How infrastructure gaps, funding, federal government’s inconsistency stalled resuscitation of landlines

The explosive growth of the Global System for Mobile (GSM) communication services over a decade in Nigeria has changed telephone conversation from a niche market to a fundamental constituent of the global telecommunications market. It took the shine off the fixed telephony, the use of which has declined tremendously in this part of the world. While other countries still use landlines, investigations have shown that in Nigeria, both regulator and operators appear handicapped about resuscitating them. In fact, in the last one year, fixed line telephony growth has remained stunted. ADEYEMI ADEPETUN, Head Communications and Technology, reports…
PRIOR to the advent of the Global System for Mobile communication (GSM), the fixed line telephony was the toast of the country.

Global statistics on fixed line telephony from the International Telecommunications Union (ITU), revealed that as at 2000, Nigeria had 553,374 fixed telephony lines. Interestingly, the number went up to 1,050,237 by 2010, but it started the journey to extinction by 2011, falling to 719,406 users. As at 2017, which was the period covered by ITU, usage rate had gone down to 139, 344 users.Data from the Nigerian Communications Commission (NCC) further confirmed how the technology has sustained a downward profile in the last two years in the country. Precisely, NCC said fixed wired service offered by MTN, Glo, ipNX and 21st Century only has 107,949 subscribers, while the fixed wireless, offered by sold Visafone and moribund Multilinks only has 26,865 users.

The fortunes of fixed telephony further nose-dived when the Nigerian Telecommunications Limited (NITEL) was disrupted by the GSM technology. The technology, according to the NCC can only boast of 0.10 per cent usage, whereas the GSM has 99.7 per cent acceptance level.Indeed, in the hey days of NITEL, it was a tug of war for users to get the full benefit of the service as subscribers would have to wait several hours; even days to get a dialing tone that would enable them to make calls. This challenge contributed greatly to its downfall.This battle that threatens the existence of fixed lines is not limited to Nigeria, although it is more pronounced in developing economies, in the developed world, usage rate is still very high.

According to the 2017 ITU statistics, in the USA, there are still 119.9 million users; 2.32 million users in UAE; 33.1 million in the UK, while Brazil had 40.8 million subscribers.In Sweden, there are still 2.62 million subscribers; 3.65 million in Switzerland; 1.99 million in Singapore; 26.8 million in South Korea and France had 38.9 million land lines.In Africa, Egypt had the highest number of landlines, 6.60 million. It is followed by South Africa with 4.18 million; Mauritius 4.13 million; Algeria 4.10 million; Morocco 2.04 million; Tunisia 1.12 million; Ghana 301,551 and Kenya 69,861 users.

As stated, this steep fall in the usage of fixed telephony is not limited to Nigeria. However, reports have it that in other part of Africa, such as South Africa, Kenya and others, where adoptions have been low as well, both government and private players are engaging one another to revive its fortunes, a move that is missing in Nigeria.
For instance, South Africa’s Telkom – Africa’s largest fixed-line telephone group developed a turnaround strategy to transform itself into a profitable and sustainable business that will be able to support economic development of the continent’s second biggest economy.

Telkom re-organised its consumer and wholesale business units into three parts focusing on residential users, corporate customers and networks. According to the firm, the move is expected to improve the efficiency of the company and boost its financial performance, while expanding coverage.Meanwhile, as part of the strategy to stay afloat, Telkom is interested in buying another South African operator, Cell C, which will also make it rank among the first three operators in Mandela’s country. Zambia’s Zamtel is still a monopolist operator as far as retail fixed-line telephony is concerned. Other operators struggle as they fail to fend off fixed-mobile substitution in the country.

Analysts have noted that the fixed line environment services primarily the enterprise market and to an extent the high-end residential market. However, the mobile phone has come to dominate the Nigerian market and most consumers have since shunned landlines, relying exclusively on the mobile phone for communications. But many industry observers believe that both the operators and regulator have not done enough to bring back the fortunes of fixed lines in the country.

Impact of GSM technology on fixed lines fortunes
In major regions, the disruptions brought about by the introduction of GSM technology actually sound the death knell for landlines. This is a major development it might not recover from in several years to come. Research has shown that technology has the potential to lift people out of poverty. All signs point to the developing world skipping past the eras of landlines and desktop computers and going straight to mobile. That potential for two-way communication is changing the face of international development.

On the revolution brought by mobile technology, co-lead of UNICEF’s Innovation, Chris Fabian, said: “For the first time ever, we’re able to have a clear line to people who are in the middle of nowhere to give them a sense of a future, information, opportunity and choice.”Mobile carrier industry alliance, GSMA estimated globally there are now 7.5 billion mobile connections with 3.7 billion unique subscribers. But 10 per cent of the Earth’s 7.2 billion people still lack access to basic voice and text services, and about a third lack access to 3G or 4G mobile broadband Internet. The majority of these uncovered populations live in the rural regions of Asia and Sub-Saharan Africa, which together account for 3.4 billion of the 4.8 billion people not yet connected to the Internet.

