Engr Nwaulune Augustine Kaonyegwachie writes on the proposed increase in telecommunications tariffs in Nigeria, warning against taking the rather simplistic position that tariffs should not rise until service quality improves.
In the ongoing discourse on the proposed increase in telecommunications tariffs in Nigeria, the House of Representatives has taken the rather simplistic position that tariffs should not rise until service quality improves.
While this might seem like a pro-consumer stance on the surface, a deeper analysis exposes its fundamental flaw: Why is the telecommunications sector the only one where pricing is tied exclusively to service quality? Should we not ask the same of fuel, electricity, aviation and other critical sectors that impact daily life and business operations?
Telecoms Tariff: A curious case of selective economic logic
Consider the energy sector. In the past year alone, Nigeria has witnessed multiple hikes in the price of electricity and fuel, with no corresponding improvement in service delivery.
Nigerians pay more for unreliable power and skyrocketing fuel prices, yet no legislative intervention has demanded that tariffs remain frozen until service improves.
Why, then, is telecoms, the very backbone of digital transformation and economic productivity, be singled out for such an impractical condition?
It is an undeniable fact that Nigeria enjoys some of the lowest telecommunications tariffs in the world. Compared to global standards, Nigerians pay significantly less per minute and per gigabyte of data than many other developing and even developed nations. This affordability has come at a cost, squeezing profit margins and discouraging further investment in network expansion and quality improvement.
Telecommunications operators are businesses, not charity organisations. Their costs are real and mounting:
• Electricity tariffs have increased multiple times, and yet telecoms operators still run on expensive power grid electricity where scarcely available, diesel and gas-powered generators.
• Diesel prices have surged by over 300% in recent years, a critical input for network infrastructure.
• Foreign exchange volatility has made network equipment procurement an arduous financial burden, with the naira fluctuating unpredictably.
• Investment in spectrum and infrastructure requires billions of naira, yet operators must recover these costs within a reasonable period to remain viable for sustainable investment.
Where is the equity in demanding that telcos alone absorb these economic shocks while every other sector; including those supplying their essential inputs, passes costs onto consumers?
The myth of free or cheap telecoms services
It is an undeniable fact that Nigeria enjoys some of the lowest telecommunications tariffs in the world. Compared to global standards, Nigerians pay significantly less per minute and per gigabyte of data than many other developing and even developed nations. This affordability has come at a cost, squeezing profit margins and discouraging further investment in network expansion and quality improvement.
Quality of service is not an arbitrary outcome; it is the direct result of sustained investment in infrastructure, technology, and skilled personnel. If the industry is not allowed to price services in line with rising operational costs, how will these improvements materialise? If the golden goose is starved, how will it continue to lay golden eggs?
A question of policy consistency
Across the globe, tariff regulation in telecommunications follows a predictable and rational approach. Even in highly regulated markets, cost-reflective pricing is the norm. Countries that have successfully built resilient and high-performing telecoms sectors, such as South Korea, the United States, and even our African counterpart, South Africa, have allowed for price adjustments that reflect economic realities.
Yet, in Nigeria, we demand world-class service but insist on third-world pricing models. How is this sustainable? Should investors in the sector be expected to keep providing services at a loss? Can the country truly achieve its digital economy ambitions when the industry’s financial viability is continually undermined?
A pragmatic way forward
The House of Representatives must resist the temptation of populist policy making and adopt a balanced, forward-thinking approach:
1. A phased and structured tariff review: instead of outright suspension, the government can engage telcos in a framework that ensures gradual and manageable tariff adjustments.
2. Targeted infrastructure support: addressing the root causes of poor service, such as power challenges, right-of-way issues, and vandalism, will have a more significant impact on network quality than simply freezing prices.
3. Consumer protection mechanisms, ensuring transparency in how additional revenue from tariff increases is reinvested in network expansion and quality upgrades.
If Nigeria truly aspires to be a digital powerhouse, it must stop suffocating the very industry driving its economic transformation. The golden goose should not be estaminated, it should be nurtured, lest we all wake up one day to find no eggs left at all.
Engr Nwaulune Augustine Kaonyegwachie, PhD, FNSE, Fsca, President and CEO of Augustine K Nwaulune & Co Consultants Ltd, before his retirement, held several positions including Director, Zonal Operations; Director, Digital Economy and Director, Spectrum Administration at the Nigerian Communications Commission (NCC), Abuja Nigeria.
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