THE FIRST LAW OF DEMAND WILL ELIMINATE THE INTERNET DATA BLACK MARKET

The first law of demand simply specifies the inverse relationship between the price and quantity demanded. It states that the lower the price, the higher the quantity demanded and vice versa. For instance, when you obtain a N500 airtime, and the tariff is like 30kobo/sec, you tend to conserve it, spending it on more important calls. In that case, your demand is elastic. In simple language, you are conscious of the price. But when the tariff is in the range of 10kobo/sec, you tend to exhaust the airtime within a shorter time. This is because in this situation, you are less concerned about the price. Your demand is now inelastic. Suppose the price (tariff) goes down further, you will end up making more calls and recharging your phone more often. It is so straightforward. The lower the price, the higher the quantity demanded. That’s human behaviour!

Unfortunately, while the telecommunication companies implement the simple law of demand as regards call tariffs, they seem not to get it right when it comes to internet data tariff, thereby leading to internet data black market where ‘cheat codes’ are developed and sold at cheaper rates. Although the expression “internet data black market” is my coinage, I believe it is clear enough. We are all aware of the MTN, GLO, Airtel and Etisalat data cheats. Probably because Nigeria ranks among countries with majority of poor citizens, a sizeable number of Nigerians go through the black market to obtain internet data to access the internet. The argument in this article is that it is only when these telecommunication companies implement the economic law that they can eliminate the internet data black market.


The telecoms companies often employ tech experts to outsmart the youths who develop these cheats. And, you can be certain that those experts will never be able to outwit the youths. Not even the National Communications Commission (NCC) can effectively circumvent them. I can vouch for the intelligence of the Nigerian youths! There will continue to be a vicious cycle. The only solution lies with the price system.


This writer therefore argues that the panacea is not to continue to employ experts to block the cheats in the bid to eliminate black market. Rather, the solution is to employ the price mechanism by using the law of demand. Who says the telecoms companies cannot sell 3 gigabytes of internet data for N500? There is established and growing demand. Apart from the ever-ready demand that comes from our large population, there is high and growing demand for internet resulting from demand for online activities as our social, economic and educational activities are increasingly being conducted over the internet. However, if the telecoms companies wish to shift demand for internet data from the black market to the official market, they have to consider lowering the price. Aside the fact that the telecoms companies will be able to save huge costs, they will be able to increase their revenues because there will no longer be any incentive to patronise the black market. The customers will now patronise the telecoms companies. Another advantage of this course of action is that the youths who provide those services will have to turn their attention to more productive activities.

In conclusion, this piece has argued that for telecoms companies to eliminate internet data black market, they have to employ the price mechanism using the first law of demand like they are doing with call tariffs. This action is expected to eliminate the black market and bring in more customers especially as youths who make up the bulk of the participants in the black market also form a significant proportion of the Nigerian population. Thus, the benefits to the telecoms companies are in the areas of cost reduction and simultaneous opportunity for profit maximisation. For the society at large, the benefit comes from the youths who are left with no alternative but to use their intelligence for better productive activities.

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Vacancy.

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Op, you have a point. This is one of the reasons why I think some of this "cheats" you pay money to activate were actually made by these network providers

One thing not considered in this analysis is infrastructure.

Yes, the price of data can get subsidized but with that comes an influx of network activity from users who otherwise couldn't purchase expensive data. Voice calls as we know is less strenuous on networks than data transfer. To accommodate the rise in bandwidth use, the network would have to invest heavily in major upgrades which run into meeting a backlog of five year non-maintenance due to inefficient usage. There's no way you'd tell me mtn can compress a 2 year upgrade of their services into a one week time-frame.

Much as I agree with you on the possibility of a subsidy, the costs to the company in upgrades would highly outweigh the benefits of more user patronage and would most likely drag the companies back into a situation whereby recouping profits would take years of operation to achieve.