Why Telecoms Pay about 39 Different Levies and Fees in Nigeria – Engr. Olusola Teniola, President, ATCON
As the President of the umbrella body of telecoms in Nigeria, how do you rate the industry?
The telecom industry did not start in 2001 when GSM license was given out as Digital Mobile Licenses (DML). To assume so will be missing the importance and contributions of those that came before the GSM licensing was awarded. I am going to say that if it wasn’t for the feats of ATCON’s past presidents, there would not have been a regular term in the NCC. So, that was the first task.
So, as a body, we did well in the early beginning. We were quick to realize that the regulatory directives of Ofcom in the UK were very unique to our situation in Nigeria. Again, we commenced our regulations then. Those that were part of it joined the NCC Act 2003 because it created a voice revolution. The voice revolution impacted our society tremendously in no small way.
It’s easy now to say that the mobile device in the hands of many people is one of the most important appendages to the human body, which was the case in 2001. Nigeria started with 500,000 fixed line subscribers. We now have 188 million subscribers. It has meant that the creation of the financial services industry relied on our platform. It has changed the way youths and grandparents communicate.
You don’t think the coronavirus pandemic has got something to do with it?
Covid-19 has also demonstrated the importance of this infrastructure that was built on the voice revolution. Because in the last three months we have been on lockdown and people are still able to carry out some form of business transactions, and young people have started using e-learning to engage with the teachers. I think the industry deserves a huge round of applause for not experiencing any outage during this period. There are other institutions that had different outages then.
Secondly, we have also ensured that our members were able to give palliatives. We have built isolation centres in conjunction with the Nigeria Centre for Disease Control [NCDC] and give millions of citizen free SMS and special numbers and ensure that the prioritization of government’s request to reach the poorest got the deserved attention.
What did ATCON members do differently during this period?
We have also learnt that our networks need to be built differently in preparation for the future. What is the future? It is the digital economy. I am proud that we as an industry, despite the challenges, were able to demonstrate that with all the obstacles that are prominent in our society in terms of doing business, we were able to render services to the vast majority of Nigerians.
We have learnt that we need to bring the internet to every Nigerian. We also understand that implementation of Nigeria broadband plan on 2020/2025 must be expedient because we have massive youth unemployment that must be engaged. Government services must be moved from filing cabinets to e-government platforms in the cloud. We have also learnt that for us to have meaningful contribution to wider digital global world, we need STEM – science, technology, engineering and mathematics taught at primary, secondary and tertiary institutions. This is necessary.
The issue of RoW won’t go away. Have you addressed this with the state governors? Will high cost of RoW result in high cost of data?
The issue of open access was a very important issue in our industry. The success of voice technology has created fortresses. You have your network. I have my network. You don’t share a base station. I have built my based station. You have built your own based station. You don’t share. That’s unsustainable. It does not make sense.
We have built an industry that was built on success. But we have forgotten that its foundation was weak. Why is it that we have networks and we have ISP, vast operators who are trying to compete in the same market who cannot access the same networks? If we are not careful we will go back to square one. We will have another version of NITEL.
What preempted the issue around open access was the story of the bottlenecks those operators that don’t own the middle man infrastructure are experiencing when they want to build their own network. This arose because others will not want them to have access to their networks. It is not the right thing to do.
However, let’s address the issue of the Right of Way [RoW]. We will come back to multiple taxes but RoW was arbitrary. Who suffers? The consumers! Because that person was able to negotiate the RoW at a high price and passed the cost to the consumers and at the same time, there is no competitive force that is competing to ensure that the price goes down.
At the National Executive Council meeting in 2013, which ATCON members had with the minister of communication then, we told the governors that we need a harmonised rate. The evidence was provided that if we task infrastructure upfront, investors will not come into the country. Because if I’m bringing a certain amount of fund to invest and more than 50% of the fund has gone into administration, where is the fund to build infrastructure?
We are talking about equipment and not cement business, which you can add sand to get concrete. You can’t connect fibre cable to a base station because the rate of RoW is exorbitant. Without realization, the idea of Infocus was built. It further opened access forum on the proviso that Internet Service Providers [ISPs] are able to access the middle man with capacity and then translate the lower price to the consumers.
