By Martin Ekpeke
The Nigerian Communications Commission (NCC) since the liberalization of the telecom sector in 2001 has shown itself as a people-oriented regulator by deploying various regulatory frameworks and initiatives to ensure consistent reduction in the cost of telecommunications services in the country.
However, stakeholders, especially telecom consumers and mobile network operators (MNOs) and other concerned consumerist groups in the country have raised vehement objections to the recent move by the Ministry of Finance, Budget and National Planning under the leadership of Zainab Ahmed to introduce the controversial five percent excise duty on telecommunications services.
The stakeholders were unanimous in their opposition to the fiscal move, saying that the development is capable of contradicting the NCC’s regulatory position to always want to ensure a reduction in telecom tariffs over the last 20 years.
Speaking the maiden Nigerian Telecommunications Indigenous Content Expo (NTICE), organized by the Commission through its Nigeria Office for Developing Indigenous Telecom Sector (NODITS), the Minister of Communications and Digital Economy, Prof. Isa Pantami, has rejected the imposition of another tax burden in form of excise duty on telecoms companies.
While stating that the timing is wrong, considering the economic hardship that Nigerians currently face, Pantami said the excise duty would lead to an increase in tariff of telecoms services, as telecom operators would only pass the extra tax burden incurred onto Nigerians in form of an increased tariff.
The Minister’s opposition to the imposition of five percent on telecommunications services by the Federal Government, resonated across the country as he described such a move as ill-timed because according to him excise duty should be introduced on luxury goods but telecoms has become a necessity, having been described as fundamental human right of every citizen by the International Telecommunications Union (ITU).
He stated further that as the supervising minister of the telecom sector, he was not consulted and that the timing of such duty is antithetical to the growth of the industry, especially at a time when hardship is being witnessed across the country and telecom operators are faced with the quagmire of multiple taxations.
“We reject the decision on five percent excise duty on telecom services. It will be unfair to impose such an increase on an already burdened sector trying to cope with multiple taxations despite contributing about 17 percent to the country’s revenue,” he said.
From all indications, the NCC has clearly demonstrated its position too on the matter, by frowning at the proposed introduction of the Five percent excise duty on telecoms services. In other words, NCC’s body language is clear in terms of its alignment with the Minister’s position. After all, the Minister has spoken for the sector he supervises.
NCC’s Consistent Quest for Reduction in Telecoms Services
Those who have followed the telecom sector in the last 21 years should understand the position of the NCC in terms of tariffs for telecom services. The Commission has never been on the side of the tariff increase.
Instead, the Commission has always worked towards the reduction by consistently engaging various stakeholders through its many consultation platforms.
Findings by ITPulse showed that occasions abound when the NCC disagreed with the telecom operators when they attempted to increase tariffs in the telecom sector, which is today said to be contributing over 17 percent to the country’s Gross Domestic Product (GDP), according to the National Bureau of Statistics (NBS).
ITPulse recalls the recent demand for tariff increases by the operators through the Association of Licensed Telecommunications Operators of Nigeria (ALTON), citing the high cost of running their operations and insecurity as the major reason for their proposed tariff hike. The NCC rejected the demand, allaying the fears of Nigerians that no tariff increase will be carried out by the operators without due regulatory approval by the Commission.
From NITEL’s 400,000 pre-GSM auctions to today where Nigeria boasts of over 200 million connected lines, representing 108.15 percent teledensity and over $75 billion in investment, the sector has continued to thrive growing in leaps and bounds. This growth can be attributed to the Nigerian Communications Commission for its stand to be on the side of the subscribers.
NCC’s Consumer-Centric Regulatory Focus
Speaking with ITPulse, sources within the Commission said as the regulator, the NCC is aware that additional taxes and levies on telecommunications operators will have a negative consequence on the price and quality of services offered by operators. Thus, the Commission had, over the years, remained a consumer-centric regulator, making sure quality services that are seen to be affordable compared to other jurisprudence are offered by the operators.
Consistent with Section 108 of the Nigerian Communications Act 2003 (NCA 2003), the Commission is responsible for the approval of tariffs and other charges for the provision of service by licensed telecommunications service providers.
There are also laid-down conditions for approval of a new tariff plan or modifications of a tariff plan. So, any attempt by the Federal Government to increase tariffs will be seen to be inconsistent with Section 108 of the Nigerian Communications Act 2003 (NCA 2003).
Though the telecom sector is seen today as a revenue spinner for the Federal Government, industry analysts say it will be wise for the government to also extend its net to other sectors as it hopes to increase revenue because the telecom industry is already doing enough and could crash if any further taxes are added to about 40 charges being imposed on the operators by various level of government, as claimed by the National Chairman of ALTON, Engr. Gbenga Adebayo.
Therefore, each sector must contribute a certain percentage to the economy rather than relying on a single sector, and then moving ahead to further burden such a sector with more fiscal burdens that negatively affect its contribution to the nation’s economy.
Also, industry pundits have also stated that any increase in telecom services such as calls, Short Messaging Services (SMS) and data comes down to the subscribers having to pay more, apart from having a negative consequence on the services offered by operators in terms of pricing, investment choices, service quality and service affordability.
NCC and Evidence-Based Regulations
As a regulator, the Commission has always followed international best practices and established regulatory procedures to ensure that its regulatory activities are guided by regular cost-based and empirical studies to determine the appropriate costs (upper and floor price) within which service providers are allowed to charge their subscribers for services delivered.
Toeing this line, the regulator has also consistently ensured that any cost determined, as an outcome of such transparent studies is fair enough to enhance healthy competition among the operators, provide wider choices for the subscribers as well as ensure the sustainability of the Nigerian telecoms industry.
Tariff regulations and determinations are made by the Commission in line with the provisions of the NCA 2003, which entrusts the Commission with the protection and promotion of the interests of subscribers against unfair practices including but not limited to; matters relating to tariffs and charges.
The current tariff regime, being administered by the service providers is a product of NCC’s determination both for voice and SMS in the past. This has not changed as of today. The cost of services has been democratised and become more affordable for Nigerian subscribers compared to other climes, considering that the consumer spent between N50-N70 on a minute of call 20 years ago and today, it is around N20, despite the rising cost of operations by the telecom companies.
It is therefore the view of the majority of industry analysts, including the National Association of Telecom Subscribers (NATCOM) that, going by the antecedent of the Commission, the regulator has demonstrated more commitment to the cause of ensuring subscribers get greater value for money spent on telecom services.
Lofty Target for Service Reduction and NCC’s FIGHT Against Multiple Taxations
In the current Nigerian National Broadband Plan 2020-2025, the goal of the government is to reduce the cost of data to as low as N390 per one gigabyte. Already, through an effective regulatory regime replaced by the NCC as one of the key agencies under the Ministry of Communications and Digital Economy to implement the broadband plan, the cost of data has crashed by 50 percent. This is so if considered that consumers can now get 2GB of data for just N1000.
Also, the Commission has, on several occasions, met with various stakeholders including state and non-state actors to dialogue on how the industry can deal with the issue of multiple taxations and regulations which, ipso facto, lead to an increase in the cost of delivery services which operators are likely to pass to the final consumers of telecom services.
It also goes without saying that the Executive Vice Chairman and Chief Executive Officer of NCC, Prof. Umar Danbatta, has consistently pursued the path of broadband availability, accessibility and affordability since the assumption in 2015.
Danbatta, on several occasions, has said the essence of the NCC’s Strategic Management Plan and the Strategic Vision Implementation Plan are, among others, to enhance the quality of service, quality of experience for the consumers as well as ensure services are more affordable to all Nigerians irrespective of their circumstances.