Tag: investment

The telecoms sector is not insulated from the recession challenging the country. President, Association of Telecoms Companies of Nigeria (ATCON), Olushola Teniola, says the Federal Government must take steps to halt further erosion of investors’ confidence in the economy. He says there is need to also license the remaining infrastructure providers to accelerate broadband penetration across the country. He speaks on other issues affecting the economy in Lagos, LUCAS AJANAKU was there.

Last year was particularly trying for the economy. How did the telecoms sector fare?

The Information Communication Technology (ICT) sector totally witnessed a very mixed set of circumstances in Nigeria last year. The impact of devaluation of the naira to the United States Dollars (USDs), changes in National Information Technology Development Agency (NITDA) leadership, rise in inflation, delay in implementation of 2016 budget and loss of jobs characterised the year under review. It also created some opportunities – the realisation by the Federal Government that ICT is a sector that is critical to the diversification of the economy and the ongoing contribution of ICT to the growth of our economy. ICT recorded almost 9.9 per cent contribution to the nation’s gross domestic product (GDP) last year despite all the headwinds and also against a slow-down in the overall economy.

 ATCON vehemently moved  the Communication Service Tax bill pending before the National assembly. What is the situation of the bill now?

I believe the Communication Services Tax (CST) bill is due for public hearing and we as an industry and other consumer interest groups under the aegis of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Alliance for Affordable Internet (A4AI) and National Association of Telecoms Subscribers (NATCOMS), seriously stand against any attempt by government to destroy the growth of this industry by creating an additional tax on top of the already 26 taxes/levies that are imposed on the ICT industry. ATCON has provided alternatives for the government to consider. Alternatives such as increase in value added tax (VAT) across  board (not just applied to this sector) at no more than one per cent alongside incentives that will encourage further much needed investments in addressing quality of service (QoS), broadband roll-out and sustaining job creation. Any excessive tax will stall and/or stifle further growth in the ICT sector.

There is also the Telecoms National Security Infrastructure Bill pending before the National Assembly. What is the situation too?

Well, I have not seen this bill that you refer to, so I cannot make any meaningful comment on it. What we advocate is the Cybercrime Act to be fully implemented and executed to the lettters. In particular, we want the Police, National Security Adviser  and other security agents to assist the industry in the protection of Critical National Infrastructure (CNI). ICT infrastructure is now under CNI. This will help improve QoS and reduce the costs of repairs in the industry to a minimal level. The infrastructure that is rolled out to support broadband services needs to be fully protected from vandalism, theft and destruction and therefore, the enforcement of the CNI under the Cybercrime Act needs to be implemented without any further delay.

Interconnectivity debt is a major issue in the industry. How do we address this?

Trust is an important factor when dealing with sensitive transactions such as interconnection billing. The arbitration of these outstanding debt is, in my opinion, the best way to go and applied as best practice in other climes. The major issue is that settlement of debts must be done in a timely manner to not accumulate into a dire situation where an operator is not able to pay down or net off the outstanding to another operator. In these cases, only arbitration can resolve an effective way forward as an alternative to an operator denying the debtor termination access. Without this sort of scheme in place, it becomes difficult to continue to establish trust by the debtor operator in the industry.

What advice do you have for the NCC on spectrum management because it is a scarce resource?

The industry seeks further allocation and utilisation of spectra that will contribute to the growth of mobile broadband penetration in rural areas of the country. The options presented at the Spectrum Trading forum hosted by the NCC in last year should be explored and implemented this year, specifically considering the Nigerian terrain. The migration of analogue TV to digital TV should be a major focus during this year and this should free up more broadband-type spectra that will allow high-speed or superfast broadband to be easily rolled out.

Over the years, there appeared to have been a slow-down in the pace of infrastructure expansion by telcos. Do you agree with this?

Yes, I do. The reason is simple: the USD to Naira uncertainty has led to anxiety within the investment community and this has also meant that foreign direct investment (FDI) needed to fund network expansion and capacity upgrades under our members’ capital expenditure (CAPEX) programmes have had to be put on hold. We need the government to see that an enabling environment with clarity in policy formulation and execution that leads to transparency will encourage investors, both domestic and foreign, to bring funds to drive this expansion. The government needs to remove the fear, uncertainty and doubt that are prevailing in the economy this year or there will be further contraction in the economy, irrespective of crude oil prices on the global market.