That battle has taken us to 2020. Now the current Minister of Communications and Digital Economy and a member of ATCON, who was the chairperson for the Nigerian Broadband Plan 2020/2025, with the Executive Vice Chairman of Nigeria Communications Commission [NCC] had to visit the Nigerian Governors Forum [NGF] and pleaded the case. With that move to the NGF, they could refer to the 2013 meeting where the current chairman of NGF attended seven years ago.
What has happened after the initial meeting?
Seven years later, that same person is now NGF chairman. He saw the merit back then and we commended his leadership and others that have followed. Even better, the 145/linear metre, and in one case the N1 per kilometre, we didn’t ask for. He asked for a metre. But he gave N1 per kilometer. Anambra and Kaduna States waived the tariff. We commended the states because if it wasn’t for the move by Ekiti State Governor Kayode Fayemi, now NGF chairman, we will still be discussing the issue of RoW.
For us, as a body, we are concerned because our members are licensed owners who are seeking RoW at abnormal rates. Now the pressure is on them because in some of the regions, some governors have been moving in. Imo States, for instance, have been moved. We are happy. We’ll like others to follow suit. But I’m sure that some governors are aware of their colleagues’ moves.
And if there is a business plan or a case presented, or if it is demonstrated, that dropping of RoW doesn’t use internally generated revenue [IGR] or taxes or use them in employment. I am sure any meaningful governor will also adopt the harmonised RoW of N145 per millimetre for digital infrastructure deployment which is much needed right now.
How much have you achieved concerning the RoW?
Let me correct something because there is a notion and I think it must be corrected. There is a Critical National Infrastructure [CNI] Bill or the directive that is sustainable without the Executive Order being put in place or the CNI Bill that is still with the National Assembly being enacted. I want you to correct that notion and it’s not just about the tower.
We are happy that we’ve engaged the Ministry of Communications and Digital Economy in an attempt to drop a draft for the Executive Order in favour of the CNI Bill that is still a work in progress. What we have from the presidency is an approval that the equipment is critical in nature and should be protected as such, and I believe that the directive has been given to various security agencies.
We have not seen a formal memo in that regard. So, there’s still a need for further clarification because we don’t want to lose sight of the criticality of the issue you’ve raised. I don’t want to trivialize the importance of RoW. You’re going back to seven years. Let’s face what is ahead. The plan was so future-looking that people said it was ambitious. Do you know that right now that the 1.5 megabit per second minimum speed download is not going to be attainable in Nigeria but we have a broadband penetration rate of 39. 9%?
When you mention the CNI Bill, you can go into the year 2020. I was part of the recommendation team on the CNI Bill. When you say the infrastructure and how we move forward in 2018, you will see the recommendation again. When you see the spectrum and you see the demand drivers and look at the 2013 broadband plan, you can see that year 2020 is solidified.
That is what we did in 2013 and it is a continuum. The only thing I will say is that we have wasted seven years. It’s not about the plan. It is the execution. If we do not execute that 2020/2025 plan, I can assure you that in 2026, we will be six years older and we will be talking about the same thing.
So, what is ATCON’s position concerning the issue of multiple taxes?
On the issue of multiple taxations, it is very important that the Ministry of Finance review the updates to taxation made in 2015 because there seems to be an interpretation by the federal, state and local governments that multiple taxes are unlawful. We are not stating that taxes should not be paid but the duplication of the same taxes should be avoided.
We, as an industry, seek a one-stop-shop at the highest level and that one-stop-shop we will pay the taxes to. The taxes paid to that one-stop-shop should be distributed so that when we present evidence that taxes have been paid at the state and local government levels, they do not then seek to tax on the same taxes that have been paid to that one-stop-shop. We know that there are close to 39 different levies and fees. They are too many.
In fact, the broadband plan of 2020/2025 states that “if we attract the investment to implement this plan in quantum figure of $5b, which the government doesn’t have and we need to have private sector driven or private sector led, there should be over dose palliative and incentives to attract that kind of funds”. So, instead of taxing, there should be a waiver. Tax holidays should be introduced because of the fact that the outcome of this infrastructure. We need to create more jobs. More jobs create PAYE taxes, which benefits the state.
