Can the Nigerian Communications Commission (NCC) Legally Set Telecom Tariffs in Nigeria?

By Oseghale L. Obaga, Esq

The current economic realities occasioned by government policies are taking a toll on all sectors of the Nigerian economy, and the telecommunications sector is not spared. It was recently widely reported by major newspapers that Airtel recorded a loss of $151 million in the first quarter of 2024, while MTN Nigeria lost N137 billion for the year ended in 2023 due to the naira devaluation policy of the Federal Government, among other factors, which have greatly increased the operational costs of the telcos while their tariffs have remained unchanged for the past 11 years. And all attempts by the telcos to increase their tariffs to make them more cost-effective and keep the telcos afloat have been resisted by the NCC as the regulator in exercise of their powers to fix tariffs for telcos. It means that no licensee can unilaterally fix any tariff or charge for any service without the prior approval of the Commission. The powers of the NCC to fix tariffs for telcos are not only statutory but also rooted in the discharge of the competition and consumer protection mandates of the Commission. It is against this background that the power of the NCC to continue to fix tariffs for telcos is examined in light of the current state of competition and consumer protection laws in Nigeria.

Section 108 of the Nigerian Communications Act 2003 provides that no licensee shall impose any tariff or charge for the provision of any service until the Commission has approved such tariff rates and charges. However, this power is not to be exercised arbitrarily, but the approvals shall be done within certain parameters and guidelines limited by S.108(4) of the Act. That is to say, the tariffs must be: (a) fair and not discriminatory; (b) cost-oriented; (c) competitive; (d) investment-friendly; and (e) in line with international best practices. Therefore, given the current operating economic environment, it becomes imperative to ask the following critical questions: Is the current state of tariffs fair? Is it cost-oriented? Is it competitive? Can it attract investment into the Nigerian telecommunications sector? The focus of this article is not to provide answers to these questions, even though the answers stare us in the face.

The coming into force of the Federal Competition and Consumer Protection Act (FCCPA) of 2018 opened a new vista for competition and consumer protection jurisprudence in Nigeria. This is so for many reasons, a few of which shall be briefly highlighted herein. First, by virtue of Section 2 of the FCCPA, the scope of the Act applies to all undertakings and all commercial activities in Nigeria, as well as binding on all government and private entities operating within Nigeria, including the telecommunications sector. Second, Section 104 of the FCCPA provides that in all matters touching on or pertaining to competition and consumer protection in Nigeria, the provisions of the FCCPA shall supersede the provisions of any other law in the country. Three, while Section 105 of the Act recognizes the existence of any other government agency saddled with the responsibility of competition and consumer protection in any sector, the Act establishes co-regulatory jurisdiction with such government agencies but gives the FCCPA precedence and superiority over and above that other government agency only as it relates to competition and consumer protection jurisdiction.

It follows, therefore, that the Nigerian Communications Commission, being an agency regulating competition and consumer protection in the telecommunications sector, can only exercise that competition and consumer protection jurisdiction subject to the overriding powers of the Federal Competition and Consumer Protection Act. It is against this backdrop that the power of the NCC to continue to fix and regulate tariff prices for telcos has become questionable. This is so because Section 88 of the FCCPA provides that only the President of Nigeria has the power to fix the prices of goods and services by an order published in the official gazette. And the President shall only make that order in a market where there is little or no competition; as such, price control becomes necessary to protect consumers from the consequences of monopolies in the sector concerned. According to the Act, the publication of the price regulation order is not open-ended but narrowly designed to target only a few items and for a limited period only, as it is expedient to ameliorate the effects of the lack of competition in the affected market. Section 88(3) of the Act provides that no order may be published without the Federal Competition and Consumer Protection Commission first determining the extent of competition in the affected market and submitting a report thereof to the President, and any order made pursuant to these provisions of the Act shall contain the date on which the order shall expire.

From the foregoing, therefore, the following facts are established: (a) only the President of the Federal Republic of Nigeria has the power to fix prices of goods and services in any sector in Nigeria on the recommendation of the Federal Competition and Consumer Protection Commission; (b) it must be in a sector where there is minimal or no competition; and (c) it must be for a specific period of time. The above three conditions precedent for the fixing of prices of services in any market in Nigeria have not been observed in this respect. Besides the fact that the prices are determined by the NCC without recourse to the Federal Competition and Consumer Protection Commission, the telecommunications sector, being a highly competitive market, does not qualify for price fixing, going by the provisions of the FCCPA. However, should there be a determination to the contrary, it is the business of the FCCPC to determine whether or not the sector is due for price fixing and make appropriate recommendations to the President of the Federal Republic of Nigeria accordingly.

Therefore, the practice of fixing prices for Nigerian telecommunications service providers by NCC in an industry that is highly competitive and for an unspecified length of time is not just a violation of the provisions of the FCCPA; it is also a usurpation of the powers of the President of the Federal Republic of Nigeria. The power of the NCC to fix tariffs for telcos was legal until January 30, 2019, when the FCCPA, which is the supreme law of the land as it relates to competition and consumer protection, came into force to remove that power from the NCC and vest it with the President of the Federal Republic of Nigeria. Therefore, any further purported price regulation and fixing by the NCC is beyond the powers of the Commission.

Written by Oseghale L. Obaga, Esq., LL.M. (Telecommunications Law), Ph.D. (Telecommunications and Consumer Protection Law). He can be reached via email at oseghaleobaga@gmail.com.

Source: BarristerNG