Nigeria’s telecom sector in turmoil over legality of market dominance

The Nigerian Communications Commission (NCC), the body charged with oversight of the industry has been accused of failing to follow due process in enforcing its own guidelines on the industry, which is meant to create a level playing field for operators and protect the Nigerian subscriber.

Etisalat, a key player in the Nigerian telecom space, says that the NCC rather has colluded with MTN, a local competitor, to subvert  the rules on the determination of dominance. According to Etisalat, the NCC had approved a 30 percent differential in on-net and off-net tariffs for MTN without due process.

Etisalat Nigeria is seeking a judicial review by a Federal High court over the tariffs granted MTN by NCC which it contends is a breach of NCC’s regulation. tagged the “Determination of Dominance in Selected Communications Markets in Nigeria”. The regulation, which is meant to regulate further overbearing domination of the market by any single player, was issued by NCC on April 25, 2013, following a study it conducted in 2012.

The study unsurprisingly uncovered that MTN was the dominant operator in the retail mobile voice market segment of the industry and that it maintained a wide differential of up to 300 percent between its on-net and off-net retail voice tariff, which was not favorable to its competitors.

Following this discovery, the NCC reportedly directed that MTN should not operate with any differential between its on-net and off-net tariff because such would substantially reduce the competitive capacity of other telecommunication service providers in the country and give MTN the overbearing dominance.

Etisalat says it is instituting this action because, contrary to this earlier directive by NCC, the regulator has granted MTN further concession to operate yet another 30 percent differential between its on-net and off-net calls, a move that can only further grant the South African telecoms company an overbearing influence over the Nigerian market.

Etisalat’s contention is that this action of the NCC if not reversed by the court is harmful to millions of Nigerian subscribers because it forces them to restrict their calls to subscribers within the MTN network only since calling customers on any other network is charged at much higher rates. Even though MTN is said to have made the promo alluring to unsuspecting subscribers by naming it a “Calling Club”, Etisalat is opposed to this as it considers it injurious to the interest of MTN subscribers who will pay more for calling anyone outside of the MTN network just as non-MTN subscribers pay more for calls to MTN subscribers.

Healthy competition is at the heart of this case as the NCC who had declared MTN a dominant operator proceeded to grant MTN a special waiver in contravention to the obligations imposed on MTN in the Dominance Determination. Etisalat Nigeria is wondering why such a waiver was granted without due process and sees this as detrimental to all other players in the sector. According to its counsel Aanu Ogunro, Etisalat’s suit is not in entirety about “the business of our client but about the interest of millions of Nigerian subscribers whose economic interests are being abridged with this preferential decision by the NCC.”

At the first hearing held on Tuesday 21, July 2015, Etisalat’s Counsel, who appeared before Justice Mohammed Idris with an application seeking the leave of the court for the suit to be heard during the court’s ongoing annual vacation, urged the judge to hear the suit as urgent, claiming that if the decision of the NCC in favour of MTN was not reversed, it posed a threat to the business survival of Etisalat, other telecommunications players and more importantly millions of Nigerian subscribers who are oblivious of the implications of the unfair advantage the NCC has granted the South African telecommunications company.

After hearing the lawyer and the argument advanced in support of the urgency of the case, the judge granted the application to hear the case during the annual court vacation and thereafter adjourned till Monday 3, August 2015 to take the substantive application.

But at the resumed hearing on 3, August 2015, counsel to the NCC pleaded with Justice Mohammed Idris to grant more time to file its counter affidavit to the suit by Etisalat Nigeria, challenging the decision of the commission granting special waiver to MTN to operate special tariffs under its MTN “Family and Friends” promo. Joined as co-respondent with the NCC is MTN which has continued to run the promo currently being challenged by Etisalat. Justice Mohammed Idris subsequently adjourned the case to September 25, to hear the suit.

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