to end…pretty much due to the same reason they started.
Like I mentioned in this interview with Quartz, the major driving factor for the price reductions, had nothing to do with competition or the free market, but rather with the removal of the floor data price (minimum that a Telco could charge per KB) by NCC. Before then, NCC pretty much determined how much these companies could charge for data, the logic being that it was a means of levelling the playing field for all the operators.
What I skipped however in my excitement was that there was a caveat in that release, which I have highlighted in the reproduction of the original announcement below (emphasis mine):
The Commission, in a bid to ensure sustainability, growth and development of the data service market segment, approved the withdrawal of data floor price on October 13, 2015. However, the Commission WILL restore the floor price if any distortion is observed within the market segment.
Long story short, the NCC has re-implemented a data floor price which kicks in on the first day of December and explains why you may or may not have gotten messages such as the one below from MTN, giving you a heads up that the price of data will change soon.
The argument from the NCC side according to whispers that have reached my ear, is that the current free market prices only favour the the bigger players, who are running the smaller ones out of business, and as such, a floor price levels the playing field for all the players. I’ve also heard that the floor price is also being reintroduced as a measure to check the quality of service, which has apparently dipped in some quarters thanks to the cost.
If you ask me though, I think it’s counter intuitive to on one-hand be chasing broadband penetration and on the other hand pushing out policies that will lead to less access. I’m also a bit tired of government’s general need to “protect” businesses that should naturally be competitive. I also think there are better ways to control quality, without having to dictate the price. Cracking down on operators not meeting QoS KPIs without dictating the price, would have ensured quality, as networks would have naturally adjusted the price to match a pace they could keep up with.
Also, rather than spoon feed several smaller businesses, the smaller businesses would naturally have merged to form larger ones, been acquired, innovated their way forward or maybe died. Whatever way they may have gone, I believe in the long term, it would have been for the customers good.
While I currently haven’t gotten wind of what the new floor price is, I’m almost certain it’ll fall in the region of what Etisalat currently prices it’s plans, (after the recent upward review).