Data tariff crash heightens competition among telcos

Mobile data subscription is getting cheaper by the day; reason: fierce competition is pushing telcos to woo subscribers with price cuts! But, with data pricing now around 100 per cent cheaper than a couple of months ago, a worsened quality of service across networks poses questions on temporary joy of telecom service consumers over crashed data prices. Adedeji Adeyemi Fakorede reports.

Nigerian telecom sector has gain a tremendous success and positive changes that have occurred in less than two decades. Even when people forget the past, the pleasure of the present often brings back the memory of the ugly past, such that someone who is being enticed to get a particular network SIM card for free would remember the time he had to spend N30,000 to acquire a SIM.

Such is the dramatic turnaround in the Nigerian telecommunications industry that a country with about 400,000 fixed lines in 2001 now has over 148 million active mobile lines.

Interestingly, before the first set of licences were issued in 2001, most international mobile operators were afraid to come to Nigerian based on reports by so-called experts and telecom research agencies and the global financial institutions like the World Bank and the International Monetary Fund (IMF), which had forecast that in the Nigerian telecom sector, the average Nigerian could not afford to own a mobile phone as the per capita income, set by these agencies, of the citizens was below the internationally recognised average.

With this gloomy picture painted by the international community, the innumerable opportunities in the bustling country, Nigeria, were hardly seen.

Based on such reports, which clearly ignored or failed to acknowledge the special environment and nature of the people and the country, the telecom research agencies had forecast that it would take a 12-month period for any operator to reach 100,000 subscribers, three years to connect 300,000 lines and five years to hit the half a million subscription mark. This conservative report peddled to mobile operators about the market in Nigeria and other emerging markets put off many global players and investors that would have entered the auction at the time.

The course of Nigeria’s telecom sector however changed in January 2001 with the auction which was globally adjudged to be a most transparent process. Thus, immediately, confidence began to build in the sector that had been feared to be a dead-on-arrival zone. For instance, MTN’s shares on the Johannesburg Stock Exchange fell sharply when news petered out that the company had won one of the licences at the auction in Nigeria. Such were the initial cynicisms that would later give way when the companies all combined could hardly keep up with the pent up demand for mobile lines.

The auction and eventual licensing thus liberalised the sector bringing in mobile operators like MTN, Econet (now Airtel)); and further in 2003, Globacom to operate digital mobile phone services. Etisalat would later join in 2008 to make four strong GSM operators.

Today, the success of the Nigerian telecom sector is a reference point across the world. But not just as the world sees it, the Nigerian people can attest to the turnaround that sees virtually every citizen owning a mobile phone and having access to communicate at will. No doubt, the Nigerian telecom subscribers are the top beneficiaries of the stiff competition that has come to play with the emergence four mobile network operators and of course with the entrance of a fifth one, Ntel, which is promising revolutionary data offerings.

Investigation by National Daily reveal that there are stiff competition among the initial four mobile operators had brought down tariffs for voice calls, such that subscribers can now make phone calls absolutely free. Each pride itself as the leading and the best network for the subscribers to clinch to and as such has to roll out many fantastic products that others are not offering. From an average industry rate of N35 to N42 per minute across networks in 2010, today, subscribers can make call for as low as N6 per minute or even call for several minutes for free, depending on which network and what tariff plan they have chosen.

Interestingly, with Average Revenue Per User (ARPU) dropping from voice calls, operators’ attention have now been shifted towards data. But such shift in attention may not be misplaced after all, as the industry regulator; Nigerian Communications Commission (NCC) has declared broadband, which is all about data connectivity as the next frontier for the industry. That, perhaps, explains why operator has been aggressively pushing data offerings.

In an exclusive chat with National Daily a data analyst also reveals that 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. The plan for the telcos is to get their data prices 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 telcos are hoping to gain more users who might later upgrade to more expensive plans,” he said.
Obviously, among the four leading mobile operators, a fresh battle line has just been drawn with data offerings; it is about who deliver it cheapest and expectedly, the subscribers are latching onto this rare opportunity where they can now get 2 gigabyte of data at N1,000. Indeed, good times are here for the Nigerian subscribers. But is it really a good time as the challenge of service quality persists? Are the subscribers really getting value for the ‘little’ money they are paying for subscriptions?

