These are critical times for the Nigerian economy and almost every sector yearns for funding even the telecoms industry, unfortunately even in the dire of foreign direct investment, rich Nigerians are not willing to invest in ICT, President Association of Telecommunications Companies, ATCON, Mr. Olusola Teniola, who is also the managing director of Internet Solutions Limited, observed.
Can give an overview of the industry over the last ten years?
I know this is like repeating some of the things that you have heard in the past, particularly for those of you who are probably older than me in the Nigerian ICT industry.
My perspective on the industry is that it has now reached a level of maturity in the voice telephony space. The voice telephony is actually 100 years old in Nigeria. The British brought in the equipment and used it for administrative purposes to communicate with London.
But in terms of the changes in technology there was the analogue which was mainly the fixed line. And then there was the CDMA, which came in much earlier than the GSM but was provided on a regional basis. GSM came in 2000 and coincided with the liberalisation. That liberalisation had really happened 16 years earlier in other climes so there was no different concerning what Nigeria is going through that those in other climes had not gone through.
And that brings me to the power of the incumbent, which in this case is NITEL in Nigeria, British Telecom in the UK and AT & T in the USA.
So the opportunities for telecommunications were driven by the incumbent. Standardisation was also driven by the telecos, and if it was not the OEMs or vendors it was the operators. The standardisation that we are utilising in Nigeria actually was created by other telecoms companies abroad.
The liberalisation of the telecoms sector in Nigeria created the opportunity for new operators to come in. The difference between the incumbent and those private entities is that government was not sponsoring them; it was shareholders money, so that the ability for innovation in those companies is far greater if you work in those entities than the incumbent. It was not surprising that when Glo came in they brought in the innovation of per second billing, which the others said it could not be done.
But because Glo want to change the landscape and produce return on investment, it became the first Nigerian innovator in the industry. There are a lot of technology and innovations that we have not actually brought into Nigeria.
In the GSM category, what we have done is that we have grown through light-handed regulation such that by the time Engr. Ernest Ndukwe left as the executive vice chairman of the Nigerian Communications Commission, we have grown penetration to five percent to over 75 percent, and since then it has gone to over 100 percent.
What they are saying is that we have more device than the population and it depends on which statistics you use but the main point is that our measurement for tele-density is different from what obtains in Europe. In Belgium, a small country of about 11 million people there don’t have two mobile telephone handset, if you go to Germany and the UK people don’t have more than one mobile telephone handset.
Ultimately tele-density is a true reflection on the people because in Nigeria it is a case of multiple handsets. If I have three handsets are you going to say that it is three people? So we have a subscription base of about 158 million, the latest data but you have to divide by the numbers of devices then you can get the actually statistics of the people that have access to GSM technology or CDMA.
The development of telecoms is a huge success compared to the numbers of people who have phones and you cannot give the numbers of subscription but majority are on voice.
The mobile phone has the power to do so many things but we are only using two percent of its capability. But how many people can afford the smartphone let alone use broadband because if you don’t have broadband the features in the phone cannot really work.
My user experience is very limited but if I take the same phone to other clime I will start using the same judiciously. So we have a smartphone population that is growing but it is still a fraction of the 158 million of the subscription because those people have feature phones used it for voice and text message.
How can Nigeria realise the potentials of broadband?
Broadband is already in Nigeria but it is only assessable to a certain strata of the population and going by the definition of the National Broadband Policy it is 1.5 megabyte per second download. The talk of 1.5 megabytes per second does not exist so if I want to read the encyclopaedia, I cannot read it because I will be running at 200mb per second and when I see the bill I cannot afford it.
Broadband is at its infancy in Nigeria, all the statistics prove it whether you want to define it at 1.5 megabytes per second because that is how we define it, since the technology that can really drive that right now is LTE. That is why most operators are picking the LTE.
Accessing the internet is not broadband. Doing video streaming, e-commerce and e-governance is what true broadband means. You need an enabling platform for that to happen. The rest of the world is already using broadband and any foreigner in Africa expects that it works as it is abroad. They expect that Nigeria replica what they are used to at home.
Are you saying that a lot of the streaming that we need to do cannot be done by 3G or 4G unless on LTE technology?
