Telecoms Sector 58 Years After Emma Okonji

X-rays the performance of the telecoms sector since Nigeria attained independence 58 years ago

From 1960 when Nigeria gained her independence from the British colonial government, telecoms contribution to Gross Domestic Product (GDP) could be said to be low and the sector was fraught with operational challenges having recorded only 400,000 lines with a tele-density of 0.4 per cent from 1960 to 2000.

But the old scenario changed since 2001, when the Global System for Mobile Communication (GSM) was introduced by the government of former President Olusegun Obasanjo. Prior to 2001, telecommunication was seen as a product for the elitists in the society and as such, only few Nigerians had access to telephony and its contribution to the economy was very low.

But from 2001, came the game changer, when GSM was introduced for the first time in Nigeria, and was immediately followed by the rollout of GSM services across the country.

Between then and now, Nigeria has recorded over 162 million active subscribers, with a tele-density of 116 per cent and contributing over $70 billion to GDP, apart from the direct and indirect jobs created from the telecom sector.

Telecoms’ growth Before Nigeria gained independence, communication was mainly through the telegraphic wire, initiated by the colonial masters, but after independence in 1960, the Nigeria Telecommunications Limited (NITEL), was established in 1985, following the separation of postal services from telecommunication services. People had to queue for hours and days, just to make international calls and sometimes local calls through NITEL.

However, the advent of GSM in 2001 eventually demystified telecommunications, and gave every Nigerian the access and right to communicate. Today, anybody in Nigeria can sit at the comfort of his or her home and office to make instant calls within and outside the country, through mobile phones.

Banking activities are now transacted on the mobile phones, without the bank customer visiting the banks.

The most eventful period was between 2001 and 2015, when the telecoms sector was liberalised, and the first set of operators licenced.

They included Econet Wireless (now Airtel), MTN and NITEL. In 2003, Globacom was licenced and in 2008, Etisalat (now 9mobile), also acquired its licenced, while ntel came on board in 2014, but rolled out services in 2016, after its successful privatisation process through a guided liquidation exercise.

Following the inability of NITEL to cope with competition from GSM operators, it folded up its operations and was eventually sold to NATCOM in 2014, which currently trades as ntel.

Although the deregulation of the sector began in 1993, when the Nigerian Communications Commission (NCC) was established by Decree 75 of 1992, but the full deregulation was in 2006, after the five-year exclusivity period given to telecoms operators by the NCC elapsed and the NCC had to open up the market by licensing more operators.

Challenges since Independence One major challenge faced by the telecoms sector since independence, is the poor state of telecoms infrastructure across the country. It became a challenge because the government did not invest in telecoms infrastructure, thus leaving telecoms operators to reinvest their profit in building network infrastructure and in expanding their networks to distant parts of the country.

Today the country is still battling with data harmonisation, despite the data collection and processing by different agencies of government. According to industry stakeholders, the challenge persists because Nigeria lacks the required telecoms infrastructure to harmonise all data collected by NCC on SIM card registration; Federal Road Safety Corps on driver’s licence; and Banks on Biometric Verification Number (BVN), among others.

In addition, the slow pace of digital transformation in the country remains a challenge.

Despite celebrating its 58th Independence anniversary, Nigeria is still backward in the area of technology development, given what developed countries of the world have achieved through technology.

Today, developed nations of the world are driving their economies through emerging technologies and governance is highly driven by technology.

Systems are automated both in the public and private sectors and technology is used to tame corruption, reduce fraud and to fight insurgencies that threaten the unity of their collective existence, but such is not the case with Nigeria, 58 years after Independence, as the country struggles to catch-up in the area of technology development.

But industry stakeholders were of the view that lack of investments was a major reason that affected the sector’s growth.

The Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, said Nigeria later realised its mistakes and commenced actual investment in Information and Communications Technology (ICT) from 2001.

Call masking/refiling Another challenge that rocked the telecoms sector in the recent time was call masking, call refiling and SIM Boxing, which forced the telecoms industry to lose as much as N1.06 trillion within a short space of two years.

The Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, said recently that aside the revenue loss, the situation posed serious national security threat to the entire country.

According to him, the revenue loss started in September 2016 when the NCC reviewed and implemented a new call termination rate for international inbound traffic from N3.90 kobo per minute to N24.40 kobo per minute. He said the operators involved in call masking and refiling took undue advantage of the hike in international termination call rate to tamper with international calls and terminate them as local calls in order to avoid paying the new rate, thereby defrauding the telecoms industry, trillions of naira within a space of two years.

