MTN’s suggestions — this is definitely not the way to go

MTN has suggested to government to either ban or tax WhatsApp, Snapshot and Viber calls. Reason: the activities of these companies, which might not be paying taxes in Nigeria, are affecting their businesses.

When and how? Last Tuesday, Ferdinand Moolman, MTN’s CEO, asked Nigerian lawmakers to take the kind of action the UAE took on the likes of WhatsApp and Viber.

And what did the UAE and some other countries do to WhatsApp and Skype calls?

They put heavy barriers to these services. For instance, the UAE banned mobile operators from using the voice calling features of companies such as WhatsApp. The country’s telecoms regulator further stated that companies who wanted to offer these services should seek licences.

And if such is applied to Nigeria, it will amount to taxation through the backdoor: companies who get these licences would build it into their costs, and these services won’t be ‘free’ anymore. (Today, these services are technically free, except for the cost of data bundles.)

Unfortunately, the implications of these taxes are grave. For example, one of the services, which reduces cost for people who export and import goods and services in Nigeria, is VoIP – the Voice over Internet Protocol which companies such as Skype and WhatsApp are providing.

A one-hour business call to the UK could be relatively free on WhatsApp or cost as much as N2000 on some networks. And if you multiply this cost for all your employees, the implication could be outrageous.

But big telecoms businesses are not happy. Even though WhatsApp calls are good for you, it eats into the profits of telecoms firms.

But a country in depression should know what is good for it, especially if it wants to come out of depression. It’s unfortunate that since the debate on taxing calls over three minutes started, little research has been published on the impact of increasing telecommunication taxes on businesses.

Research has shown that one way a small business can reduce its expenses is to reduce its telephone expenses, and many companies are advising their employees to Skype or WhatsApp. (Sadly, a country in recession, which should be thinking of eliminating every barrier to business, is actually thinking of creating more.)

And even big companies have started bargaining for all kinds of contracts with major phone operators for their employees, who make long calls.

And if you spend hours talking to friends abroad on WhatsApp, this new proposal will definitely kill that habit.

Should taxes and tariffs on telecommunications be finally increased, as some in the industry want, the relative increase in government revenue will be nothing compared to the damage that will be unleashed on the economy.

But telecommunication companies and government will have to survive for the economy to grow, as well. And to survive, these companies and their regulators should endeavour to increase their user base in order to get revenue from economics of scale.

There are other novel schemes that could be introduced. A good example is the ‘‘speed-based pricing’’ system. Some Nigerians can afford to pay more for ultra-fast connectivity. Those into Bitcoin mining won’t mind.

But the rest of us who do basic things like sending emails, ‘Facebooking’, visiting the controversial MMM site, watching YouTube and video calling should be allowed to have cheap connectivity. Basic internet speeds, which can be achieved in many western countries, should be accessible to Nigerians.

MMM phenomenon

Just like telecom firms have complained, I expect banks to soon accuse MMM and other funny schemes of taking away cash from their vaults – many people no longer want to keep cash in savings and fixed deposit accounts.

Today, the most profitable businesses are these schemes. It doesn’t matter to some Nigerians that these schemes are termed ‘Ponzi schemes’ and that one newspaper predicted that they would collapse in July.

These guys believe they are providing and receiving epp!