GSMA noted that only two per cent of African households have a landline, while nearly two-thirds of American households still do. Recent Pew Research Centre numbers showed that cell phones are as common in Nigeria and South Africa as they are in the United States, with about 90 per cent of adults owning mobile phones. As at the end of 2002, almost one, and half years after the GSM revolution in Nigeria, the country accounted for over two million subscribers to the network of MTN and Econet. But today, with more players in the sub-sector, including Globacom, which entered in 2003 and 9Mobile (Etisalat), which came in 2009, Nigeria, as at January 2019, can boast of 249 million connected GSM lines, while 173.6 million are very much active, leaving no breathing space for the fixed lines.

Gaps left behind by dearth of landlines
Speaking with The Guardian, the President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, noted that in many jurisdictions around the world including quite a few African countries, the fixed line network remained the fundamental building block for mobile and other important critical services such as emergency response services.

Teniola said the demise of NITEL in Nigeria that was built on both the UK and German fixed network models was and still is a great setback for Nigeria. He explained that the major difference is that incumbent telephone networks such as BT, FT, AT&T and many others, like Vodafone in Ghana and SA’ Telkom were built using tax payers’ money by their respective governments before bring privatised and they took the opportunity to build out extensive backbone networks and landlines to homes on the back of copper technology.

“These networks were then built on to bring about their mobile services using modular hardware and software technology upgrades. In Nigeria, the only thing that was left out of the NITEL legacy was a national Internet Protocol network plan on a piece of paper designed by I believe an Austrian citizen in 2005,” he stated. Teniola recalled that there were several attempts by NCC to get Private Telephone Operators (PTO) licensed and operational, under Dr. Ernest Ndukwe’s tenure as EVC. This, according to him, caused a great rush for early entrants at that time to adopt Code Division Multiple Access (CDMA) technology and a few cases of copper-based asymmetric digital subscriber line (ADSL) deployments on a regionalised basis under a fixed wireless access architecture.

“Unfortunately, without NITEL not being able to provide the requisite backbone network (or intercity connections), it spurred many competing, incomplete backbone networks using microwave technology – no single operator to date had the capacity or still has the capacity to cover the very expansive geographical landscape that represents Nigeria and when you put the sheer challenge into perspective ‘regionalised operators’ soon ran out of money. Considering Nigeria is at least three and half times the size of the UK and BT in London took decades to complete the building of its own fixed line network, it wasn’t any surprise that this didn’t materialise in Nigeria.”

Like his counterpart at ATCON, the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, said the country didn’t have the required sufficient underground infrastructure to support land lines and the people were denied access to telephones for many years. Adebayo noted that the incumbent, NITEL then didn’t do much and their infrastructure was not only inadequate but was not renewed as technology demented at the time.

What then killed landlines?
The dearth of landlines in Nigeria actually came, not mainly because of advancement in technology, because the country could have upgraded if the will to do so was there. According to Adebayo, the problem was more of government policy, the extremely high cost of deploying fixed lines, high incidences of vandalisation and cable theft.“In addition is the size of the country in terms of land mass, government policy, high cost of procurement of right of way by willing operators and also incidences of vandalisation and willful damage to underground infrastructure make it unattractive to deploy landlines,” he stated.

But Teniola noted that private sector investors are not as patient as social investments backed by the likes of World Bank or similar capital intensive projects that require at least $20 billion to $30 billion to build for a country the size of Nigeria. Mobile technology and especially the GSM technology has put that argument to bed. Mobile service is the future for Africa and Nigeria is at the fore-front in that context.The Director-General, Delta State Innovation Hub (DSHuB), Chris Uwaje, said landline phone was killed due to Nigerian technology development ignorance, technophobia and gross indiscipline about understanding the long-term Development of Things (DoT) fuelled by the suppression of merit, research, creativity and innovation. According to him, all those attitudes were ignited by haste, which blatantly led only to self-interest (nowhere) and unsustainable development.

Globacom failed to resuscitate fixed lines with its SNO licence
To market watchers, part of the responsibility of the Second National Operator (SNO) licence status handed Globacom, almost 12 years after, was to resuscitate fixed line services in the country. In the words of telecoms analyst, Dobek Pater, Globacom never deployed a fixed line access network since getting the licence, with the exception of corporate data links.According to an industry expert, who was privy to the arrangement then, but preferred anonymity, Globacom actually shied away from its responsibility and unfortunately, the regulator was unable to enforce the conditions of the licence. “Probably because there are powerful Nigerians controlling the telecommunications, that handicapped the regulator from enforcing the rules,” he stressed.