Data Price Crashes
Certainly, many may not expect it to happen so fast, but it is happening already, thanks to competition among the telecom operators. Not too long ago, data was seen an expensive luxury, where many phone users were restricted to only phone calls and SMS, even when their phones were internet-enabled. But the story has changed and it is not surprising that quarterly figures from the NCC continuously indicate increase in active internet subscribers. For instance, the total number of internet subscribers rose to 92,285,052 (ninety two million, two hundred and eighty five thousand and fifty two) as at March 2016, compared to 85,315,094 (eighty five million, three hundred and fifteen thousand and ninety four) recorded at the same period last year.

Interestingly, the month of May 2016 marked the beginning of another era; an era of data competition that saw four network operators released mouth-watering data offerings for consumers

 Data subscription activity in the last quarter revealed that Globacom strengthened its position as the leader among the four major service providers in new data subscriber acquisition.
An analysis of the report showed that it was only Globacom that had an increase in its internet subscriber figure in the last quarter. Globacom had 23,285,454 internet users in October, 24,952,559 in November and in December 25,082,066 subscribers which indicates an addition of 3.2m new internet subscribers in the quarter.

Before then, Globacom had launched some data offerings which included Free Tomorrow, Bumper Data offers, Campus Booster, Twin Bash and Weekend and Night packages. Glo CampusFree Tomorrow gives back double the value of airtime a subscriber uses in a day for internet services, phone calls and SMS. This is re-credited to the subscriber’s phone by 12 midnight. Campus Booster on its part is a special data plan that allows students and others on campus to get up to eight times more data value whenever they use their Glo lines on campuses.

In the Bumper Data offers, subscribers get 1.5G for just N1000 and 4.5G for N2500. Similarly, a N3, 000 data plan gives subscribers 6GB data valid for one month, while a N4000 data plan gives 9GB data plan valid for a month. Also, Twin Bash offers subscribers the facility of recharging data directly from recharge cards in denominations of N200 to N5000. A customer who recharges with N200 gets 200 MB of data worth N800 and N200 worth of airtime free for voice calls.

Interestingly, other operators joined the fray by announcing data packages at reduced price and the common among all being the N1, 000 for 1.5 gigabyte. But Globacom would not want to lose its subscribers to the competition who are ready to catch up with it in the data game. Hence, it came up with another tempting offering, slashing its data prices by almost 100 per cent across packages.

Globacom later unveiled a new plan tagged “Data Overload”, which it said was designed to give Nigerian data subscribers unprecedented value as the network has increased data value by additional 100 per cent across board. A breakdown of the offer shows that the N1, 000 plan which used to give the subscriber 1.5GB of data now gives 2GB, while the N2, 000 plan which hitherto came with 3GB of data now has 6GB data.

Similarly, subscribers now get 10GB of data for N2, 500 plan instead of 5GB and 12GB for N3,000 instead of 6GB data which the plan offered before. For the N4,000 data plan, the subscriber now gets 18GB instead of the old 9GB, while the N5,000 subscription will give the customer 24GB.

The biggest offer is the N8, 000 subscription which instead of the old 24GB, now gives the customer a whopping 48GB of data. According to the operator, “the new Data Overload is currently the most attractive in the market as no operator offers anything near it.”

A statement from Globacom explained that the new Data Overload was designed to promote upward migration from lower plans and excite Nigerians. “As the data game-changer in the industry, we have decided to give our esteemed subscribers the most affordable data value on our super-fast network powered by the Glo 1 submarine cable. We also wish to enrich their communication experience through unbelievable data volumes at best-in-class prices,” Globacom added. The company said it would continue to come out with innovative products and services for the benefit of its teeming subscribers.

Airtel Nigeria announced a review of its data tariff plans in a strategic move to offer more value to customers. Under the new data plans, customers can now enjoy up to 30MB with just N100, and 7GB at just N3,500 for a 30 day period. According to Airtel, with the review, telecoms consumers will be further empowered to connect to their dreams as well as fulfil their professional and personal endeavours at an amazingly discounted rate.

Speaking on the revised data plans, Chief Commercial Officer, Airtel Nigeria, Ahmed Mokhles, said the data offering is designed specifically to cater to the needs as well as empower the different segments of mobile Internet consumers. According to him, Airtel Nigeria has a key objective of delivering innovative, bespoke and quality data offerings to telecoms consumers in line with its commitment to empowering more Nigerians to succeed professionally and personally.

The new data plans come in six variants. Customers who subscribe to the N100 Daily Plan will now get 30MB instantly, unlike the previous plan, which offers of 20MB, while those on the Easy Plan of N500 will now enjoy 750MB valid for 14 days rather than the previous data value of 250MB. According to the telco, the megabyte offer on other bundle plans such as the Android bundle plans have also been increased accordingly as customers will now get 7GB of Data Bundle for N3,500; 1.5GB for N1,000; 3GB for N2,000 and N2,500 for 5GB, respectively.