So instead of focus on short-termism, we should balance the medium term and long term because it’s not about us. It is about our children and their children’s future that we need to build and if you don’t do the 2020 plan in 2026 it might be too late.
As ATCON President, how do you protect your members?
NITEL was our biggest opportunity to expand what was then known as copper based infrastructure. I made reference to Ofcom. In 2001, the whole world was using various technologies, fixed lines and mobile for sparing few subscribers. The taxes paid by the consumers in other jurisdictions made copper very ubiquitous so that every home has a phone and can make calls even in the remote parts of the community.
They call them party lines. You have to wait for your neighbours to finish the call before you could pick up because you can hear them. That technology was ubiquitous. The difference is that the taxpayers paid for it in those countries but we used oil revenue for NITEL. The ability to have NITEL in every house didn’t happen. In fact, NITEL had a plan to build a national backbone network on fibre in 2005 but it remained a plan.
The four-year plan data I gave when backbone network should have been implemented, we have GSM licenses given to three operators in 2001 including Airtel that had WFA license. Another fact is that Fixed Wireless Access [FWA] that was predominately Code Division Multiple Access [CDMA] technology was regionalized because of economics. Then, there was no single operator that could go against NITEL. In the UK, there was a company called Imagery that was competing against the British telecom. In fact, your handset has a blue button. If you don’t want to dial a number on British line, you will press the blue button. It gives you access code and you will use calling cards.
Any investor that was in Nigeria, when they looked at what NITEL has done said that Nigerians don’t use phones. So, the surest way to change investor’s perception was to roll out fast technology. It is mobile telephony technology. It’s easier to put a base station in a location. It can cover thousands of subscribers with fixed lines. You can extend the copper infrastructure to each household and then put one phone.
In the case of the plans, it was going to be a challenge for anyone who had a FWA or fixed NITEL line, not only to compete against NITEL but also outpace the GSM technology using SIM cards. The introduction of the SIM card went from $50 per SIM to almost N200 in the space of one year. The price dropped.
It was Globacom that brought per second billing and transformed the landscape. Because on the fixed line, what we had was per minute billing and the early entrance of GSM also did per minute billing. It was Mike Adenuga who brought the Second National Operator. It was a business decision. Even Globacom that launched per second billing could not meet the demand. It was not about which technology is better. The demand is there and you have to meet up with the supply.
The appetite to make a voice call was insatiable. The rush to meet the supply created winners and losers. Our members then were predominantly ISPs, vast operators, FWA operators and those that were building infrastructure. What did we do to assist the survival of our members?
So, what did you do?
The first thing that ATCON did was to highlight the issue around technology agnostic versus being technology aware. That has to do with regulatory issues. It is very difficult for a regulator to continue to give out licenses on the back of the fact that there is a blueprint in place. If you have a blueprint then, you will be more careful with the kind of licenses you issue. ATCON had always advocated for policies that will protect the smaller operators who were mostly indigenous.
We ensured that those that have a more dominant position in the market can co-exist with smaller operators and contribute to the ecosystem. Remember that the introduction of the internet clearinghouses was ATCON’s initiative. It was the former president Olusegun Obasanjo who brought it. It was not that ATCON was not doing anything.
It was the fact that economy of scale was much more important than what we had in the market. What we have learnt from that is that we now have the large operator, ISP operators and others who are now under the armpit of ATCON so that both of them can bring ideas to the table and also compete on the same platform.
What is your view on the Ministry of Communications now renamed Ministry of Communications and Digital Economy?
One of the things that I’ve stated in making new changes is that the government needs to have a digital economy minister to do digital strategy. It’s recognised that the federal government needs to have a digital economic minister. In fact, ATCON stated this before the honourable minister was made the honorable minister. It used to be Communication Technology under Dr Mobolaji Johnson. It’s recognised that the digital economy is so important that it needs an independent body. We called it digital strategy.
In fact, we said the country is missing two things. A digital strategy that should be headed by the presidency as it is done in Rwanda. We then said we are missing a broadband plan, a revised or renewed broadband plan. Because there was a one year gap, the 70% came from ATCON and was taken by a former minister who could not conclude the work that he started but handed over to a new minister that we currently have.