He explained that the SNO licence was for Globacom to provide fixed lines like NITEL, to provide mobile lines like MTN, to provide data services just like other operators, adding: “The licence also empowers them for triple play— voice, data and video. I think they found out that it was much more economical to go mobile. This is because with one mobile switching centre with 10 BTS, you can cover up to five million to 10 million subscribers. So why will you waste time on optic fibre? The Glo 1 was primarily to augment their data services on the mobile network. They shied away from fixed lines.“In South Africa for instance, Telkom is exclusively responsible for fixed lines services and it has controlling shares in Vodacom. The cost of deploying fixed line services is huge. The likes of VGC, 21ST Century and IPNx are the one doing the services, but it requires a lot of digging. Unfortunately these operators have not expanded beyond Lagos, Abuja and Port Harcourt,” he stressed.

Giving more insight, ATCON President, said Globacom still has the SNO license status after NITEL, which owned the First Network Operator (FNO) licence status.According to him, the concept of first and second operator licence was adopted from the UK when Mercury Communications was awarded a competing license to BT then the only operator and deemed the first. He said this move in the UK created a duopoly for many years in the fixed line space, which no longer exists as Ofcom has opened up the market for other licenced operators to compete in the fixed line business.

In the case of Nigeria, Teniola said the business case for quick returns made rolling out mobile services a much more expedient and profitable way to serve the population in 2003 when Glo launched its GSM services. “It is now virtually impossible to put a business case in front of the Globacom management team to convince them to fund a new build out of a fixed line service when their mobile services business is their main source of income in 2019,” he stated.From his perspective, ALTON Chairman, Globacom is within the same Nigerian eco system, “so the challenges of our operating environment may have made it very difficult for them to do much. Of course, there is no government policy to protect them and also the high cost of rights of way and high incidences of vandalisation of cables could have hindered them.”

To Uwaje, the critical issues were “market forces and time to market – amidst inconsistent policy summersault’ due to the accelerated acquisition of GSM mobile phones.
“When you have a market force (Nigerians without means of any mode of telephony communications facilities who experienced many years on the NITEL waiting list – even after payment for landline phones, only to be introduced to mobile phone with instant connection on the go.

“Indeed, let’s not forget that a frontline policy maker once told Nigerians that ‘Telephone is not for the Poor’ That was when we got it totally wrong and threw research, science, technology and innovation to the dustbin-of-things. Had Globacom not switched to mobile telephony, the company would have gone down the collapsed business darkroom. Fact is we had a very weak landline communication infrastructure at that particular time,” Uwaje stressed.Efforts to get Globacom side was not successful, as the Head of Public Relations, Andrew Okeleke, was yet to respond to enquiries sent by The Guardian to him, after almost 10 days.

nTel slow at resuscitating, seeks $1b to expand operations
To many observers, the acquisition of NITEL by NATCOMs was seen as a move in the right direction for the industry with the hope that retail telecommunications services would be advanced and there will be more options for Nigerians. Ntel entered Nigeria’s telecommunications landscape after paying $252 million in 2015 to acquire the assets and liabilities of NITEL, but has been slow in its plans to bring back landlines, which was part of the licensing acquisition. The firm has rather concentrated on providing high-speed data, high-definition voice, and video services to its customers, with the strength of SAT-3 cable.The Guardian learnt that nTel actually started a pilot programme in one of the villages in Abuja for fixed lines, but it was later suspended due to the various challenges confronting the business and the economy as a whole.

The firm had hinted about two years ago, plans to raise over $1 billion to expand its operations across Nigeria, including fixed lines services, but internal challenges, among others, appeared to have stalled the firm’s enthusiasm in pursuing some of its hitherto set agenda.

Any hope of maximal resuscitation?
All hopes might not have been lost, going by industry experts’ perspectives on bringing back landlines. According to Adebayo, the right government policy, including classification of telecommunications services and supporting infrastructure as critical national security and economic infrastructure, which will prescribe severe sanctions for any act of obstruction of telecom operations will help in no small way. Also, he said government may consider incentivising those deploying landlines with as free right of way, reduction in import tariffs for cables and supporting equipment, and others.

To Uwaje, sure, landlines can be brought back to functioning. “We might as well ask: Can Nigeria Airways be resuscitated? Answer is yes. But, not until you aggressively promote and deliver incentives to research, science, technology and innovation by actively deploying knowledgeable Nigerians on merit to midwife real national and patriotic development. Landline telephony is a significant and robust infrastructure for national development.”From his perspective, ATCON President, private networks within the enterprise segment of the telecoms market has deployments of various forms of fixed line technology for intra and intercompany communication. According to him, Fiber to the Home (FTTH) may also provide an avenue to deploy very high speed broadband coupled with voice applications over data. However, universal access services will predominately be solved using a mixture of fixed line or wireless to the curb and then wireless for the last leg – it’s simple economics!