Etisalat had excited Nigerian subscribers with its N1000 for 1 gigabyte and N2000 for 2 gigabyte plans, but that was before recent wave of price crash across other networks. Etisalat also announced new price for its data packages which saw an increase in data from 1 gigabyte to 1.5 gigabyte for the same cost of N1000. By the same token the N2000 data subscription on Etisalat now gives 3.5 gigabyte as against 2 gigabyte.

The company said it believes that by delivering a more affordable price range for users, it would help continue to push the use of mobile phones for Internet browsing. According to the company, the new data plan is a demonstration of Etisalat’s commitment to providing quality and affordable services to its customers.
Aside the reduction in its data price, in which 1.5 gigabyte now sells at N1000 and N500 for 750 MB, MTN, is putting icing on the cake with other mouth-watering offers for its new subscribers. MTN said its StartPack is designed to welcome new customers with great and exciting voice and data offers, which are automatically activated as soon as a customer successfully registers a new MTN number.

A source in MTN in a chat with National Daily said the introduction of MTN StartPack is in line with MTN’s commitment to giving more value to our customers from the very beginning. This is why new subscribers will immediately enjoy six times the value of any recharge, 10MB on every recharge of N200 and above as well as free data on the MTN Deal Zone. The new value proposition also aligns with MTN’s quest of deepening internet penetration in Nigeria. ”

Commenting on the MTN Start Pack offerings, Richard Iweanoge; the General Manager Consumer Marketing MTN said the bonus is part of the Company’s commitment to reward and excite new customers on the MTN network. ”It is part of our strategic thrust to satisfy and excite our esteem customers with offerings that will help redefine and ease their day-to-day activities with quality telephony and reliable data services. In line with this preposition, we have decided to reward new customers on the MTN network with special tariff plan that will afford them the opportunities of making cheap calls and receive data bonus on all recharge”.

Data Price Expected to Fall Further
New forecasts have shown that mobile data revenue will double over the five years to 2019—topping $22 billion. On the other hand, mobile voice revenue, though still significantly higher ($50 billion in 2014), will only grow by 10% in the same period. It means the continent’s telecoms operators will likely intensify efforts to grab more mobile data market share in coming months

Meanwhile, a PwC report shows that mobile data prices need to drop significantly as only 43% of the world can afford 500 megabytes per month. Specifically in Nigeria, prices are expected to drop by 97% to become affordable for the majority of the country’s 180 million people and with current drop in prices from all the operators, experts say Africa’s biggest mobile market could be on its way to meeting that target.

NCC Set the Stage for Data Price Crash
On October 13, 2015, the Nigerian Communications Commission approved the removal of the data floor price limit, giving internet service providers the freedom to drop their data prices as low as they can go. That single action set the pace for stiff competition similar to what had happened in voice tariff before now and it was not long before the operators started the battle of wit.

Recall that sometime in 2013, the NCC introduced a “Data Floor Price” (minimum price that a network could charge for data), in a bid to ensure that competition among all the players was fair, with the idea being that if the price wasn’t regulated, a large network could “choke” a small one to death by offering data at a cost the smaller one could not sustain.

But the Commission in October last year removed the restriction “in a bid to ensure sustainability, growth and development of the data service market segment.” It added that “the commission will restore the floor price if any distortion is observed within the market segment.”

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. 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). 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.

With the reality of a new game field, where Globacom is obviously winning internet subscribers from other networks with its cheap data packages, the other operators had to go along the same route by reviewing their data prices downward. This may just the beginning of the price data war as no operator would like to be left behind in the race to capture large chunk of revenues from the data-hungry Nigerians.

While many subscribers are excited about the drop in data prices, a further drop in service quality is what they might not have anticipated but that is the reality now playing out as they complain bitterly about poor service on the networks.

Specifically, subscribers who spoke with National Daily complained bitterly about their inability to exhaust their data before due period for expiring due to fluctuating connection on the networks.

Uche Joseph, a trader at the Computer Village, in Ikeja, Lagos, says he was happy to know that he could get more data from his N1000 monthly subscription on his network, but he is frustrated because he found it difficult to download with the data and at the end of 30 days, he found out he had not even used up to half of the data he subscribed for before it expired.

“It shouldn’t just be about cheap data, they should improve their network as well, because what is the benefit of having about 3 gigabyte for N1000 and you don’t use up to 1 gigabyte until it expires?” he queried.

