Have you noticed that internet data price from our telcos have crashed in recent times? Before now, you could barely get 2GB for ₦2,000 on Globacom’s network. Today, that same amount will fetch you 6GB. Cool right? Few months ago, Airtel sold 4GB data for ₦3,500; now this will buy you 7GB worth of data. MTN and Etisalat are not left out has they have also reviewed their data tariff in a bid to stay in competition.
Though we have been looking forward to witness this reality, but i can’t help but wonder why there’s this sudden internet data price crash from the major telecommunication service providers. Why the recent competition in data price? is it because the Nigerian communications Commission removed the data floor price? And how does this new data price regime affect the revenue of these telcos?
We will consider each of these points one after the other, starting with the NCC’s removal of the data floor price.
Relevance of NCC’s data floor price removal
Data floor price in the telecom sector, is the limit to how low ISPs in Nigeria could fix their prices. Remember how the federal government is making the oil sector more competitive by the removal of subsidy and placing a ceiling of ₦145, above which oil market marketers can not sell petrol. That is exactly what NCC did on October 13, 2015 where it approved the removal of data floor price limit so the ISPs could compete for customers with low prices, but they could only go so low. This explains why Globacom (Glo) and Airtel had already started offering more affordable data plans before the announcement became official.
In other to ensure smaller ISPs and ‘upcoming’ telcos had the chance to compete with the bigger, already established ones, NCC had set the data floor price limit. But I doubt this plan worked out as intended. How many new ISPs have been established in recent years? And has any new ISP been able to build up enough momentum to challenge the big players? No. So the plan did not work, and NCC had to do away with it.
Once the data floor price was out of the way, ISPs (including the telcos) now had the liberty of dropping their prices and revising their data plans as they saw fit.
Internet Data Price Competition begins
Report has it that in September 2015, a month before NCC removed the data floor price, MTN had the highest amount of internet subscribers among the 4 major telcos – and by some margin too. Going by the NCC’s Internet Subscriber Data report of May 2015 – April 2016, MTN had 41.8 million internet subscribers – that’s almost 100% more than Glo’s 21.9 million subscribers. Airtel was third with 17.7 million and Etisalat fourth with 15.6 million.
One month after the floor price removal, in November 2015, MTN lost 1 million subscribers (40.8 million), Glo gained 3 million (24.9 million), Airtel lost close to 1 million subscribers (16.8 million), and Etisalat lost close to half a million (15.2 million). I assume it was around this time that Glo revised their data plans again and introduced their ridiculously cheap Campus Booster data plans and other packages of the sort.
By April 2016, MTN had lost almost 10 million internet subscribers (32.4 million), while Glo had gained almost 5 million (26.3 million). Airtel’s internet subscriber base fell from 17.7 million in September 2015 to 15.3 million in April 2016, while Etisalat’s internet subscriber base rose to 17.2 million from 15.6 million.[irp]
Looking at these figures, it’s obvious that Glo has been the big winner so far in the ongoing data war. For all the others to compete with it, they have to drop their prices and revise their data plans. And that is what they are doing. Although, many Etisalat internet data subscribers are claiming that the quality of internet service they get has reduced considerably. This leads me to the next point.
What is the impact of the new data plan prices on the telcos?
I’m pushed to ask if these telcos are really ready to fight for customers in the boxing ring of data plans. If this fight goes on, will someone get knocked out because they couldn’t keep up, or is my question too drastic?
I mean, if Etisalat customers are already having to deal with the baggage of slow internet and MTN subscribers putting up with high rate of data consumption attached to cheap data, I think it is okay to ask these questions.
MTN’s sudden revision of their data plans in May 2016 seems to me like a reaction to what is happening to their internet subscription numbers, and not a result of planned action.
According to Yomi Kazeem of QZ Africa, mobile data revenue is growing and is expected to top $22 billion by 2019. On the other hand, the growth of mobile voice revenue is slowing down, and is only expected to grow by $5 billion by 2019; note that it was at $50 billion in 2014.[irp]
The plan for the telcos is to get their internet data price as low as possible to gain more customers and make it cheaper for Nigerians to access the internet.
“By making mobile data cheaper than it’s ever been,” Yomi says, “telcos are hoping to gain more users who might later upgrade to more expensive plans.”
… For Customers?
For us, the consumers, cheaper internet data price means we can consume more digital content than we used to. For content producers, it means access to more customers and more potential for revenue.
But with the access to more content and the opportunity for more content producers to create, there will also arise the need for consumers to control and determine what they consume. Information overload is not fun.
We could go on and on about what internet data price crash holds for Nigeria. There’s much to look forward to, and I’m excited about to be a part of it. Aren’t you?