Williams, a young boy, 12 years of age, full of gusto is dead. He had a cheerful smile that lit up the room whenever he walked in. Williams’ dream was to become a computer scientist. Sadly, this dream will never become a reality. A couple of years back, he was diagnosed with Asthma.
Williams would have been alive today if only his elder sister was able to put a call across to her mother to find out where the inhaler was. Apparently, all the telecoms masts in their vicinity were vandalised few weeks back. She could not make a simple call, so little William lost his life. It could have been anybody’s child. Quite pathetic! This is just an example of an incidence that would have been averted if telecoms infrastructure was protected.
On a daily basis, telecoms installations across the country are been vandalised. The government has continued to ignore calls by stakeholders, mobile operators to accord telecoms installations the status of critical national infrastructure. This has become quite evident due to the recent spate of bomb attacks on telecoms infrastructure in some Northern states of Nigeria.
Without a doubt, Nigeria’s telecoms sector has witnessed phenomenal growth in the last decade, and has emerged as the leading mobile telephony market in Africa, in terms of subscriber base and revenue. This tremendous growth however has been due largely to regulatory and policy reforms in the country and the emergence of a quasi-independent regulator, which in turn ushered in an era of stability and growth. The resultant increase in investor confidence led to an abundant inflow of Foreign Direct Investment (FDI), which provided the financial lubricant required to sustain growth and expansion in network infrastructure and services deployment in the country.
A study by London-based research firm, Pyramid Research, indicates that revenues generated by the telecoms industry in Nigeria amounted to $8.6 billion in 2010, and has maintained a steady growth. Pyramid Research predicts in the report that revenues will hit N1.7 trillion by 2013. Besides, indications are that chunks of the revenues from tax and levies paid by network operators have significantly boosted the receipt of many government agencies.
Some of these include Corporate Income Tax, Value Added Tax (VAT), Annual Operating Levy and Import Duties on telecoms equipment. From a private sector investment of about $50 million in 1999, the industry by end of 2009 attracted more than $18 billion in private sector investments, including FDI.
In spite of significant strides in the industry, there have been numerous challenges, mainly revolving around tariff and quality of service, power and most especially, vandalism of telecoms infrastructure. Overall, the advent of GSM (Global System for Mobile Communications) in Nigeria has significantly advanced the lives of Nigerians, individually and collectively, stimulating economic growth by facilitating cross-industry linkages and improving efficiency.
Threat to FDI
The willful destruction and vandalism of telecoms infrastructure and equipment has become a worrisome development emerging in Nigeria’s highly competitive telecoms market. Analysts have warned that vandalism of telecoms infrastructure is already threatening the continuous inflow of FDI into the sector.
Last year, the entire telecoms sector was massively shaken when the news broke of the attack on telecom operators’ Base Transceiver Station (a critical network component required to deliver telecoms services) by insurgents in some states in Northern Nigeria. A large number of telecoms masts belonging to MTN, Glo, and Airtel, Etisalat, Multilinks, and infrastructure provider, Helios Towers, were targeted and destroyed by the assailants.
Besides, stakeholders at the time expressed their reservations over the development. The vandalism, according to them, could send negative signals to investors that Nigeria is not a safe place to do business. “Security concerns are one of several considerations that could potentially discourage foreign and local investment. It may therefore be more accurate to state that consideration for the entire operating eco-system would drive investment decisions”, said Funmi Omagbenigun, general manager, corporate affairs, MTN Nigeria told Business Day in an interview.
At the moment, there were a little over 22,000 BTS sites in Nigeria serving a population of over 167 million people as of the end of year 2012. Expectations are that operators still require additional 50, 000 BTS to meet the quality of service mandates of the telecoms regulator.
Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), said the vandalism of telecoms equipment would have an impact on the current efforts to improve quality of service across the nation.
According to him, the development will not only slow growth in the sector but set the industry back considerably, as requisite funds that could have been invested in deploying more base stations would now be used for replacements. During last year’s attacks, operators expressed the fears that the attacks and the cost of replacements would push their costs northwards and profits southwards. The cost of building a Base Transceiver Stations (BTS) stations from the time you secure the land where you want to install the BTS and the time it goes live is around $250,000 (about N39m).