Danbatta, said in the process of addressing the issue, NCC barred as much as 750,000 lines assigned to 13 operators from the national network.

The lines, which were barred this year, were suspected of being used for masking and NCC took a hard and no-compromise stance to withdraw the use of such lines.

Call masking and refiling is basically when an international call ID is tampered with and terminated in Nigeria as a local number, while SIM Boxing is a process of creating an artificial middle man with device that alternates call rates.

The perpetrators have ulterior motive of profiting from price differentials between international and local call termination rates.

Telecoms’ impact In spite of the myriad of challenges facing the telecoms industry, stakeholders are of the view that telecommunication has impacted the Nigerian economy to a great extent.

Danbatta recently pointed out that despite the challenges faced in the Nigerian telecoms sector, Its contribution to the Nigerian GDP has surpassed $70 billion.

Danbatta said telecoms investment to GDP was $70 billion as at 2017, but explained that the figure had since been surpassed, following the steady growth in telecoms contribution, adding that telecoms contribution to Nigeria’s GDP rose to 10.5 per cent in 2018, up from the initial 9.1 per cent in 2016.

On his part, Adebayo pointed out that between 2001 to 2017, the telecoms industry significantly impacted on the Nigerian economy in the area of GDP growth, infrastructure development and job creation, despite being a late starter in technology investments.

He said the progress made by the Nigerian economy since 1960, largely depended on ICT investments.

“Governments at all levels and the private sectors, all depend on ICT for their growth and development. This is true because ICT has since become the fundamental and most reliable public infrastructure that we have in the country today,” Adebayo said.

Service quality Since independence, Nigeria has been battling with service quality, but it became more prominent after the licencing of GSM operators in 2001.

To address the challenges, the Nigerian Communications Commission (NCC), came up with several measures, which included the introduction of Key Performance Indicators (KPIs) and fines, as well as ban on telecoms promos, yet the mobile network challenges continue to bite hard on telecoms subscribers across all networks.

But considering different measures put in place by the regulator and the telecoms operators, Adebayo said there has been significant improvement in service quality delivery.

He said right of way permit from various governments, has been a barrier to broadband penetration and better service quality.

He also called on the various state governments in the country to consider removing right of way barrier in telecommunications to enable faster broadband penetration and better service quality delivery in data and voice communications.

Broadband penetration In 2010, MainOne and Glo 1, landed their sub-marine cables from Europe through the western coast to Nigeria, and this was closely followed by the landing of MTN West African Cable System (WACS) in Nigeria, which were addition to the Nigerian SAT-3 Cable System that was resuscitated by ntel.

All these were submarine cables, also known as fibre optic cables, designed to drive broadband penetration.

Despite the avalanche of submarine cables at the sea shores of the country since 2010, Nigeria cannot boast of nationwide broadband access because of lack of investment on the part of government to build a national backbone infrastructure that will carry broadband capacities from the shores of the country to the hinterlands, where the services of internet broadband providers are highly needed.

The situation contributed to the high cost of internet bandwidth in the country, industry, Adebayo said.

Today Nigeria has 22 per cent broadband penetration with a plan to attain 30 per cent broadband by 2018, as enshrined in the National Broadband Plan of the country.

According to Adebayo, “Broadband penetration in Nigeria is largely mobile, which makes it necessary for government to provide backbone infrastructure.”

He however said government refused to invest in broadband infrastructure, thus compelling telecoms and internet service providers to rollout their own broadband infrastructure in order to provide broadband services for Nigeria, with over 92 per cent mobile internet connectivity.

Tech start-ups One of the major technology innovations that is currently driving the telecoms sector is the rise in technology start-ups companies and FinTech players that are currently disrupting the telecoms space. Although they have the challenge of funding, but most of their solutions are already disrupting the financial sector of the Nigerian economy.

The President, Association of Telecoms Companies of Nigeria (ATCON), Mr. Olusola Teniola said the growth of technology start-ups and fintech players would boost technology development, if given the adequate attention.

Citing instance with Remita payment software that was developed by SystemSpecs and currently being used by the federal government to drive the Treasury Single Account (TSA) initiative, Teniola called on government to support more local solutions like Remita.

Nigeria had in the past, missed out in several global evolutions, but with conscious efforts and commitment from government, Nigeria can develop her technology and become a force to reckon with in the global digital transformation initiative.