Battling new challenges of expansion 17 years after GSM revolution
ADEYEMI ADEPETUN, in this report x-rays the 17 years of what has been widely termed Global System for Mobile (GSM) revolution in Nigeria and concluded that the $70 billion worth telecommunications industry still has a few hurdles to surmount, especially regulators at the state level, whose activities are appearing as serious threats to the robust growth of the sector.
Telecommunications revolution is daily transforming the Nigerian society in diverse ways since the dawn of the new millennium. A breakthrough in telephone infrastructure emerged in January 2001 when the sector was totally liberalised with the licencing of MTN and ECONET, now Airtel. Both operators injected over a million lines within a year before Globacom came into existence two years later.
The journey to GSM spread begun in earnest in a fashion never anticipated from state to state and city to city. The introduction of ubiquitous mobile phones for chatting and messaging further ignited the revolution.
The new era was all that was needed to end the monopoly of the Nigerian Telecommunication Limited (NITEL), which was the lord of the Manor for decades on the fixed line turf. Mobile phones became the veritable tools to bridge the existing digital divide.
While government’s liberalisation policies provided the fertile ground for the emergence of the new network providers, they, however, put paid to the monopoly hitherto enjoyed by NITEL and opened a new vista for substantial private sector investments. With this development, mobile phones spread to the villages and have since served as useful communication links among rural dwellers.
Then came the Internet, one of the technologies available for global resources and information sharing. It has become a common platform for seamless sharing of information across the world. With Internet, geographical distances and borders have been broken, just as it has proven to be a powerful democratising force offering greater economic, political and social latitudes to communities and nations globally.
From 450,000 telephone lines to over 150 million active connections
August 8, 2001 marked the commercial launch of GSM operations in Nigeria. Though the journey actually started in January of the same year with the Digital Mobile Licence (DML) auctions, conducted by the then Dr. Ernest Ndukwe-led Nigerian Communications Commission (NCC) during the regime of President Olusegun Obasanjo. The auction produced Econet, now Airtel and MTN, after they successfully paid $285 million each to procure the facility.
Prior to the era, Nigeria had 450,000 telephone lines, with government owning about 50 per cent of it. But today, investment in the industry is in the region of $70 billion with more operators, including Etisalat that joined the fray in 2009. Etisalat has since metamorphosed into 9Mobile.
There is also ntel, which began operations in 2016 with a promise to make a difference. There are now over 250 million connected lines out of which 150 million are active and 93 million unique subscribers. The country has crossed the 100 per cent tele-density mark and accounts for nearly 100 million Internet users and 22 million Facebook users, the largest in Africa.
Nigeria has no doubt grown phenomenally ever since. It is in this light that the chairman of the Association of Licensed Telecommunication Operators of Nigeria (ALTON), Gbenga Adebayo, tagged the industry as the only surviving sector of the country’s economy.
The Executive Vice Chairman of the NCC, Prof. Umar Danbatta, at an event in Abuja in 2016, revealed that the sector contributed N500 billion into the national economy in 2014 only, adding that it created about 2.5 million direct jobs in 10 years and multiple indirect employments.
The industry has contributed almost 10 per cent to the GDP with a target of 25 per cent by 2025. The last GDP rebasing of 2014 rated the telecommunications sector highest, describing it as the most performing sector in the country’s economic development.
Some players that are enabling this phenomenal growth include the quartet of MTN, Globacom, Airtel and Etisalat, now 9Mobile. Others are MainOne, Phase3 Telecoms, Rack Centre, VDT, ntel, CWG, ipnx, Microsoft, Google, Cyberspace, Zinox Technologies, Jumia, Konga among several others.
Subscribers not satisfied with current service offerings
While these achievements speak volumes, subscribers, who pay the bills running into trillions of naira through call cards and others, are, however, still craving for improved services and lower tariffs as a favourable regulatory environment devoid of recurring rancours between the regulator and operators.
A number of subscribers ventilated their misgivings to The Guardian. First was Joke Jolaosho, a subscriber and banker. According to her, issues of drop calls, unsolicited SMS, airtime deductions were disturbing.
Jolaosho, who works with a new generation bank, noted that operators still need to work on their networks, adding that “though they are better than where we started, I believe we can achieve 95 if not 100 per cent call success rate. For now, it is very appalling.”
Borno-based Zarkariyau Biu called on operators to increase investments in the North East, stressing that relative peace had returned to the region. In an email message from his United Kingdom base, Kehinde Aluko commended the operators for their foray but urged the four major GSM operators to improve service delivery by undertaking more investments.
For Emeka Nnamdi, the operators should desist from exploiting subscribers. A major vehicle spare parts dealer at Ladipo Market, Lagos, decried the spate at which operators’ milk subscribers by deducting money for services not rendered, among other infractions.
