Wednesday, 10 April 2013

Has NCC just lost the regulatory war?

How tough should regulator need to be to bring mobile operators into line? The Nigerian Communications Commission has just been empowered to revoke operating licences of operators that ignore its directives on promotions and lotteries. So far so good.

The NCC's current crackdown on promotions and lotteries started last year when it fined MTN, Glo, Etisalat and Airtel for the princely sum of NGN 22 million, but which converts to just USD 138,828.

Now USD 139,000 is small change for most businesses, and if the reward for not complying is revenues many times greater that the fine, there might be a strong temptation to pay the fine and carry on. This appears to be exactly what happened as the NCC claims the four have yet again breached the directive and has fined them again.

It seems odd that the regulator has lurched from levying an insignificant - almost irrelevant - fine which would never have changed corporate behaviour to the other extreme and is now threatening to revoke a licences. Would the NCC actually cancel a licence? One feels that the NCC might find this an even more problematical penalty to administer effectively, when the simple expedient of a much larger fine might just have done the trick. A case maybe of winning the battle but losing the war?

By way of comparison, at the end of March the Liberia Telecommunications Authority (LTA) published what it described as a 'Tool for Regulatory Enforcement' - sub-titled the 'LTA Regulation on Penalties'. The aim was to ensure 'strict adherence' to the Telecommunications Act of 2007, and the document provides a detailed menu of potential offences with a schedule of fines that might be applied.

The fines were enough to make even the largest of corporates re-consider its actions: the first item in the 'menu' would result in a fine 'of not less than 1.5 times the existing License fees times two years or the numbers of years of operations' - maybe not the clearest of sentences, but one that few would want to find themselves lumbered with, and compliance might be considered the better option.