Decision by the minister considering the fact that the way our governance is structured, the best he could do was to add the digital economy to his portfolio. I have told him that he’s brave. The honourable minister has to be commended for his bravery. He needs our help because the digital economy has seven pillars. He said to himself that one man cannot do it. We have been speaking only about one pillar. There are other pillars that we’ve not mentioned.
My concern is if there’s no collaboration among MDAs, civil society, academia, unions and industry or industries, it would just lie on the papers of Nigerian Digital Economy Policy and Strategy document that was again inaugurated by our president on November 28, 2019 in Abuja. That’s my concern because we still have a long way to go in this digital commission.
Do you think NBC being subsumed under the Broadband Commission is a good idea?
It has been addressed already. If you look at the body language of this government, even the recent restructuring report sidestepped the merger of those two sister commissions. Technology has already converged. Countries do it in different ways. In our case, NBC is under a different ministry. One minister cannot tell another minister what to do. But that is the way governance is in Nigeria.
Government is meant to protect the consumers. The current government is currently struggling to understand the technology. Remember, I said that technology is agnostic as opposed to technology being involved. Technology has left regulation behind. You can’t be waiting for things to happen because technology has moved on. Right before our eyes, if we do not meet the 2020/2025 plan, we’ll be enslaved again and at this time, the white man will not make a mistake again because the mistake the white man made was to give us freedom.
Who is Olusola Teniola?
I have been in the telecom industry close to 28 years. I am the sixth National President of the Association of Telecom Companies of Nigeria (ATCON). I am riding on the back of great past presidents that have led this organisation. I recognised Dr Ernest Ndukwe, late Engr. Alaba Joseph, Dr Emmanuel Ekuem, Engr Lanre Ajayi and others. They have created a platform I am resting on. Over the past, I have been opportune to work at the secretariat that has changed the fortunes of the industry.
ATCON has over 160 members. We are entering our 27th birthday and that shows longevity. I joined the industry in the UK in 1989 after I graduated. I’ve always been in this industry. I have seen a lot of innovation that I have been privy to in other climes that are now bearing fruits in Nigeria. We now have 188 million subscribers. Though most of them are on 2G platforms, there is a transition towards 4G. We also have on the back of it, the new Nigerian broadband plan.
ATCON, for the record has always stated that 70% of broadband penetration is what suffices for our industry today and we are happy that President Muhammadu Buhari has officially inaugurated the Nigerian broadband plan for 2020/2025 in March before the lockdown. I have been the President of ATCON for four years for two terms now and we are now planning to handover to the younger ones.
Though, I will still be around with the executives of ATCON and also look forward to assisting all the players through the journey of digital transformation to see this industry change because Nigerian economy will be dependent on the digital economy that was kicked off by the President in November last year.
How do you respond to being named as one of the top CEOs of the decade?
I am very humble by any recognition that has been given to me. I entered this industry as one of the very few black people in 1989. In fact, I was the only black software designer in 1990. I thank God that I became an accomplished software engineer in telecoms at the very early age. One of the things that got me where I am is passion and true understanding of technology. I don’t have any fear for technology. I always embrace technology but one of the deliberate things that is not a coincidence is that I came to Nigeria.
A former minister brought me back to Nigeria. I was in Abuja for some time because of the powers-that-be and I’m fortunate to be able to put myself in a position of responsibility. To those that have the opportunity to work with me in the private sector, I run two companies in Nigeria and I’ve worked with Germans in South Africa, they have to understand that there are also people like myself in diaspora waiting to make a mark.
So I speak to them that the building of this country cannot be done by just us and no foreigner will build the country like I have come back whether in private or public sector. I want to tell the youths that they should never stop learning. I have not stopped learning. If you don’t have passion, you would become an opportunistic person. You would see telecom as just a way to make money. So the recognition is what I accept. I therefore encourage others to see what I’ve done as an encouragement for them to do the same.
They should join ATCON. They should voice their concerns and build the platform for the future of this country because it’s going to a digital economy whether we build it or a foreigner builds it. Rather, we should build it because we understand our culture and our idiosyncratic behaviour and also we can leverage the vast talents that we have in this country. We just need to harness it and create intellectual property to turn what is the new black gold which is data into an export revenue earning industry. That’s what I would like to say.