Slow investment drive
So far, $70 billion has been invested in the sector in almost two decades, with a bulk coming from Foreign Direct Investments (FDIs). While it hopes to wind down next year, the repayment of a previously syndicated loan of N329 billion taken in 2013 for capital and recurrent expenditure, MTN Nigeria last week secured another N200 billion facility from 12 local banks structured with a two-year moratorium and a repayment plan of five years.
Its Chief Executive Officer, Ferdie Moolman, at the MoU signing, said the loan was a major landmark in the firm’s expansion programme. At a post-event interview, the Chief Financial Officer of the firm, Kunle Awobodu, disclosed that for this year, the South African firm is committing N180 billion on network expansion, stressing that in the previous two years, MTN committed N192 billion and N252 billion on roll-out and service obligations.
Earlier in April, Otunba Mike Adenuga Jnr’s Globacom announced the commencement of the construction of Glo 2 submarine cable system. Globacom signed a MoU with Huawei for the construction of the submarine optic fibre cable. The facility, which comprises three fibre pairs, is to offer solutions to the protracted issue of non- availability of telecommunications service on off shore platforms.
Speaking on the occasion in Lagos, Globacom Enterprise Coordinator, Folu Aderibigbe, said: “This dedicated submarine optical cable will provide ultra-high capacity connection to oil communities as well as enhance the network efficiency in all its operating areas.
Prior to MTN’s N200 billion facility, The Guardian had last month reported a 35 per cent dip in rural telephony investments in some 205 communities in the country, which housed some 33 million Nigerians. Danbatta said the commission has been able to reduce them to about 190.
“Nigerians living within the current 190 access gap areas, are not experiencing telecommunications services and this is a challenge we need to address as a country. To address the challenges, there is need for capacity building to leverage ICT to do greater things and in better ways. So, we need to sensitise the people and empower them with ICT tools that will make them achieve their dreams,” he said.
Lukewarm attitudes surround broadband drive
Earlier this year, the United Kingdom disclosed that 95 per cent of premises within the country now have access to superfast broadband. U.K. Minister for Secretary of State, Digital, Culture, Media and Sport, Matt Hancock, who announced the milestone, praised the government for deeming it possible to encourage superfast broadband rollouts in areas deemed less commercially attractive by operators.
While the UK and other countries including Rwanda, Kenya, South Africa, and Mauritius are fast deepening broadband, connecting cities to the hinterlands, attitudes towards Nigeria’s broadband drive had been lukewarm. Only the NCC has shown commitment to the 30 per cent broadband target as enshrined in the National Broadband Plan (NBP) 2013 to 2018.
This has prompted the NCC boss to appeal to other government’s agencies, which have specific roles to play in the country’s move to enthrone a broadband regime to step up their games. These agencies include the National Information and Technology Development Agencies (NITDA), which has the mandate for capacity building and skills development; Galaxy Backbone, whose mandate is to galvanise government parastatals’ readiness for the revolution; and the Nigeria University Commission (NUC) with mandates centered on preparing tertiary institutions for broadband regime.
This is, however, not to say that Nigeria has not recorded any progress on the mandate. Danbatta explained that the country hit the minimum target of 20 per cent in 2017 and that so far, on the maximum target of 30 per cent, the country can boast of 22 per cent.
“To us, this is a milestone achievement. Of course, we could have done better as a country if other agencies are playing their part of the agreement. If you examine critically the 22 per cent is 70 per cent of the 30 per cent target and that shows we have not lost the trajectory. We await UNESCO to release by September a new figure of our broadband penetration.’’
Infrastructure deficits put hole in 4G connections
Infrastructure deficit in the telecoms sector and the country as a whole is still a major issue that requires urgent attention. As at July, Nigeria’s Internet speed ranked 108 at 9.97Mbps, according to Ookla’s Speedtest Global Index. This is against global average speed of 22.81Mbps.
For market watchers, there are enough bandwidths in the country, even in excess of 10 Terabytes, lying at the seashores without adequate infrastructure to help in the spread. These bandwidth capacities have resulted from the efforts of players including MainOne, Globacom, MTN, among others.
According to the president, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, until the forex mechanism is corrected to remove the multiple forex windows, it will be very hard for investors in the telecoms sector to bring in much-needed equipment to fund network expansion, which correlates into the quality of service, especially now that we hoped to attain 30 per cent broadband penetration by year end.
“We are talking about capacity issues; capacity cannot be increased unless we increase the equipment installed and provisioned, and usually it is in form of hardware and software. If there is a mechanism by which we can actually access funds, in dollars, to purchase equipment, then we won’t have a delay in the expansion of capacity,” he stated.
The ATCON president noted that enthroning a broadband regime requires some critical infrastructure, including base stations, fibre optic cables, stable power supply, enabling environment, security, among others.
Teniola said Nigeria might need 80,000 base stations with regard to the speed that is required for 4G or 5G networks. “Currently, we have about 22,000 towers covering around 30,000 base stations maximum. There is a shortfall of 50,000 base stations and with that, we need fibre behind these base stations to be able to carry the magnitude of capacity that we have.