An angry subscriber, Victor Adeoye described the reduction in data prices as a ‘scam’. “It is all a scam because how would I subscribe and would not be able to finish it due to bad service? I have tried three networks and I can say they are all the same in terms of bad quality service,” he said.

But according to Mr. Samuel Adeyeri, CEO of Whyem System Inc., the reduction in prices of data by the mobile network operators is a welcome development which would enable many Nigerians access the internet at cheaper costs. However, he would also want the operators to improve on the quality of their service.

“The challenge of service quality has always been with us, not just because they reduced data price, but the operators need to invest more in upgrading their networks so that we can enjoy the service they are providing because with poor quality service, subscribers cannot get value for money even if their subscription goes for one Naira,” he said.

For Mr Muritala Bello, Managing Director, Afrikgold International, the current issue of service quality has nothing to do with the drop in data prices but a problem that has been with the industry for long.

“Yes, more people will be on the network at the same time and that may lead to congestion, but we have always had that. While some of the network operators are trying to improve their service quality, some are not. I use two networks for data, Etisalat and Glo; while Etisalat is fairly okay, Glo gets disconnected at will and you have to start praying before you can connect again.” He urged the operators to also compete in the area of service quality and not only on their products.

Unfortunately, subscribers’ bitterness is not only about service quality, as some lament about data being depleted abnormally, thus, they are losing money rather than gain from the price reduction.

A subscriber who simply identified himself Femi said: “These telcos are playing on our intelligence, it’s not about the price and the amount of data you are given but rather the burn rate; burn rate in the sense that when you download a file of 6MB, how many MB actually leave your data? Some devices come with data calculators, so this will further explain if this offer is beneficial of just another scam. I remember downloading a file of 2MB and 2.7MB actually was deducted from my data balance. At the expiry of my 1GB, I discovered I used overall lesser than the 1GB but I got the expiry message.”

Another subscriber who took to the Social Media to express his disappointment said: The last subscription I made was 500MB for N750. By 11 pm I had received a text message that my data balance was 100MB, I turned on data savings on my opera browser and stopped browsing to sleep. I woke up in the morning to find text message saying I have 10MB left by 4 am and then minutes later another saying I have 5MB and the last one saying my data was exhausted while I was sleeping.”

A subscriber, Hillary Udeji had also lamented on Twitter over similar issue of data disappearance. “I subscribed for 3.5 gigabyte, surprisingly; it lasted me just two days. No download, no YouTube streaming and in less than 72 hours, it was gone. This is daylight robbery.”

For Mr Omoniyi Olaiya, it was a different scenario; he is ‘ok’ with his browsing experience on his Airtel line, however, he would want the data price to be more affordable. “What they are charging for data is still high; I want them to reduce it. Airtel is okay for me because I’m able to browse anytime but my data doesn’t last and I have to subscribe twice in a week sometimes.”

However, the telecom operators have absolved themselves of blame on issues of data depletion. A top staff of one of the telcos who did not want to be named because he was not authorised to speak with the media, debunked the claim that operators wipe subscribers’ data unjustly or cheat them in any way.

According to the source, most phone users, especially on Android operating system do not understand that their phones can perform certain updates without their permission, which depletes their data even when they are not browsing.

“No operator would want to cheat or offer you what they cannot sustain; in most cases, it is the mobile operating system that does a lot of background updates that causes what subscribers describe as data wipe. In any case where a subscriber’s data is erroneously wiped, such will be revised once the subscriber lodged a complaint,” he explained.

Unarguably the network with the cheapest data packages so far, Globacom according to NCC statistics is dominating other networks with the largest number of internet subscribers. Unfortunately, that may have been an extra burden on the network leading to poor data experience for its subscribers.

While there is general complaint about all the networks over poor quality of service, subscribers who spoke with National daily  were particular about Globacom’s poor data service. Interestingly, it’s a three-case scenario for some subscribers: While some complained about data draining too fast because the network is good in their area, some complained of inability to exhaust their subscription before the expiry date due to bad or no signal from the network; but some are torn between the network being good in their home and bad at the office area; or vice versa.

Mr Emmanuel Onu is torn between two networks, neither of which has met his needs in terms of quality of service. Though he still subscribes for mobile data as he needs that to run his business on the go, he is a dissatisfied subscriber. Onu says he was initially using Glo for data until he realised that “my data kept disappearing without use, even though the service was a bit okay, I was losing money for doing nothing on my phone.” Thereafter, he moved to MTN, however, the experience has not been palatable either, according to him, “I’m just fed up with the MTN network, even though I cannot go back to Glo. It is very difficult to browse as the network fluctuates, most times, what I see on the signal bar is the ‘E’ and once it shows that, I can’t use the internet until it shows the ‘H+’ on the signal. They need to do something about this because it is disturbing.”

