‘Bank’s Excesses on Non-Interest Loan Is the Reason Telecom Networks Not Stable’ – ATCON
President of Association of Telecommunication Companies of Nigeria [ATCON], Engr. Olusola Teniola in this interview shared that the banks have hands in why the telecom network operators are struggling to keep their networks stable. Excerpt.
We are grappling with the issues of quality of service, broadband penetration and base stations challenges. What are the solutions?
Let’s first understand that any venture one explores has challenges. The telecom has now become a dependable tool for almost every Nigerian that has held a mobile phone device. It has changed the way we live, play and work. So, that dependence really puts the telecoms industry on the spotlight. Let’s take some positives before we start to address some of the challenges.
About seven years ago, we had internet penetration of five or six per cent. We had a lot of players that were into voice services. We had CDMA operators if you remember. I think Starcomms was still around and I think Multi-Links too. Those are the days. So, the reality is that there have been changes. There have been some consolidations. There have been some exits. But in spite of that, subscriber numbers have been growing.
Those numbers really reflect an increase in the subscriptions, which are accounts on a home location registered database, or in this case, including the HSS system, but it’s still a database. So that reflects multiple SIMs being used and it also demonstrates a teledensity in certain areas that is close to 160% and that demonstrates maturity in those segments of the market. And let me focus your attention to those markets. You’re looking at Lagos, Abuja and Port Harcourt. These are the Golden Triangle. That’s always been the case or the rhetoric over the years.
There’s really a huge and intense competition in that space. In the area of understanding why the quality of service has been impacted, remember, I took you back to those metrics and those KPIs, which is just maturity. However, look at the nature of the network that they are rolling out in Nigeria, it is predominantly 3G. 3G has been mixed in terms of its expectations. There’s been a delay in converting from two to three, and then 4G, which is now the platform that we know will provide high-speed broadband.
It has been demonstrated outside this country. So, it is not a technology issue. It is more of a rollout issue. There are impediments to that and I’ll come back to it. But let’s just pick the landscape. On the back of that, we have 160 million active subscribers, predominantly on the four mobile network operators. And in that time, we’ve had SIM card issue, which led to a fine against the largest operator.
We’ve had Etisalat exit the market. We’ve had a foreign exchange that’s virtually somersaulting. This slowed down CAPEX and you know CAPEX is the engine of any emerging market, especially Nigeria. We have 192 market gaps. Those market gaps represent 20 to 30 million Nigerians that have never held a phone. But we talked about 106 per cent teledensity.
What are the other issues?
Let’s go down because we are addressing multi issues. If you have a typical user in Lekki phase one, Ikoyi, Victoria Island, on the average, you might have five or six SIMs and one of these SIMs might be dedicated to CCTV for security. So in a household, you might have more than 10 SIM cards. I have three devices. My wife has two. That’s five. We are not talking about CCTV and a child that might have a mobile phone. That is endemic around Lekki phase one while affordability is not an issue.
We say that we have 33% broadband penetration. Lagos takes 11 out of that 33% and out of 36 states so do the math. It is skewed in favour of Lagos, Abuja and Port Harcourt. Probably all those three states put together take almost half of that 33% and I’m being conservative here. The reality is that, yes, there’s been an exceeding 30% that the Nigeria Broadband Plan sets but it didn’t talk about subscriptions.
It talked about subscribers. This is because every 10% increase in broadband penetration leads to a 1.3% growth in GDP. We have not realised that because Nigeria now is having around 2% GDP growth and our population growth rate is increasing.
We are in a dilemma. The dilemma, with all the facts I have shared with you, is how do we address the trend of decreasing foreign direct investment in an environment that doesn’t appear to be enabled at all? Why is it not enabling? One of the answers is multiple taxations. The big elephant in the room is the issue of Right of Ways.
Can we focus our attention on the InfraCo licenses?
Out of the open access model that Nigerian Communications Commission [NCC] is implementing as part of the Nigerian broadband plan has stalled. It was through the political will that license was given out but these licenses ought to have been given out by 2014. The licenses were issued in 2018 with one returned, and being presented again for someone to pick up for the North Central. But under that programme, not one kilometre of fibre cable has been rolled out. That’s a reality.
The issues that have been identified in the Nigerian broadband plan 2013 are still prevalent today in 2019. And you say that quality of service will not be impacted? We have over the top [OTT] players on the network. We have a massive increase in financial transactions to the extent that the banks are making more money on non-interest income than on loans and you say networks will remain stable?
Why is that the case?
If you don’t support the ICT industry, where will the investors come from? It is about attractiveness. And if you impose a big fine on an operator, what do you think other investors will think? And then not only that, you have the Attorney General of the Federation trying to land a $2 billion tax rebates on an operator. Then we have multiple regulations. Then Nigeria Civil Aviation Authority [NCAA] said recently it would destroy 7,000 towers. It will destroy but not to create. And you have several states shutting down access to base stations.
I think I am getting a mixed signal here. Are we for development or for destruction?
So, our members are showing uncertainty. What do we do now? Do we invest further in the country that has brought us to this part for 2G, voice-centric and we need to add more to make it really data-centric, that is 4G and then prepare for 5G? Or do we wait to see how the landscape will fair? That is the picture I am painting. So, what we advocate at ATCON is that dialogue has to happen.
We have presented some of the very difficult issues both as ATCON and ALTON members and we have laid these issues at the doorstep of the regulator. We are waiting for feedback. Because the regulator should address every single issue we’ve raised. Then at the end of the day, the ICT investments have come from the private sector.
