A new study by the Emerging Technologies Research Unit of the Research and Development Department for the Nigerian Communications Commission (NCC) has called for a regulated increase in the prices of data to save Internet Service Providers (ISPs) from dying. According to the study, there is currently a regime of “artificially low data prices” in the market due to stiff competition among the operators.
While the number of ISPs in the country had consistently declined over the years, the operators have been blaming the bigger operators, especially the likes of MTN, Globacom, Airtel, and 9mobile for their woes. The operation of the mobile network operators in the retail data market with cheaper prices is said to be the bane of the ISP businesses.
“To solve the issue of artificially low internet/data prices, a regulated minimum price level has to be put in place by the Government and the Commission, for both big and small telecom operators to compete on the quality of the network and customer services they provide,” the study recommended.
In the report of the study titled: “An Exploratory Study on the Challenges and Survivability of ISP Licensees in the Nigerian Telecom Sector,” the researchers said they found that the licence renewal rate of ISPs in Nigeria continues to drop, even as others take up the licence.
“In view of the critical need of internet connectivity for the digital economy and mass digitalisation of Nigeria, the role of ISPs is central also for the uptake of the internet of things (IoT). The Study, therefore, undertook a detailed assessment of the challenges facing ISPs in Nigeria and these were found to include: competition with MNOs offering ISP services, harsh business environment, inadequate National Broadband Infrastructure. Additional, Multiple Taxation by different levels of Government, and unfavourable conditions for the Industry in terms of the disparity between advertised Internet speeds and actual speed obtainable on the networks, inadequate provision of redundancy by ISPs to handle network downtime and lack of compensation for downtime and poor quality of service,” the report stated.
While noting that there is an urgent need for ISPs to develop business niches, improve their customer base through aggressive marketing as well as identifying the right cost of data purchase, and other sound business that will ensure that continuity, the report said the NCC also needs to ensure the conclusion of the study on cost-based pricing determination in Nigeria for retail broadband and data services. “The study report will allow the decision on the price of the data floor to encourage a level playing field for all industry operators,” the researchers added.
The study also called for more investment in telecommunications infrastructure, noting that this is essential to economic growth. It urged the NCC to encourage adequate infrastructure build-out as it contributes to the efficient operation of the sector and the survivability of the ISPs.
“The Commission should provide the best enabling environment that encourages additional Investment in telecommunications infrastructure as essential to economic growth, as adequate infrastructure contributes to the efficient operation of the sector.
“The Commission should champion the ubiquitous use of e-Services, eGovernance, and e-Business, which would result in an increase in the need for internet services which would invariably lead to more business opportunities, niches, and customers for the smaller ISPs especially in more rural areas which might not be so commercially viable for the MNOs to compete in,” the report recommended.
The researchers also noted that there is a need to encourage ISPs to improve their general business processes/practices to ensure long-term growth and sustainability in order to create new revenue streams, recreate existing products, diversify into new areas for which resources and capabilities are available, and establish a minimum market price.