Mr Sunday Adesina is a lecturer who lives in Lagos and works in Ogun State; for him, it’s a world of two experiences on the Glo network. While he enjoys his data subscription when in Lagos, it becomes a nightmare once he gets to his work place in Ogun state.

Unfortunately, he needs the data connection more at work than at home and he has been battling with the challenge, hoping that the network will improve. “I have been on the Glo network for some time now, but the issue I have is having to move from Lagos to Ogun State; the network is always good anytime I’m in Lagos, but it becomes a problem once I get to Ogun State, the service fluctuates and sometimes it might take me up to 24 hours before I could send a mail.

“In fact, I resort to prayer anytime I need to send an urgent mail, because you may have to wait a whole day. I think they need to improve, they need to install more base stations in Ogun State and other remote areas, it shouldn’t be about Lagos or the major cities alone,” he advised.

Prompted by the recent acquisition that saw MTN swallow the last CDMA operator, Visafone, Mr Oladotun Lawrence, a Consultant, had to move to another network with affordable data plan close to what he was enjoying under Visafone and according to him, Glo came as the best option as it offers the cheapest data packages.

But what he got was not what he expected. His words:

“I was using Visafone before; with N1000 subscription, I would connect my phone and laptop and it worked well. But when MTN bought Visafone, they discontinued the package and I had to look for alternative. I had actually used Glo for data before and it was working fine and when I realised they now have the cheapest data, I didn’t hesitate to go back to Glo.

“Sadly, I’m having the worst internet experience right now. It is difficult to connect and browse and when you connect, before you know it, your data is disconnected by itself. I’m finding it very difficult to even do anything on the internet using my phone.

“What I have now discovered is that the service is fair in some areas. You won’t believe that in my office, I have to move to a particular spot before I can get signal. But Glo was not this bad before, may be they now have more subscribers than they can cope with due to their cheap data.”

NCC Looks Towards Broadband for Cheaper Quality Data Service
While admitting that mobile network operators are facing challenges, such as vandalism, shutting of base stations and Right of Way issues, which often times disrupt their network and cause the service to get poor, NCC, the industry regulator believe ongoing efforts on broadband will address some of the challenges such that subscribers will be able to enjoy quality data experience.

According to the NCC’s Director of Public Affairs, Mr Tony Ojobo, “the current data revolution with lower tariff on internet bundles across all networks will help to drive data penetration, adding that, “the digital opportunities arising from pocket-friendly internet bundles cannot be overemphasised”. However, he noted that deficit in telecoms infrastructure has remained the biggest challenge in the industry. And to address this, he said the Commission had already licensed two InfraCos in the country, which include MainOne for the Lagos region, and IHS for the North Central region, with plans to license additional five.

Ojobo said the commission is finalising the licensing process for the additional five InfraCos. “Already, a committee has been set up to look at the conditions under which the remaining five InfraCos will operate and once that is finalised, we will licence them to operate in the remaining regions, but this must come after we have licensed more spectrums that are underway”, Ojobo added.

While stressing the plans to licence more operators to play in the broadband space, OJobo noted : “One of the things that happen in this type of market is that competition is key. It is competition that drives issues of QoS, pricing etc. so if you have the right type of competition in the mix then you’ll be sure that the consumer will be happy for it.

“With the national broadband policy of course you’re aware that we’re looking at 30 per cent broadband penetration by 2018, some people are already of the view that we’re behind schedule in terms of whether we’re going to be able to meet up with the benchmark that has been set; but of course it’s work in progress but the important thing is that as we have the foundation laid now, with the Infracos that are already licensed and the five that are coming up additionally. But of course 2018 which is two years from now, I’m sure we’ll still be able to meet that 30 per cent and maybe probably surpass it and have a more pervasive broadband services provided.

If what we’re seeing today in e-Commerce, e-Medicine, eLearning etc. is anything to go by, and we’ve just 10 per cent broadband penetration, now you can just imagine what will happen when we have 30 per cent broadband penetration by 2018 and going into 2020. We believe that it’s going to impact very seriously and positively on businesses in Nigeria and of course you are aware of this talk that for every 10 per cent increase in broadband penetration there’s a corresponding 1.3 per cent increase in GDP, so we’re going to see increase in GDP, in other words a lot of small businesses are going to be able to contribute to the economy because of the availability of broadband that will help them in hotels, schools etc. in all the sectors you’re going to see tremendous impact” he said.