Government has acknowledged that the telecoms industry, the wider ICT sector could only be driven by true PPP with the emphasis on the last ‘P’ being private. And until we have some of these issues resolved, then we’ll continue to have this the narrative that we’re having right now; poor quality of service, which is based on the fact that we don’t have critical national infrastructure bill turned into an act.
So, there’s no protection and base stations and towers are being destroyed. These have a prevalent impact on the quality of service. They also chase away investors who will like to come into the country because it demonstrates a lack of security.
And it’s funny, isn’t it? Because whilst we destroy this infrastructure, it’s not only the citizens that suffer, truly but we also now raise an ugly security issue. There I rest my case for now.
From your analysis, everything still rests on the quality of service issue.
You know communication also depends on the commercial viability of the transaction. You can’t force people to collocate but you can encourage them to collocate. We have about 44,000 base stations spread over 46,000 towers. We need more towers. We do not have active sharing in Nigeria. We advocate for that.
In fact, some of our players in the industry that will remain nameless are looking at how we can structure the industry where active sharing is performed right from the optic fibre cable to the equipment’s at the base station because not everyone needs to duplicate efforts. That will take some time but I know that NCC is encouraging us and we are grateful for NCC to have shared a draft paper on that.
But in terms of passive infrastructure, the passive business structure is now prevalent because it makes economic sense to not duplicate the number of generators being built by every service provider. So, where it makes sense to collocate, they collocate. But we need more towers now as we expand the networks. Let me say something, mobile technology is results driven. Spectrum is in the air. It is finite. It’s not infinite. It’s not like optic fibre. So, if you are walking down the streets to another street and you hit a black spot. What do I mean by black spot? A building where the signals pass through, your call is dropped. By the time you try to get back to the network because the call has been dropped, someone else may have taken that space.
Just like airlines, you know, you can’t see planes so closely together. Our economy is based on wireless technology. The weakest link in physics, the weakest link in engineering should be a combination of fixed line and wireless, not whole wireless, no fixed line.
That model in Nigeria is very acute, where we have 0.1% penetration of fixed line, but we have 99% of mobile broadband. So, we have built an economy on mobile services. That wasn’t meant for that. It was meant for the mobility of telephony. Whereas fixed telephony, which is like a phone on your desk or your home, was built as the underlying infrastructure.
So, we have turned everything on its head. And then we just literally put everything not in a blueprint fashion but in a way that says, well, where the best returns on investments. Sorry, we don’t apologize for this, our members are privates companies. I know that MTN has been listed on the stock market but before the listing, it was a private company. MTN seek profits. The company came to the country because we said we have a large population, large youth population. That’s what attracted the company, the market metrics. If those are removed, they won’t come to Nigeria. So, equally, they seek profits.
But now we are giving the responsibility to the governments to fill the gap. But as you know, our budget is constrained. And there are some tech companies that have 30 times our budget size. That’s a reality. So you can’t change things because you feel it is unfair or you feel that they are taking advantage. Globalization existed long ago.
The reality is, as long as we keep shouting that we have a market coming to our country, as government is seeking FDI, they will take the best opportunity that’s presented. They will not be forced to do something that we think is for us to determine what we believe they should do, and encourage them.
The bigger operators are trying to stabilize the network and not to live.
Sadly, there isn’t a business case right now to do an extensive expansion of the network other than a backbone network. Next generation backbone network is predicated on fibre. Specifically, NCC has stated that we need about 120,000 kilometres of fibre. In India, they have millions of kilometres of fibre. You know, right now in Nigeria, we only have 54,000 kilometres of fibre. So there’s a big gap, as you can see. So, until we have that, and that’s just fixed-line backbone, so imagine fibre to the home, fibre to the building.
As I said, the business case isn’t quite there. Because it is evident that when you have applications that you’re using that can still be done on a mobile device, and it is reasonable consumer experience. To get a better one, we know you can do it by fibre but the cost of switching from what you already have to fibre is quite exorbitant. It’s greater than 30% and if it’s greater than 30% it’s not worth you moving.
Where is the place of e-commerce in this?
Well, you know, the internet always has a darker side to it. And that’s with every system that I’ve been aware of. We can only push preventive measures and have a great awareness about what you do when you’re on the internet and using services or applications or your interactions with governments.
Cybercrime will never go away because it’s like any form of development. There will always be good and the bad. What we advocate and what we know to be the truth is that there are measures and procedures that you can do to minimize the events of cyber threats and those require a level of education that ensures that we as service providers are able to educate the users about the threats.
And the only way that we can do that is to collaborate with government, with the widest stakeholders to ensure that the message in the usage of these platforms fully goes to the average Nigerian. And that average Nigerian would have an opportunity to understand exactly what they need to do to prevent certain threats to them when they use the internet.
The internet is a vehicle. It’s like when you go out you drive your car. Hopefully, you’ve gone to driving school, as I said, hopefully, you pass the driving test. So you go out as long as you obey the rules and you assume that there’s enforcement that allows that other people on the same road have gone through the same thing as you, then you might not have an accident. Remember, that doesn’t prevent accidents from happening.
We really don’t cover everything bad. I think that the internet has its good sides as long as you know what you’re doing. But then there are technical issues, which the service providers can address. But the more social and environmental ones are purely to do with education. And until we address that, from an early age by introducing science, technology, engineering, mathematics, we will always have this challenge of ensuring that cyber threats do not overwhelm the developments of e-commerce and other services.