As a new battle of fees and taxes erupts in the beautiful Nigeria, I will like to drop a small hint to NCC (Nigerian Communications Commission), the telecom regulator: copy and adapt what they do in most countries. Largely, in places like U.S, people in cities pay more for telecom services in order to help subsidize for rural people! That is the capitalism CNN and BBC do not tell us in Nigeria.
The Federal Government has directed the telecom firm, MTN, to suspend its plan to impose a new charge on customers who use its short codes to access banking services.
MTN Nigeria in an SMS message to its subscribers on Sunday said the decision was at the request of the banks and would take effect from Oct. 21.
“Yello, as requested by your bank, from Oct. 21, we will start charging you directly for USSD access to banking services. Please contact your bank for more information,’’ the message said.
Yes, in the quest to make internet accessible to many rural people, telcos have to do business in highly unprofitable territories. To give them incentives to deploy their services there, U.S. regulations demand that city dwellers pay a small fee to ensure the prices telcos charge those rural people do not get out of the roof.
This is economics: the city dwellers have volume (density) and unit prices are fairly better. That contrasts with rural areas where fewer people share the infrastructure. Yet, those people do not earn much as most are in farming services which pay mostly minimum wages.
Of course, Nigeria has not emerged in a way we can fairly categorize which community is rural or urban; that debate will engineer massive strikes in the nation. Lagos may be urban, well ahead of Umuahia, but there are areas in Lagos which Umuahia trumps. With no effective zip code for micro-billing, everyone will simply go and register his or her sim card in the cheapest “billing community” in Nigeria if NCC adopts the U.S. model.
But Nigeria needs to find ways to ensure equity rules. Most people are happy to pay a fine of N60 or so at an ATM on the 3rd withdrawal from out of bank network. It saves you time and money because there is no way that money can cover going to a bank branch with all the associated time wasting. Yet, some may not easily absorb that fee, and prefer to visit a bank. Unfortunately in some banks, they have phased out some in-person services, pushing all to digital platforms.
NCC has to invent new ways to manage these issues. If banks are not paying or refunding telcos, it is natural that telcos go to the users to pay. But where they cannot collect the money, it means everyone wants the telcos to offer services free. That may not be fair because the real culprits here are banks whose services the users are benefiting from. But where the government thinks that has to be that way, then it has to design a way for heavy users to cover the fees of those that cannot pay. Yes, anytime you recharge for more than N10,000 in a month, you lose 2% of the value to help subsidize for one guy who must not reach N500 monthly recharge, otherwise he/she loses the benefits of free USSD services! Or where that cannot work, mandate telcos to block the services so that banks send the necessary cheques to have them back again!
This is one area I do not expect government to start issuing mandates – the banks and telcos can deal with this matter and the government can focus on more urgent things like the border closure, national debts, mass illiteracy, security, etc. This is exactly how the CBN Governor sees it: “The banks are the people who give this business to the telecom companies and I leave the banks and the telecom companies to engage. I have told the banks that they have to move their business, move their traffic to a telecom company that is ready to provide it at the lowest possible, if not zero cost.” Period!