“Remember that our telecoms service is now the primary network, the mobile telephony network is the primary network that carries all data, mobile payments, transactions whether security, financials, health, voice, SMS, your traditional communications as well as the fact that it has a huge growth in the youth population that is now using social media where over the top (OTT) players are now holding sway,” he stated.
Danbatta admitted that limited infrastructure was putting serious pressure on quality of service. He tasked operators on further investment into the sector. The NCC EVC revealed that four licencees of the commission namely IHS, MainOne, Phase3 Telecom and Broadbased Telecom, which are in the Vice President, Prof. Yemi Osinbajo’s committee are planning to lay additional 18,000km fibre infrastructure to complement the already 40,000km on ground.
Danbatta said this will further complement the 120,000km of fibre optic cable that the country needs to ensure maximum broadband connectivity that will address the country’s challenges of intra and inter broadband connectivity.
“Our plan is to make Nigeria a fibre connected nation across all its 774 local government areas. Every local government area in the country deserves to have broadband connectivity and this can be achieved through additional deployment of broadband infrastructure. So, we need targeted deployment across the country,’’ he stated.
On the Critical National Infrastructure (CNI) bill, for the past seven years, it has been back and forth exercise on the passage of the bill into law. Adebayo, ALTON chairman, said classification of telecom as critical national security and economic infrastructure and granting the industry the highest level of protection by the Federal Government was critical to the next wave of development in the sector. He noted that there was need to insulate the industry from all forms of interference by government agencies.
State governments and agencies as greatest threat to the next revolution
Having missed hugely the opportunities that came with first, second and third industrial revolutions, it will be a disaster for Nigeria and other sub-Saharan African (SSA) countries to miss the fourth. This alarm was raised by experts at the recently held GSMA Mobile 360 Conference in Kigali, Rwanda. The experts noted that developed countries have fast left Africa behind in terms of innovation and development.
GSMA noted that apart from huge revenue loss that would come as a result of obsolete infrastructure, the country risk being cut off from global technology eco-space. According to the Senior Director of Privacy, GSMA, Boris Wotjan, he said the 4th Industrial Revolution would be a big opportunity for Nigeria and other African countries to leapfrog into the global technology ecosystem.
The 4th Industrial revolution is the current and developing environment in which disruptive technologies and trends such as Blockchain; Internet of Things; Machine Learning; Artificial Intelligence; Driverless car, Augmented Realty, among others would dictate the pace of individual countries development.
To leverage on this, Wotjan called for massive investments in infrastructure and upgrade of the existing ones across the country, cum Africa.
He advised Nigeria and other SSA countries to among others introduce policy and regulatory framework for improved ecosystem; come up with digital inclusion strategy that would aid connections to the rural areas.
In Nigeria, the challenge for rural telephony expansion, apart from slow investments, has been attacks from states governments and their agencies.
Activities of majority of states in the country and some agencies are currently in cross-purposes with the move by the Federal Government to enthrone 30 per cent broadband penetration in Nigeria by the year end.
The Guardian gathered that due to the exorbitant Right of Way (RoW) fees charged by states as against the agreed levy signed by regulator, operators and the Governors forum at a meeting, some operators have stopped expansion drive, especially the deployment of fibre optic cables across the country.
This challenge is seen as a major impediment to the attainment of 30 per cent broadband penetration and 80 per cent Internet coverage of the country by the end of 2018.
While majority of the states are charging between N5, 500, N7, 000 and N25,000 per meter as against the N145/meter fees for RoW, some Federal Government agencies appeared lukewarm towards driving broadband and are failing to carry out their roles as enshrined in the National Broadband Plan (NBP) 2013-2018.
The challenge of RoW has forced iConnect, a subsidiary of IHS Nigeria to return its Infrastructure Company (InfraCo) operating license for the North Central region, owing also to delays in getting approval and cut throat roll out charges by states agencies.
IHS and MainOne Cable Company were the first firms to which NCC granted Infrastructure service provider (InfraCo) licences in 2015, but are yet to deploy infrastructure, because of difficulties in securing RoW approval from state governments within their zone of operation.
It was gathered that MainOne and Ibile holdings, in Lagos are still having protracted discussions on RoW, which the NCC has initiated an intervention move.
Among the states gathered to be targeting operators for increased Internally Generated Revenue (IGR) include Delta, Rivers, Ogun, Abia, Kano, Kaduna, Osun, Imo, Ebonyi, Taraba, among others.
Speaking with The Guardian, the Chief Executive Officer, Medallion Communications, Ikechukwu Nnamani, said states are not aware of the need for a vibrant ICT infrastructure. ‘’The state authorities don’t know what ICT can bequeath them. The Federal Government need to urgently intervene, if not, Nigeria would also miss the gains of fourth Industrial revolution.’’
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