3G theoretically can run 1.5mgb per second download in the lab when I load the network with more than one hundred and two hundred roaming devices congestions starts to happen because I have to share the 1.5mbg among those numbers of people. The reality is that you only get 380mgb per second but there is an alternative to using 3G in Nigeria, and that is fiber and then you put wifi in the device.
4G uses 1.5mgb per second in reality that is LTE and 5G has been proven to go into 10 and 20mgb per second for many users. So you use the technology that gives you the speed that you need. 3G is not the answer for broadband.
Do you think that Nigeria can still achieve the 30 percent penetration?
It is a tall order. I was part of the team that drew the ICT policy and one of the things that we did was not to set a low a target. The reason why we did that was because no one will come to invest with a low target. 30 percent penetration was place in the broadband policy to use as a benchmark. We were starting at one percent when we wrote.
The affordability issue is a big one in the country, whether you use 3G, 4G on fibre how much does it cost for megabyte per second to give you the user experience? In the UK and France people are getting 25mgb per second at five euro monthly and six pounds per month. How come in Nigeria it is higher and even people in highbrow area in the country cannot afford it.
And it takes me to the evasiveness of broadband of the have and has not. When do we get to the point where everyone has broadband? You know 30 per cent is not the whole of Nigeria. In fact I can do 30 percent in the whole of Ikoyi and ignore the rest of Lagos. So we have to be careful with statistics. It is a measure to say that it can be achieved but at what price. Where is the investment going to come from? I have that issue; yes we can rollout the technology but when is my money going to come back. So if I give you a bill so high will you would not pay it. People don’t pay their bill that is the experience that I have had. So where is the investment going to come from. It does not work that way. We need a balance and that is what ATCON is all about because voice has found a balance. 15 years ago I could only afford one phone and SIM cards were very expensive, the tariffs were very high but now I could see children using phones. The consumers are leading on voice but we are starting from a point of inflection on data which is low and it needs to pick up. Remember in 2011 I was advocating for the internet that I knew from abroad because then we were using MySpace Facebook is now bigger than MySpace, so the journey of Nigeria is unique because we need the content to drive broadband and not the other way round.
The supply side can be given, let me cite a good example, in Denmark you can get 1 Gb per second service but the utilisation is so low because they don’t have the content that they feel that the consumer needs for the 1Gb per second. The challenge for Nigeria and the industry at large is to get the necessary data to fill the pipes at the shores of Lagos.
And then we have to over the obstacles of getting the same bandwidth in Lagos to Kano at a reasonable price. Then we can begin to solve some of the problems that are reoccurring, if we don’t solve them the same question will come up six months after.
Talking about driving the broadband to the hinterland whose responsibility, the government or the operators that brought it to the shore and then in terms of investing in the sector does it seems that the environment is too harsh considering it in the light of the recent auctioning of the 2.6Ghz spectrum, and why do operators need to pay so much for it?
Governments creates the enabling environment and it is not in the business of building broadband, during my presidency I will not be advocating that government should build broadband. You remember I talked of liberalisation in voice, if you looked at the FCC in the America and what they did to AT&T it demonstrates that it is the private sector that builds technology, not the other way round. The notion that we have in Nigeria is that government is answerable to everything.
The investment which totalled top about $32 billion till date is private sector driven and led. The gap that exists at the moment is due to the market conditions, why, government gives out licences. A licence in Nigeria includes a telecoms operator to build a transmission network that does not exist in any regime in the world. It is assumed that a fixed line national network exists but in Nigeria that does not.
So operator A is given a license for 25 years, operator B and C (I am taking of the four big network operators that we have now) each of them owns similar licences and they have to build their own transmission, power is unprecedented. It does not exist in any regime, so the speed of rollout is reduced because you have a lot more work to do and then you also have to mark a return on investment.
Government just gave out the license and say that you have rollout obligation, so typical operator in their right mind will ensure that they rollout in cities and that is why 36 capital cities including the FCT have presence and that is how everyone copies each other. When tell them to go the local areas, the economies to bring the infrastructures outside the cities to the local government does not add up.
