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NCC plans new policy on transmission cable pricing

By on March 27, 2015

The Nigerian Communications Commission (NCC) is considering  introducing a new pricing regime for effective cost based transmission cable pricing for the telecoms sector.

The proposed pricing regime was contained in the result of a study presented by KPMG at a Stakeholders’ Consultative Forum organised by the NCC in Lagos.

The forum was  on the determination of a cost based transmission cable pricing among telecoms operators in
the country.

The essence of the new pricing policy is to enable NCC have full control of the market and protect smaller telecoms operators from dominant operators who may want to take undue advantage of their small size to introduce arbitrary charges on connectivity.

The NCC had before now, held an interactive session with telecoms operators to discuss the issue, where concerns were raised on discriminatory and arbitrary charges, predatory pricing, denial of access to viable routes, among others.

The Commission had contracted KPMG two years ago to carry out the study as part of its regulatory oversight function to address competitive dynamics, pricing and related matters in cable transmission pricing among operators.

Executive Vice Chairman of NCC, Dr. Eugene Juwah, who was represented at the forum by the Executive Commissioner, Stakeholder Management, Dr. Okechukwu Itanyi, said the decision was informed by the commission’s observations of arbitrary and discriminatory pricing inherent in the transmission line market segment.

Although he said NCC welcomes market dominance but frowns on market oppression by dominant players.

He explained that presentation of findings from the study to stakeholders, is to further prove the commission’s participatory regulation to gather opinions and inputs for best pricing regime in the sector’s cable transmission market.

According to Juwah, “While the policy of government on communication is that appropriate prices should be determined by market competition, but it also recognises that in the journey from monopoly to full market competition, there will be period of transition when competitive market forces may be inadequate to bring about efficient market conduct and prices that are close to costs. In such situations, the policy provides that regulatory intervention goes into effect.”

He said it became imperative for NCC to embark on the cost study titled ‘Cost-based transmission cable pricing and development of an accounting separation framework /retails voice tariff’.

The essence of determining a cost based transmission cable pricing and development is to enable an extremely high degree of frequency reuse, requires minimal frequency coordination, which allows links to be deployed close to one another without interference.

Partner, Management Consulting at KPMG, Mr. Joseph Tegbe, said the primary objective of the project is to develop a cost based option for regulating the pricing of transmission cable in the telecoms industry.

According to him, the greatest challenge encountered in the project was access to data as it took a year before accessing operators information.

He said having followed the best international best practices in carrying out the study, information given by the telecoms operators was used as benchmark in the proposed pricing regime.

Having presented the findings of KPMG, telecoms operators are expected to study it and make their inputs before the final policy document is released