The real sector has been affected by the foreign exchnage (forex) drought. what about the telecoms sector?

There are no legal ways of working around the forex issue and as previously stated, until the government allows telecommunication equipment to be on the preferred list of items that can access cheaper USD to the Naira, it is hard to see where the further growth will come from this year. Without expansion of networks or increase in capacity upgrades, the networks will not be able to sustain QoS or improve on it and revenue will stagnate or decline. Again, the government needs to show strong leadership on this critical issue.

The National Broadband Plan  envisages 30 per cent  penetration by next year. With the current situation, is this target achievable?

Nigeria plans to achieve 30 per cent broadband penetration by 2018. Well, with the right policies in place and an enabling environment anything is possible. Last year, some statistsics from the Nigerian Communications Commission (NCC) suggested a 20.9 per cent broadband penetration, though this is yet to be verified, it is evident that penetration is skewed in the trendy areas of Lagos, Abuja and piecemeal in Port Harcourt. Any further increase will need to be on the back of infrastructure companies (Infracos) and other network roll-outs outside these geographical regions to prevent a ‘have against have-not’ landscape occurring. This is the year when we need to have implementable programmes in place to ensure we are on track to achieve the 2013 National Broadband Plan (NBP) of 30 per cent broadband penetration by end of 2018. The industry needs all government agencies in charge of and responsible for infrastructure at state levels to work with and support the roll-out of much needed fibre optic metro infrastructure that supports the whole eco-system to deliver on the promises made in the NBP. Furthermore, the industry needs government policies in place that will attract much needed investments to support the capital expenditure programmes that needs to be undertaken to realise the country’s vision of a digital transformation (smart cities, e-Government and Internet of Things).

What message do you have for the regulator of the industry this year?

The focus for this year should be unlocking ‘local content’ in the industry and ensuring that a level-playing field exists to bring about increased employment for the growth in the skills set required to generate a digitally transformed industry. The ecosystem will bring about new players from the over-the-top (OTT) space and regulation that balances the interests of these players versus the investments already made by the telecoms players will need to be addressed. The investments required to fund the mobile broadband revolution must be addressed, so all incentives and an enabling environment should be put in place by the Federal Government, so that investors’ confidence is not further eroded.

There was an attempt by the NCC towards the end of last year to cap data prices. It was resisted  and the regulator was compelled to suspend the move. Do you think there is such need in a liberalised market?

Yes, it is the regulator’s rightful intervention and role to ensure that a level-playing field exists in the industry and to curtail any monopolistic and unfair behavior creeping into the industry, irrespective of the noises being made by the masses. The law does not dictate for ‘anything must go’ approach to destroy market values and more importantly, investments made to create the market in the first place.

We, at ATCON, represent both the large and smaller players interests and also support fair competition that benefits the consumers and encourage the NCC to continue to do its work on the determination of whole pricing, seek wide stakeholder input and then, place mechanisms and instruments to safeguard the Nigeria’s reputation in the eyes of the international community.

The NCC does not have a barometer for measuring the QoS, the data segment of the industry, though it has for voice calls.  Don’t you think the time has come to have similar thing in data segment?

The key performance indicators (KPIs) set for voice should be maintained and with the advent of data services becoming prevelant, the NCC has the right under its enabling laws to also introduce relevant KPIs to address cost and quality of data services too.

As an industry, how can the infrastructure deficit be bridged? 

Without the tall buildings that exist in other climes in the United States (US), Tokyo, Hong Kong and London for instance, it is only through more towers housing more base transmission stations (BTS0 that will cover the many black spots present in the network coverage across the diverse terrain that makes up Nigeria that we can reasonably expect to fully resolve ‘drop calls’ for examples and other environmental issues that are inhibiting the improvement of QoS. In addition to the 60,000 BTS, we also need the infrastructure to be protected from unlawfull closures, destructions and sabotage.

