Internet service providers (ISPs) have blamed the declining fortunes of the sub-sector on the regulatory role of the Nigerian CommunicationCommission (NCC).
They accused the NCC of giving preferential treatment to Tier 1 operators with huge capital to throw around. They said the last straw that broke the camel’s back was the issuance of Unified Access Licence (UAL) to telecom operators.
The NCC defines UAL as “an authorisation that allows the licencee to provide a basket of services under a single licence. For example, under a Unified Licence, the licencee may be allowed to provide Mobile and Fixed telephony services, National Long Distance, Gateway services under one licence, it can be regional or national services”.
Wtes Project Chief Operating Officer (COO), Chidi Achuzie, said time was when the industry had about 1000 operators that employed young Nigerians and added value to the nation’s gross domestic product (GDP), adding that 60 per cent of the companies in the sub-sector are living on life support.
Achuzie said broadband services are still driven by mobile, adding that because of the hostile business environment, some ISPs have ventured into other areas.
A source in the NCC, however, refuted the allegation because the Commission does not unilaterally take decisions that affect every player in the industry. The source said the ISPs attended the public fora that preceded the issuance of UAL, wondering why objections were not raised.
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Also, Divisional CEO, ipNX Business, the Enterprise Business Division of ipNX Nigeria Limited, Segun Okuneye, said the outbreak of COVID-19 pandemic and subsequent global lockdown proved the importance of ISPs as the internet became the only lifeline for businesses to continue to thrive.
He said ISPs are the gateway to the world, adding that if the challenges facing the sector such as harsh business operating environment, access to capital, and limited access to foreign exchange (forex) are addressed, ISP is a profitable business.
He called for a level-playing field backed with regulation to allow Tier 1 players and ISPs compete. The lack of this, he said, is threatening the existence of ISPs.
The operators spoke at the Telecom Sector Sustainability Forum organised by Business Remarks with: “Examining the Nigerian Internet Service Providers (ISPs) Viability in a Digitised Environment” as theme, at Ikeja, Lagos.
Okuneye wondered why ISPs were shut out of the Central Bank of Nigeria’s (CBN) forex window and sought the quick intervention of the apex bank to access forex. He appealed to the Federal Government to grant waivers on imports to bridge the infrastructure gap.
He said the submarine cables with a humongous terabytes of data are landed at the shores of Lagos, saying the challenge is the last-mile infrastructure to take them to users in the hinterlands.
He lamented the frustrations that come with securing right of way (RoW) to expand infrastructure capacity. While he commended some states that keyed-into the harmonised cash payment for RoW, he lamented that some states still charge N3000 per meter.
Vandalism is another challenge Okunneye identified. He said the last two years have been challenging in Lagos because of the level of construction going on across the state.
He sought rebate on taxes, saying electricity tariff from the national grid was too high while the skyrocketing price of diesel is dealing a crushing blow on the ISPs.
Okunneye said the enforcement of law on critical infrastructure will insulate the industry from wilful vandalism and theft.
He also said the cost of spectrum licences should be looked at by the NCC.
ISPs, he said, must think out of the box, converge cost, understand the market and decide which will guarantee return on investment (RoI). He added that collaboration was important because it will be unwieldy to attempt to operate across the entire value chain. He advised ISPs to also offer high quality services.
Achuzie said the model would not work and that NCC was looking at how to remodel the market for growth.
He said the challenge facing the operators was whether the infrastructure they had built could be used to offer other services, adding that local content initiatives was something that would have boosted revenue.
The Wtes Project COO said another big issue with ISPs was that they operate in silos, adding that integration is a huge challenge. “How to connect to the whole mesh to create value for ISP is also a challenge,” he said, adding 300terrabytes on our shore would lead to huge price drop in price. He asked rhetorically: “The issue is: how do we prepare for the price crash?”
On the way forward, he urged ISPs to expand reach, take advantage of the open access model of the NCC in broadband infrastructure provision, consolidate opex which kills business and be cyber ready.