Competition forces telcos to reduce tariff on data services

•Internet users in for good times
Ben Uzor Jr

Going by the increasing number of undersea cables coming into Nigeria, both finance and market watchers say the nation’s highly competitive telecommunications market appears poised for a tariff war. Speaking on the development, which they already estimate will spur exciting times for internet users in the country; they told BusinessDay that most operators are spurred by the prospect of boosting revenue from internet services as voice tariffs continue to fall.

To this effect, data services has now emerged as the new ‘competition war front’ for telecoms firms. Since the liberalisation of the telecoms sector in 2001, internet access market has remained untapped while voice services thrived. For years, and until the last few weeks, the only cable system serving Nigeria’s internet needs was the South Atlantic 3/West Africa Submarine Cable - a submarine communications cable linking Portugal and Spain to South Africa, with connections to several West African countries along the route.

MainOne cable and Glo-1 have already commenced commercial services. Equally, the West African Cable System (WACS) - an initiative of nine countries (including Nigeria’s MTN Group), which comes with a high capacity submarine cable system linking Europe, West Africa and South Africa is, at the moment, under construction. Analysts who spoke with BusinessDay confirmed that some telcos are already taking advantage of the enormous bandwidth on offer from these new cable systems to lower internet tariffs, strengthen existing services and produce new solutions that promise to transform the economy.

Leading the pack in the area of pricing, meanwhile, is MTN Nigeria which has reduced its monthly Blackberry Internet Service (BIS) tariffs from N5, 000 to N3, 000. This thus rates it as the cheapest in Nigeria currently. According to Kenneth Omeruo, an internet analyst, for other telcos to stay competitive, they will have to lower their respective BIS tariffs.

This, he noted, will translate into more Nigerians getting connected to the internet at international broadband speeds and at more affordable prices. However, in a swift response, second national operator, Globacom, which has its own self-feeding submarine cable - ‘the Glo-1’, has also reduced the price of its 3G internet service by 25 percent. Now, Globacom’s internet subscribers can enjoy data limits of 6GB on its ‘Always Max Package’ for only N7, 500 from the previous price of N10, 000. Moreover, insider sources disclose that Zain is also making plans to introduce a new promotional package that would see BIS tariffs fall to as low as N1, 500 monthly.

Some GSM operators have also introduced new bundled product offering, with the pay- off being free internet service. Only recently, Etisalat and Samsung launched the Samsung Galaxy Tab, a new smart device that allows users to enjoy PC (Personal Computer) like web browsing, e-mail-on-the-go with an optimised user interface. The Tab comes with an Etisalat SIM card which offers 25 minutes of free voice calls, 25 free SMS and more importantly, 250 MB of free internet access every month for one year.

Similarly, Globacom and leading technology solutions provider, Hewlett-Packard (HP), have introduced an innovative offering that enables Nigerians to own top-end internet-equipped netbooks. Under the special bundling offer, customers can get Glo 3G powered HP netbook for N34, 000. Without doubt, data services have become the next frontier in Nigeria’s telecoms industry even as the voice segment reaches saturation point, analysts have submitted. They added that telcos would however have to pay keen attention to data services as a new revenue generating stream.

The analysts believe that even as telcos focus more on internet services due to the proliferation of submarine cables, the cost of internet access will continue to drop significantly as more bandwidth capacity becomes readily available to the market. Lanre Ajayi, president, Nigerian Internet Group (NIG), who spoke with BusinessDay at the weekend, said: “Telecoms operators are increasingly paying attention to the internet. The reason for this is that voice services is reaching saturation point. They are looking at data as a new revenue generating stream. This is also why they have rolled out their 3G and GPRS services to their customers.

What we are seeing today is not surprising to me. We are witnessing the effect of having more than one submarine cable in the country. With three cables fully active in the country, there is an abundance of bandwidth capacity available to telecoms operators. They have no options but to offer innovative data services to their subscribers at lower costs. The trend will continue and we hope when other cables berth on the country’s shores, the cost of internet access will become even more affordable and improve Nigeria’s digital index and internet penetration rate,” the NIG boss noted further.

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