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Pricing and consumer protection
What rules govern retail pricing for telecoms services?
Individual licence holders are required to seek prior approval from the regulator of tariffs or charges for the provision of any service. Changes to any approved tariff or charges must also be approved by the regulator. The regulator may impose appropriate financial penalties on any operator which exceeds approved tariffs.
All tariff rates and charges must be published. The rates must:
- be fair and non-discriminatory;
- be cost-oriented and in general, cross-subsidies will be eliminated;
- not contain discounts that unreasonably prejudice the competitive opportunities of other providers;
- be structured with levels set to attract investment in the communications industry; and
- take into account the regulations and recommendations of international organisations of which Nigeria is a member.
What rules govern consumer service contracts?
Pursuant to its powers under the Nigerian Communications Act 2003, the regulator issued the Consumer Code of Practice Regulations 2007, which requires every communications service provider to prepare a consumer code for the provision of services and related consumer practices applicable to it and submit it for approval by the regulator. The regulator has attached to it as a schedule the General Consumer Code of Practice, which is to act as a guide to service providers for the production of their specific individual codes. The consumer code to be prepared by the service provider will include at least the terms and conditions of the general code or equivalent terms and conditions that are no less favourable to consumers.
On approval, all services and related consumer practices will be governed by the provisions of the approved code from the publications date.
The minimum terms and conditions as prescribed by the general code covers areas including:
- the provision of information to customers;
- service contracts;
- pricing information;
- contract term and termination;
- advertising and representations;
- unsolicited marketing;
- consumer billing;
- protection of consumer information; and
- complaints handling.
The preparation of a consumer code by a consumer forum, subject to ratification by the regulator is also acceptable.
Are telecoms service providers bound by any consumer disclosure requirements?
Yes, in accordance with the General Consumer Code of Practice (Schedule 1) to the Consumer Code of Practice Regulations 2007 any telecoms service provider that collects information on individual consumers is required to adopt and implement a policy regarding the proper collection, use and protection of that information. The service provider must ensure that any other service provider or other persons with which it exchanges or otherwise discloses such information have adopted and implemented an appropriate protection of consumer information policy.
Issues and concerns
Are there any particular competition issues or concerns in the domestic telecoms market?
Following the withdrawal of the data floor price cap in October 2015, the regulator directed service providers on a price floor for the data segment of the telecoms sector to commence in December 2016. The regulator stated that the decision to have a price floor was primarily aimed to:
- promote a level playing field for all operators in the industry;
- encourage small operators and new entrants; and
- not necessarily to hike prices.
However, the directive was suspended due to public outcry as to the likely price hike that may follow the implementation of a data floor price. Reports suggest that there has been a 65% decrease in data prices in Nigeria over the last two years resulting in reduced margins for operators and it is believed that the price wars might lead to the demise of some of the smaller players in the industry.
The Nigerian Senate recently passed the Federal Competition and Consumer Protection Bill 2017 which seeks to establish a Federal Competition and Consumer Protection Commission and Tribunal for:
- the development and promotion of fair, efficient and competitive markets in Nigeria;
- the facilitation of access to safe products by all citizens; and
- the protection of rights for all consumers in Nigeria.
The bill is yet to be passed by the House of Representatives.
Do any sector-specific competition regulatory/legal provisions apply (eg, special conditions for dominant telecoms market players)?
Yes, in accordance with the provisions of the Nigerian Communications Act 2003 the Nigerian Communications Commission (NCC) has the exclusive ability to:
- pronounce upon;
- monitor; and
- enforce compliance with competition laws and regulations, whether of a general or specific nature.
The NCC has the power to determine whether a telecoms service provider is in a dominant position in the market. In making such a determination the NCC may publish guidelines and regulations which clarify how it tests whether a service provider holds a dominant position.
The NCC issued the Competition Practice Regulations 2007 to provide a regulatory framework for the promotion of fair competition in the communications sector and protection against the misuse of market power or other anti-competitive practices.
The regulation provides further guidance on:
- the standards and procedures which the NCC applies when determining whether particular conduct constitutes substantial lessening of competition;
- what agreements or practices the NCC considers to be anti-competitive;
- the standards and processes the NCC applies in determining whether an operator has a dominant position in one or more communications markets;
- what conduct is deemed to be an abuse of dominance; and
- the merger review procedures applied by the NCC.
In determining whether or not a particular service provider or operator is in a dominant position in one or more specifically defined sectors, the NCC may consider one or more of the following:
- the market share of the operator, which is determined by referring to:
- numbers of subscribers; and
- volumes of sales;
- the overall size of the operator in comparison to its competitors, particularly any resulting economies of scale or scope that permit the larger operator to produce products or services at lower costs;
- control of network facilities or other infrastructure, access to which is required by competitors and that cannot, for commercial or technical reasons, be duplicated by competitors;
- the absence of buying power or negotiating position by customers or consumers, including substantial barriers to switching service providers;
- ease of market entry and the extent to which actual or potential market entry protects against the exercise of market power such as raising prices; and
- the rate of technological or other change in the market and related effects for market entry or the continuation of a dominant position.
Are there any requirements for structural, functional or accounting separation of operators’ activities?
Under the Telecommunications Network Interconnection Regulations, when interconnection services are not provided through a structurally separate subsidiary, a dominant operator is required to keep separate accounts as if the interconnection services were in fact provided by a legally independent company. A dominant operator is required to maintain separate accounts in respect of interconnection services and its core telecoms services.
Pursuant to the Competition Practices Regulations, when the NCC determines that the activities of an operator constitutes an abuse of domination position or anti-competitive practices it may require changes in action or activities as a means of eliminating or reducing the abusive or anti-competitive effect. This may include a directive for the structural, functional or accounting separation of the infringing service or business.
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