“Telecoms is now the most critical sector driving future growth in our economy, both in terms of improved and accelerated productivity and youth employment.”
Mr Olusola Teniola, is the president of the Association of Telecommunications Companies of Nigeria (ATCON). In this interview, he speaks on critical issues in the ICT sector and the ATCON.
Assessment of ICT sector
We are fortunate to witness a boom in the revolution of how we play, work and carry out our daily lives using the mobile telephony services. It is with this in mind that Association of Telecommunication of Companies of Nigeria (ATCON) recently celebrated and recognized the top 100 ICT personalities that are active in the industry despite the enormous challenges within the operating environment. The networks have been built from small beginnings from the liberalisation in early 2001, with the surefootedness of a regulator that sought expansionary growth, to the current era where ‘data’ is now the new black gold. Data centres have now been built on the back of five undersea cables sitting at the shores of Lagos. A broadband plan was introduced to address the bottlenecks in ensuring ubiquitous (access) for all Nigerians. On the back of 150m subscriptions for mobile and a potential to now drive internet penetration to the high 70 percent by 2025, there is a lot more work needed to restructure the industry to address much required improvements in consumer experience within the advent of big data/predictive analytics, artificial intelligence, machine learning and robotics. All these trending thematics will require pervasive 4G technology roll-out over and above data bundling tariffs – this is where the OTT players are now entering the space to address the next one billion untapped internet users. The industry is yet to fully push the envelope in the data-centric and digital transformative platform arena and, therefore, the next five years will see a very interesting competitive landscape unfold.
Telecoms service providers
To all intent and purposes, the collapse of NITEL has seen government hands-off the running of any telecommunications business and this has enabled the private sector to take the lead in terms of the growth, direction and, to a great degree, the policy direction that government should take in achieving foreign direct investment (FDI) to the tune of $70 billion over the years. However, this has meant that the market now needs further Government intervention to aid in more FDI and other capital to flow back into the sector to realise its full potential. Quality of service (QoS) equates to the need for increased network capacity, right from the foundation to the consumer. The services rendered by telecoms services now encompasses: Gaming (lottery), financial services (mobile banking, fintech and payments), commerce (e-commerce) and other miscellaneous services, albeit, digital in nature and consumption. This means that telecoms is now the most critical sector in driving any future growth in our economy, both in terms of improved and accelerated productivity and youth employment in the future.
More than 200 access gaps in Nigeria despite over $70 billion investment
This is due to the prioritisation of capital allocated and returns on investment expectations from shareholders in the business of rendering telecommunication services. It is well known that no venture exists in rolling out capital-intensive infrastructure into underserved and unserved parts of this vast country when the costs associated far exceed the income that will be realized. The Universal Service Provision (USP) funds under Nigerian Communication Commission (NCC) are responsible for ensuring that incentives and programmes are aligned with present-day realities to address these gaps in line with service providers’ willingness to address these communities that are not being serviced. Government should treat these communities as a priority in ensuring universal service. access is a deemed a fundamental right and not viewed as a luxury.
Poor quality of service
Poor quality of service is a result of many things. The major one is with 150 million active subscriptions and numerous e-type services being rendered on the mobile networks (that is where a majority of voice and data activity occur) on a daily basis and in the absence of any fixed line network to share the burden of the inherent capacity challenge, it is only through further targeted investments in network capacity and expansion that incidences of dropped calls etc will be addressed. Secondly, the numerous governmental agencies need to be more careful when they go about shutting and sealing off premises that host telecommunication equipment. We have several reports that our members’ offices and substations are being closed arbitrarily, mostly connected with payment disputes. This is very concerning, when one views that the disputes are not being resolved properly through the courts, which has meant that equipment servicing the nation is either switched off, destroyed or vandalised. This has a negative impact on QoS. Finally, optic fiber networks are now randomly cut many times during the day and this also results in poor quality of services. Government needs to accelerate and execute the Critical National Infrastructure (CNI) bill into law to ensure the full protection of all telecoms and ICT equipment to reverse the QoS trend.
In Africa, voice is heavily regulated and data isn’t. We in ATCON seek a balanced approach to the regulation of the industry by one and only one regulator (NCC) and all other agencies should not meddle with the affairs of the regulator but should work with the regulator to improve the lives of communities we all serve. Infrastructure regulation is one of the areas that is a bone of contention, so, it is this area that needs particular focus and a multilateral approach to resolving how we build and implement technology to the maximum benefit on a long term basis. The dig once policy for building a national backbone network is one that should be addressed immediately. In the case of over-the-top (OTT) regulation, we only have to look at what is going on in the USA and Europe to see what the future holds in terms of data sovereignty, protection and rights – it is only going to become more complex and we need the right amount of regulation to create the right environment for all to thrive.
Consolidation is a natural fact of doing business in any sector. More so in the ICT sector that is very dynamic and fast paced. Most of the companies that have exited the market, failed to adapt to changes in technology and failed to read the consumer behavior until it was far too late. The key to success in this business is to keep your eye on the ball.
Potentially, 39 different taxes, fees and levies are applicable and far too many to attract the much-needed FDI and funds to continue to grow this sector in a serious manner. Harmonisation should reduce this to about 10 taxes paid at the federal level and distributed to the states wherever duplication exists.
Impacts of tax on telcos revenue
Taxes impact the collective bottom line of our industry and squeeze out all the margins, so prices are under threat. Also, unwarranted levies, fees and taxes are inhibitors to investments to be made, considering that over the past decade no tax holidays or other NIPC initiatives has been targeted to address the funding gap in the industry.
National Broadband Plan (NBP) 2013-2018
We are already late in the implementation of the NBP 2013-2018 and this is reflected in the slowing down in the contribution of the ICT sector to the nation’s GDP. We should be contributing close to N3 trillion per quarter in 2018, if the NBP had been fully implemented as envisioned. This is the power of broadband on any economy and Nigeria needs to key into this as the tool for diversification and to secure future generations’ livelihood.
As per how realisable is the 30 percent broadband penetration target, with government’s late rush and push to drive this, we should aim at achieving 30 percent by 2020.