Quality of service
Despite over $2.24 billion (N347bn) investment ploughed into network expansion projects by telecoms operators in the preceding year, Nigerians are yet to feel the impact in terms of improvements in network quality, BusinessDay has gathered. Poor quality of service charceterised by drop calls and incoherent transmission is still prevalent in the telecoms industry. The current situation, according to analysts has far reaching implications as individuals and businesses that depend on the availability of telecoms service are having a difficult time. A report by the Oxford Business Group (OBG) shows that MTN had invested $1.4 billion on network upgrades in 2012. Furthermore, Etisalat invested $194 million in expanding its network, aiming to build up to 1,000 base stations by December 2012. This is in addition to the 3, 000 Base Transceiver Stations (BTS) it currently operates.
On the other hand, Airtel Nigeria has invested $600 million on its network since taking over the GSM licence originally held by Zain. Globacom also signed a $6 million contract with Ceragon in March 2012. CDMA operator, Visafone signed a $20 million agreement with Huawei in 2012 to expand its network across 26 states and build up its broadband infrastructure in Lagos.
Mobile network operators have continuously invested in their networks with a view to expanding capacity in order to meet the demand for their services. The race has by no means come to an end; it hardly will in the next few years. “Quite a hug sum of money has gone into network expansion in 2012. But the problem the telecoms industry faces is in two directions. One is man made and the other is an act of God. “The spate of bomb attacks on installations, infrastructure and the recent floods which destroyed equipments and slowed down expansion projects is contributing to poor quality of service. Most telecoms operators were not prepared for this development and did not anticipate all these when drawing up the budget for network upgrades and expansion. “We also have issues of governments and their agencies shutting down base transceiver stations for one levy or the other. All these have contributed immensely to poor quality of service,” Adebayo further added.
Earlier this month, MTN Nigeria said multiple fibre cuts in the eastern part of the country have led to service outage in the area. The telecoms company said that the fibre cuts were as a result of ongoing road construction on various routes around Aba, Enugu, Owerri, PortHarcourt, Eket, Ikot Abasi, Ete, Uyo and Calabar. Omagbenigun said that the reasons for poor quality of service are numerous, but added that the two principal causes were network capacity and network availability. “These are impacted by infrastructural issues mainly power. Also, the issue of multiple taxation and multiple regulations tends to hinder investments in network expansion projects. We also have the issue of industry wide capacity constraints as demand continue to outstrip supply”. This, she went on is compounded by lower tariffs in the recent past stimulated by aggressive competition. “Security issues nationwide – vandalisation, theft and recently insurgent attacks have all contributed adversely to poor quality of service,” she added.
Giving vivid insight into some of the impediments to improved service delivery, Osondu Nwokoro, director, regulatory affairs, Airtel Nigeria said no fewer than 53 telecoms sites belonging to the company were directly affected during the bomb attacks in the northern east part of Nigeria last year. “But 193 sites were impacted in all as huge outages were sustained. The way the network architecture is designed, we have some telecoms masts that are hubs and control other base stations. So, if a hub is destroyed then other masts that depend on the hub will be affected. However, the Indian owned mobile network operator has managed to resuscitate 112 out of the 193 telecoms sites but at great financial costs. “The rising levels of insecurity, according to Nwokoro have stalled network restoration and rollout as field operations personnel refuse to work in areas prone to violence. The Airtel director bemoaned the fact that the loss of capacity occasioned by these threats in most cases affected quality of service delivery and customer experience, leading to a drop in Key Performance Indicators (KPIs).
For Aremu Olajide, senior executive at Globacom telecom is indeed critical to national development. “You need telecoms for security, health, and banking. A lot of other sectors depend on telecoms for survival. It facilitates cross-industry linkages, efficiency and productivity. That is why operators are calling on the federal government to declare telecoms infrastructure critical national infrastructure”, he stated. The telecoms sector has generated employment for several hundreds of thousands of Nigerians directly and indirectly since 2001. MTN alone, had employed over 5,000 individuals and operates an extensive distribution chain with over 111 Trade Partners, 15 service centres, 38 connect stores, 6,140 registered sub-trade partners, with an informal chain of at least 70,000 sales outlets across the country. Akinwale Goodluck, corporate services executive, MTN said, “The vandalism of telecoms equipment are unfortunate as the facilities built by MTN and indeed other telecoms companies are critical to the ICT revolution in Nigeria and the accelerated socio-economic development of our nation.”
Industry analysts further argue the mindless destruction of telecoms infrastructure is also having a negative impact on individuals and businesses in the region, whose livelihoods increasingly depend on the availability of telecoms networks. Following recent attacks on telecoms installation in northern Nigeria last year, critical sectors of the economy such as banking, security and manufacturing, which depend on telecoms for efficiency, were cut off from the global economy. At the time of the attacks, it was learnt that many banks in the affected areas have been unable to deliver optimal services. Besides, many of the banking facilities such as Automated Teller Machine (ATMs), mobile banking, online financial transactions, and international credit and debit card facilities run on telecoms backbone.
