Advancing Data Penetration Through Regulation
Adebayo Onigbanjo

Value of Connectivity
The knowledge economy is the future of the world economy and the internet is its backbone, yet
currently, only about 1 out of every 3 people can go online. Internet.org along with several
organizations are focused on getting the remaining two thirds of the world to benefit from the same
opportunities the connected parts of the world get today.
Internet connectivity today has already changed many aspects of the lives of individuals in
developed countries ranging from new modes of communication, socialization, business models,
industries and lifestyle. Today many governments already recognize the role internet access has on
their economies and how it enables both economic and social development, leading to several
governments developing National Broadband Plans.
Nigeria, like most developing countries today still has a low broadband penetration with the NCC
executive chairman Prof. Umar Danbatta indicating it is only at 14% with optimizing to reach 30%
at 2018.
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The Internet offers unprecedented opportunities for economic growth in developing countries. By
providing access to information, connecting people to businesses everywhere, and opening up new
markets, the internet can transform the very nature of an economy and support economic
development.
Enabling Connectivity
To extend internet access in developing regions to levels seen in urban areas or developed market
and to unlock the economic and social benefits, action is required. Without intervention, increase
in penetration is unlikely to reach the desired levels that brings economic and social benefits. The
required actions vary and require a close understanding of market dynamics and timing. Here are
four key initiatives
1. Extending infrastructure for low cost, high speed connectivity to semi-urban and rural parts
– To achieve the 30% penetration, it is essential to extended the infrastructure beyond tier
cities. Accelerating government programs, promoting public-private collaboration, and a
supportive telecom policy could potentially improve the pace of the roll-out
2. Enable large scale digital literacy to promote user engagement – Lack of education using
the internet and lack of local language support on devices, applications and services are
also holding back the penetration
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3. Internet based application – For the penetration to grow, there is a need for applications that
go beyond the basic social media channels to the ones that address real-world challenges
citizens in rural areas desire.
4. Create a favorable environment for internet businesses to both start and scale up – This
includes simplifying the requirements businesses need to operate The NCC Price Floor

As stated above the regulator has a role to play in enabling some of this actions to be successfully
implemented and positively impact the growth in internet penetration. Following the MNOs
stakeholders consultative meeting of October 19th 2016 the regulator requested a price floor for
data services. As you are aware the NCC has licensed several broadband operators across the
country with the expectation that creating more regional licenses will enable a growth of
deployment in the regions, however this has not been as successful as expected.
The price floor initiative was to help make the pricing competitive for the smaller and regional
players so they can economically deploy networks with the knowledge that they have a price floor
they can base their pricing on. The current format means that stronger operators will continue to
offer a lower price and only focus in the urban cities and not encourage the rollout in the rural
areas.
The price floor in 2014 was ₦3.11k/MB but was removed in 2015. The price floor that was supposed
to flag off on December 1, 2016 was ₦0.90k/MB.
In taking that decision, the smaller operators were exempted from the new price regime, by their
small market share. The decision on the price floor was taken to protect the consumers who are at
the receiving end and save the smaller operators from predatory services that are likely to suffocate
them and push them into extinction.
The price floor is not an increase in price but a regulatory safeguard put in place by the
telecommunications regulator to check anti-competitive practices by dominant operators.
This statement clarifies the insinuation in some quarters that the regulator has fixed prices for data
services. This is not true because the NCC does not fix prices but provides regulatory guidelines to
protect the consumers, deepen investments and safeguard the industry from imminent collapse.
Before the new suspended price floor of ₦0.90k/MB, the industry average for dominant operators
including MTN Nigeria Communications Limited, EMTS Limited (Etisalat) and Airtel Nigeria
Limited was ₦0.53k/MB.
Etisalat offered (₦0.94k/MB), Airtel (₦0.52k/MB), MTN (₦0.45k/MB) and Globacom
(₦0.21k/MB).
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The smaller operators/ new entrants charge the following: Smile Communications - ₦0.84k/MB,
Spectranet - ₦0.58k/MB and NATCOMS (NTEL) - ₦0.72k/MB.
While on the surface, this would be considered as a price raise for consumers, it is important to
understand that this are short term approaches which will enable investors to comfortably roll-out
in rural areas which in the long term will increase the broadband capacity and reduce the data
tariffs.