The NCC is planning to introduce national mobile roaming initiative. What is the significance of this initiative to the industry?

National roaming is a fundamental part of the idea behind sharing active infrastructure. Though a new concept in Nigeria, it is widely practiced in the United Kingdom (UK) and other climes where ‘calls are handed over to another network’s cell’ where the signal level doesn’t meet a certain criteria or thresholds. This should aid in ensuring that calls previously dropped are now given a higher percentage of probability of not being dropped if the call is allowed to roam onto another network. We await the final report from the NCC to establish the modus operandi before we can be certain that a level of improvement can be assured by the networks to the consumers in areas where a high level of intermittent issues have been reported.

 Internet of Things (IoT), cloud computing and big data are expected to take strong footing this year. How will telcos drive these emerging areas of the ICT?

Narrowband IoT will be experimented with this year by one or two of the incumbent mobile network operators (MNOs). Cloud computing will experience a growth in hybrid cloud computing on the back of more trust being placed in locally built data hosting centers certified to Tier-3 level. Telcos are challenged with Big Data in Nigeria, due to the veracity, validity and verifiable data issues that exist – further partnerships with OTT players may seek to address this.

With increased CAPEX and operating cost (OPEX), coupled with other operational challenges, what are the survival strategies of operators?

Adopting a business model that focuses on cost efficiency and creating opportunities for increased differentiation in the services and products that are offered to the target markets.

Last year, most of the operators launched 4G long term evolution (LTE) networks. What impact will this have on the economy?

The launch of 4G LTE networks in Nigeria signifies the beginning of high speed internet with speeds over 4Mbps being typical. This opens up further opportunities for more sophisticated services and applications to be developed and utilised by consumers on the move. It also provides a platform for IoT and Smart city type devices to be adopted in areas of security, water metering, farming and many other utility applications. This will in effect create new jobs in the economy.

Many licensees of the NCC have closed shops and incidentally, the affected ones have been mostly indigenous firms. Is this not a source of worry to ATCON? How  can this be reversed?

Yes, it is indeed, a great concern. However, we have also witnessed a trend of new age telecom and e-commerce businesses being launched into the eco-system alongside software companies focusing on knowledge-based technologies. Also, those companies that have adapted their business models to include true partnerships are the ones that are able to survive in the future.

The NCC is yet to license the remaining Infraco. Is ATCON worried and why?

Any further delay in awarding the remaining Infraco licences as well as the hurdles faced by the Infracos awarded in 2015 in rolling out in 2016 and still not being addressed will seriously hamper the accessibility, affordability and availability of high-speed internet and broadband services across Nigeria. In the area of licensing  Infracos, therefore, I will suggest that for the realisation of a National Backbone Network (NBN) the Open Access Model needs to be implemented to the ‘letter’ hence, the remaining licences need to be given out within the first quarter of this year. Also, issues surrounding the project execution in each geo-political region will need speedy intervention by the Federal and state governments’ collaboration to avoid experiences observed in 2016 with the Infracos that were awarded licences to cover Lagos and Northcentral regions. We must avoid the mistakes already made to ensure the success of the overall intent.

Finally, what other things would you like to say about the industry?

Well, let me talk more on the ICT policies and telecoms regulation. Local content must be a priority this year for the ICT industry in general and the government should further collaborate with the industry, the civic society and the academia to find the best fit for Nigeria in ensuring that capital flight is minimised in the areas of software, digital content and data hosting.

Telecoms regulation will need to balance the OTT presence alongside the current industry setup of strong MNOs and a few internet service providers (ISPs) against the uncertainty of the Nigerian economic situation viz-a-viz infrastructure investments and capital deployed to achieve it. This year, the telecoms industry needs to see an immediate clarity on data price floor and other intervention instruments that will need to be explored and maybe introduced into the industry to ensure competition (or lack of) doesn’t stifle innovation for the long term growth of industry as a whole. This year is the year where the NCC will be looked upon by all industry players for a level playing field to exist in the emerging broadband data era in Nigeria.