Critical national infrastructure
Economies such the United States of America (USA), United Kingdom (UK) have requisite laws protecting telecoms infrastructure. This is essentially due to the importance of telecoms in national life. There is virtually no aspect of the ever changing economic landscape of the new digital world that telecommunications is not playing active role to enhance its service delivery, be it financial, education, agriculture, and health among others. Against this backdrop, stakeholders in the industry are seeking for a legislation to make telecom infrastructure critical national infrastructure for it to be protected by law.
“All the operators have championed the call for critical infrastructure status for telecoms infrastructure and we have received excellent co-operation from the Nigerian Communications Commission (NCC), our Minister and the Executive and Legislative arms of government so far. The Federal Government must now more than ever fast track the declaration,” Omagbenigun stated.
The telecoms industry suffers with any minor errors (technical faults, accidents, vandalism, data recording errors, etc.) that can alter disrupt or block the system processes unintentionally. These disruptions not only disconnect subscribers, but could cause embarrassment to businesses and national security. The telecoms regulator has at various fora called on the National Assembly to expedite the passage of the telecoms infrastructure bill to protect telecoms infrastructure in the country. The commission has made several presentations to the National Assembly on the importance of protecting telecoms infrastructure.
Tony Ojobo, director, public affairs of the NCC, said the quick passage of the bill would protect telecommunication facilities, which he said were critical national infrastructure. He pointed out that the bill would make the vandalism of such infrastructure a criminal offence.
“We believe that the bill will go a long way in ensuring the protection of telecomm infrastructure across the country,” Ojobo said. According to him, telecoms infrastructure should be seen as a tool for national development and security. Informed sources say the commission has already begun deliberations at the governors’ forum on the issue. Ojobo further noted that there was a need for massive awareness campaigns to educate communities on the dangers of vandalising telecoms infrastructure. However, industry experts are all agreed that the federal government and other stakeholders needed to move decisively to make telecoms infrastructure critical national assets; further adding that any individual who damages telecoms infrastructure and equipment should be answerable to the state.
This was at the centre point of the Protection of Telecommunications Infrastructure Round Table in Lagos last year. The overriding submission of the forum, in its preliminary communiqué, was a call on the Federal Government to pronounce telecoms facilities as Critical National Security Infrastructures. Ernest Ndukwe, former executive vice-chairman, NCC, who chaired the forum, said, “The time has come for the passing into law of the National Security Bill pending in the National Assembly which must be made all-embracing by giving telecoms industry a critical mention in the bill.” Stakeholders at the forum said Information Communications Technologies (ICTs) facilities had become national resources that should be protected just like the railway, and electricity infrastructure were protected by the laws.
According to stakeholders, the persistent damage to telecoms optic fibres along the expressways and roads in the country and the rising spate of vandalism and willful damage of telecoms equipment required the Presidency’s intervention through appropriate legal frameworks.
Deolu Ogunbanjo, president, National Association of Telecommunications Subscribers (NATCOMS), said terrorist attacks on telecoms infrastructure amounted to economic sabotage; adding that it was unfortunate as some jobs would indeed be lost. Ogunbanjo said there was a need to declare a state of emergency in the telecoms.
Undoubtedly, the telecoms industry has continued to contribute significantly to economic growth. The percentage share of Gross Domestic Product (GDP) from the sector rose from 0.06 percent in 1999 to 2.39 percent by 2007; moved up to 2.90 percent in 2008, and 3.66 in 2009. By 2010, ICT had contributed 8.2 percent to the nation’s GDP. To sustain telecoms contribution, the protection of telecoms infrastructure cannot be over-emphasised. Omagbenigun observed that there needs to be an enabling statute brought into law. “This is the universally accepted way forward agreed by all the aforementioned parties – telecoms operators, Nigerian Communications Commission and government”, she concluded.
For telecoms services to be delivered effectively and efficiently, it requires building of infrastructure upon which voice, data and video services are delivered to telecoms subscribers. In most countries, transmission infrastructure for telecoms services such as fibre cable links and power supply are built and provided by the government, but in Nigeria’s case, telecoms operators are building the required infrastructure for effective service delivery.
It is indubitable fact that public power supply is almost none existence and that has compelled operators to use generating sets to power their base stations.