That is gap number one, gap number two there is an undersea cable coming to Lagos that is the easy path, the infrastructures that takes it out of Lagos to the likes of Kano has to be build by the operator because we don’t have a national broadband. So the X amount to be spent for voice and Y amount to be spent for data is totally different. It involves investment in different technology and skills. It took us 10 ten years to get to a significant penetration in voice, and we are only on the beginning of a three years journey on broadband since the National Broadband Policy was put out.
Each of the four big network operators owns similar licences and they have to build their own transmission, power is unprecedented. It does not exist in any regime, so the speed of rollout is reduced because you have a lot more work to do and then you also have to mark a return on investment.
Government just gave out the license and say that you have rollout obligation, so typical operator in their right mind will ensure that they rollout in cities and that is why 36 capital cities including the FCT have presence and that is how everyone copies each other. When you tell them to go to the local areas, the economies to bring the infrastructures outside the cites to the local government does not add up.
The gap number two there is an undersea cable coming to Lagos that is the easy path, the infrastructures that takes it out of Lagos to the likes of Kano has to be build by the operator because we don’t have a national broadband. So the X amount to be spent for voice and Y amount to be spent for data is totally different. It involves investment in different technology and skills. It took us up to 10 ten years to get to a significant penetration in voice, and we are only on the beginning of a three years journey on broadband since the National Broadband Policy was put out.
The question about FDI is very important because one of the things that I have learnt in Nigeria is that most rich Nigerians do not invest in ICT, in fact they move their monies abroad. Our Industry has been built with foreign money.
You mention 2.6Ghz, let’s be fair to the regulator the auction was done at a time when the Forex does not given investors a level certainty. If I were an investor, would I want to see my investment depreciate overnight by 30 percent? Let us not be hash on the regulator but there an operator that was interested in that and think the regulator is going to look at how to allocate the remaining.
It goes to show that timing is very important. I want to take you back the UK because I don’t want to be hash on the regulator. In the Uk the same thing happened with 3G in 2000, the government offer about 27 million pounds and the operator could not afford to pay it. They had to enter a negotiation of payment over a period of time but still 3G in the UK was a flop because they used that offer as tax on the operator.
We are lucky that we do not have that situation in Nigeria where spectrums have gone for billions of pounds. It is the timing and the environments of the microeconomics that have caused that have caused this issue of the 2.6 GHz to happen.
On the availability of spectrum, there was a recent announcement of 70Ghzand 80Ghz to be made available, 900 GHz two slot to be made available and there is still digital dividend of 700 GHz. There is also 38 Ghz and 42Ghz. Even if you throw that out now that everyone should come for auction there is scarcity of Forex and the uncertainty of Forex and our monetary policy does not render any assistance for foreign direct investment to come in.
Until those things are rectified you will see storing and reduction of FDI in this sector. It is a concern for every one of us this industry. There should be pressure placed on government to resolve this issue or CAPEX will stop will this antecedent of unemployment.
Telecos have complaint about access to Forex to buy equipment, what do you as an Association doing about it?
The issue of availability for Forex has always been a big one. We should be put on the list of the sector that has priority access to Forex and ICT should be seen as a diversification project of government and for knowledge.
There is a knowledge society happing in China it is a specific realm that Nigeria needs to benefit from. Indian is a good example; they are very good in software. We cannot begin to look at our extractive industry as the hope for Nigeria. It has to be a combination of the extractive industry and the knowledge society. That is the advocacy that we will be pushing under my tenure.
Price for spectrum is market driven at the moment I think that government has been looking at some interventionist instruments that have adopted in other clime but I have to say one thing here. You remember I said that FDI is brought into the country through private entities. If you tried to intervene on how they are run you will go to court why do I say that because you gave several operators licenses at a time, they are not national operators, they are not builds by tax payers money it is difficulty to regulate them especially when you have some of the large ones that are foreign owed. It is delicate balance.
We have a pricing of the capacity that lands in Lagos and we have the pricing for wholesale that goes from Lagos to the hinterland and then we have the last mile pricing. The cost of right way, multiple taxation and regulations are pushed to consumers and that decides the pricing.
My view is that we as ATCON we have to work with government to find equilibrium where we as service providers remain in business while the consumer also benefit. We have not had that dialogue with government but that is the issue am pressing.
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