In the last quarter of 2010 each of Nigeria's main telecommunications operators - MTN, Airtel, Globacom and Etisalat - reduced their tariffs significantly in what appears to be a strategy to increase their market share. As part of the process, the various operators had to take into account the regulatory framework governing the pricing of telecommunications services in Nigeria.
The objectives of the Communications Commission include the promotion of affordable and readily available communications services in the telecommunications sector. In keeping with its objectives, the provisions of the Nigerian Communications Act(1) and the conditions of its individual licences, the commission consistently monitors and approves the retail prices of services offered by telecommunications operators to the public.
Tariffs and charges for telecommunications services provided on the basis of an individual licence must be approved by the commission, in the form of a price cap. Licensees may not exceed such rates and charges without the commission's prior approval. Tariff rates must be based on the principles established by the commission, including those of fair and non-discriminatory pricing, cost orientation and the absence of non-competitive discounts. The Communications Act empowers the commission to penalise a licensee that exceeds the tariff rates for the provision of any of its services.
The commission may intervene as it deems appropriate in setting tariff rates for non-competitive services provided by a licensee. However, the act does not indicate the categories of service which the commission may regard as non-competitive and on which it may therefore make a determination on pricing.
The Communications Act and the Telecommunications Networks Interconnection Regulations published by the commission in 2007 empower it to intervene in respect of wholesale (interconnection) rates. These rates are usually negotiated between the licensees; however, where the licensees are unable to arrive at a consensus, the commission may intervene and make binding determinations on such rates, particularly if it feels that this is in the public interest. The commission has used its powers to establish interconnection rates in situations where operators could not reach an agreement.
On December 21 2009 the commission established the following interconnection rates for all fixed and mobile operators in respect of voice call and text messaging termination:
| Interconnection type | Rate (Naira) | Effective Date |
| Mobile voice call termination - new entrants, irrespective of the originating network | 10.12 | End 2009 |
| 9.48 | End 2010 | |
| 8.84 | End 2011 | |
| 8.20 | End 2012 | |
| Mobile voice call termination - other operators, irrespective of the originating networks | 8.20 | End 2009 |
| Fixed voice call termination, irrespective of the originating networks | 10.12 | End 2009 |
| 9.48 | End 2010 | |
| 8.84 | End 2011 | |
| 8.20 | End 2012 | |
| Text message termination provided by new entrants, irrespective of the originating network | 1.94 | End 2009 |
| 1.63 | End 2010 | |
| 1.32 | End 2011 | |
| 1.02 | End 2012 | |
| Text message termination provided by other operators, irrespective of the originating network | 1.02 | End 2009 |
The intense competition for market share appears to be the most significant factor in the pricing of telecommunications services in Nigeria at present. However, it remains to be seen whether competition will continue to play a major role in helping the commission to achieve its objective of ensuring the provision of "affordable communications services in the sector".
For further information on this topic please contact Afoke Igwe at Udo-Udoma & Belo-Osagie by telephone (+234 1 263 4831), fax (+234 1 263 4541) or email ([email protected]).
Endnotes