Nigeria’s Telecoms industry and its survival

By Oluwaseun Ayantokun, Lagos

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Engr. Ernest Ndukwe,
NCC Vice ChairmanEvery sector of Nigeria’s economy is unarguably a "struggler" against anti-growth forces created and put in place by Nigerians themselves. The telecoms sector that had seemed untamable by the forces could be said to be giving in now with the myriad problems militating against. Recent events certainly point to the fact that this is not an auspicious time for the industry.

2007 was not a good one with regard to the quality of service (QOS). In the first place, major service providers (that is GSM operators) threw caution to the wind as cut-throat competition among them to lay claim to the largest subscriber base became more intense. The result was that they had on their networks more subscribers than they could adequately cater for, leading to assorted sour experiences for their subscribers. Call drops, undelivered SMS, terrible voice quality in case of so-called successful calls and inability to make any data or voice call characterised subscribers' experience largely from the second quarter of the year. And it is yet to significantly improve.

Indeed, the totality of the problem was not understood by the subscribing public at this stage as various explanations were proffered by the operators concerned. One of such beclouding explanations was that they overestimated or underestimated possible reaction of Nigerians to promo offers as the latter swarmed on the networks to avail themselves of the freebies. However, no significant change was noticed after the Nigerian Communications Commission (NCC) stepped in to stop all free call promos.

The regulatory body further directed that all sales promotions by the GSM operators be stopped altogether until there was recognisable improvement on their networks. Fines were even imposed on those that failed to comply on time by the NCC. Of note is the fact that Celtel and MTN were also directed to pay compensation to their subscribers for bad service experienced at a time in 2007. The duo refused to comply and so headed for court. They lost, and going by the fresh directive from the regulatory body, both must cough out N4.7 billion now.

The current blanket ban on promos and advertisement aimed at increasing subscribers number on the networks of Glo, MTN and Celtel is in no doubt a response to the challenge the NCC was confronted with. The body had been accused of shielding the operators perceived to be squeezing hard-earned resources of Nigerians every minute and second. The move was simply because bad quality of service (QoS) issue is far from being over, and no more mess should be tolerated. The question, however, is: how comprehensively will the move address the problem?

Before this latest course of action by the NCC, it is note-worthy that the operators concerned on the issue of QoS kept on selling SIM cards when they knew that the capacity to support their existence on their networks was not there. Of course, this has been defended with the explanation that phone lines were not just being manufactured and pushed into the market because those in the market had ahead of the time been given to distributors and sales representatives. And as such, the cards could not be recalled . What can be done to the hopeless situation, according to Engr. Ernest Ndukwe , Executive Vice Chairman, NCC, at a recent Telecoms Consumer Parliament in Lagos, would be to encourage the operators to expand their networks’ capacity for good quality service. He further said it would be unwise to put a stop to provision of more phone lines because the more the cheaper for the masses of Nigerians.

Telecoms services shouldn’t be an exclusive preserve of the rich. Good as this might sound, the sincerity of one or two of the operators can be called to question as they have kept campaigning for more subscribers, not using means proscribed by the NCC but means as "mobile music and dance teams" in some major cities, instead of concentrating all resources and energies on bettering the networks.

Mr. John Odey, Information
and Communications MinisterThe situation has not been helped by the fact that certain state governments in the country are willing accomplices with their desire to partake of the "manna" in telecoms through various kinds of taxes.Multiple taxation became worrisome in 2005 when the FCT Authorities (FCTA) refused to allow telecoms operators to erect more infrastructure in the FCT without obtaining some annual permissions that cost several millions of naira. The operators would not comply and so have not been able to expand their individual coverage. Though, the issue was later said to be amicable resolved among the stakeholders, the public is yet to know what they have resolved to do since the operators have not been able to build more base stations in the FCT.

Lagos State must have had its eyes opened by what the FCT Authorities were doing. It did not see telecoms towers and infrastructure as outdoor advertisements as the FCTA did but as buildings whose plans’ approval must go through money-gulping processes. Also, just like the head of Lagos State Infrastructural Maintenance and Regulatory Agency (LASIMRA), Engr. Joe Igbokwe, said, it should not be seen as out of place for the state government to charge N500,000 on each of the over 400 base stations in Lagos annually. The two parties are still in court. And like Mr. Danian Udeh, Publicity secretary of the ALTON (Association Licensed Telecommunication Operators of Nigeria) said, the court will decide. But until then, good quality service will wait as the operators will not be able to expand coverage and so increase capacity.

The problem of inadequate power supply and insecurity (of equipment at base stations) are part of the national shortcomings that are not new. The nagging question is: for how long will Nigerians wait?

The state of NITEL today is best described as a national shame. Tied to this national shame is a key factor contributing to why good quality telecom service is eluding the country. According to Chief Ezekiel Fatoye, a former general Manager in NITEL and Engr. Gbenga Adebayo, President of the ALTON, the design was that the first national carrier will provide the necessary backbone for the licensed operators to ride on. Its failure has really crippled efforts of the operators to deliver. All of them are now taking their salvation in their own hand, installing their own optic fibres and other infrastructure. Of note is the fact that Nigeria is losing a money-spinning investment in NITEL and Chief Fatoye said the government should be held responsible for it.

Another icon of uncertainty and fear in the industry is Nigerian Communication Satellite Ltd (NIGCOMSAT). The Nigerian Communication Satellite was launched in 2007. It was a result of a term loan from China that runs to billions of dollars.

The business could bring in a lot of revenue for the country if properly run. But as it is today, it is like the government does not know what to do with it while time ticks away. The management of NIGCOMSAT, riding on government power, wants to drive it into providing last mile telephony service to quickly recoup funds invested into it but stakeholders in the industry want due process to be upheld in doing so. When will this be resolved? Somebody out there must also provide the public with the information on what is being done to ensure that NIGCOMSAT faces its real business before dabbling into other things.

The problems in the telecoms sector of Nigeria should not be underestimated by the federal government and other stakeholders. Failure to address issues the way they should will be too costly in this information revolution. Politics should be set aside and attention focused on development.