Would Nigerian broadband see traction in 2018?

by | January 29, 2018 1:08 pm

On January 1, 2018, President Muhammadu Buhari gave his New Year Day Speech and as important as most of the issues he raised were for the Nigerian economy, one critical word was missing – technology. For the entire duration of that speech, President Buhari mentioned not a single word about technology. Call it an oversight from those who prepared the speech, but it clearly shows where the subject rank in government. It also raises questions about the President’s ‘body language’ with regard to technology development.

Fast-forward to January 17, 2018, this writer sent a question via Twitter to Tony Ojobo, Director of Public Affairs, Nigerian Communications Commission (NCC) requesting to know the state of five Infrastructure company licenses – otherwise known as InfraCo – the government has for years promised to issue to deserving recipients. The InfraCo programme is a fall-out of the National Broadband Plan and is one of the initiatives of the NCC to actualise the Plan.

The InfraCo license is supposed to allow for the deployment of metropolitan fibre-optic infrastructure and associated transmission equipment on an open access, non-discriminatory and price-regulated basis.

As stated by NCC’s Open Access Next Generation Fibre Optics Broadband Network paper published in 2013, the InfraCos will be responsible for providing a national broadband network to service providers.

The Open Access Model for fibre-optic network deployment is also best suited to bridge the digital divide, facilitate the development of local content, and deliver fast and reliable broadband services to households and businesses. It is expected to help address the challenges of fibre deployment in towns and cities, promote infrastructure sharing and reduce right of way issues. Specifically, wholesale fibre InfraCos are to be licensed for the six geopolitical zones of the country and Lagos to enable retail operators leverage shared infrastructure to expand their reach and lower the cost of broadband services. In the words of former NCC Executive Vice Chairman (EVC), Eugene Juwah, “Licensing of InfraCos (telecom companies that would provide infrastructure), is a major precursor to the soon-to-evolve broadband revolution in the country.”

Ojobo responded to the tweet, “The process is on already. It will be done this year (2018).” As pleasing as the response may seem, it should be noted that the “process” has been “on” for nearly four years.

The NCC first opened bids for InfraCo licensing in 2014 when companies that showed interest were asked to submit their bids by 12pm on 4 August 2014 at the NCC’s head office. To be sure, investments in submarine cable system across Africa was put at over $20 billion in 2014. Nigeria alone accounted for about $7 billion of that investment, a third of the entire continent’s submarine cable investment.

On January 2015 – after about six months of vetting – the Commission announced MainOne Cable as the winner for the Lagos area while IHS grabbed the license for the North Central. NCC, thereafter, promised to disclose the winners for the other zones before the end of 2015. The end of 2015 came and the promise was never fulfilled.

Importantly, Nigeria ended 2014 with eight percent broadband penetration. By 2015, with penetration at only 10 percent, Nigeria was one of the countries in the world with lowest broadband penetration – ranked 130th, out of the 189 member states of the International Telecommunications Union (ITU). The penetration increased to 20.95 percent by September 2016 representing a 47.44 percent growth in that year. Broadband penetration remains unchanged in 2017 at 21 percent and has stalled ever since.

Nonetheless, regulator (NCC) has said it is confident of attaining the 30 percent target set by the National Broadband Plan. But that will only be dependent on what urgent and necessarily steps it takes before the middle of the year when political discourse will overtake developmental issues. The year 2019 is make or mar for the present administration.

So far GSM operators have built over 38,000km of fibre-optic across Nigeria according to current EVC of NCC. The big challenge is that the existing fibre is not open-access. It was built for voice traffic and is largely owned by non-indigenous companies.

However, it must be said that the reluctance of government and regulators to take broadband penetration very serious has been largely responsible for the underperformance of Nigeria in terms of innovation and by extension the country’s economic development. It also constitutes a stumbling block to growth in technology adoption and innovation in the country.

Like Nigeria, Kenya has 5 submarine cables and launched its Broadband Policy in 2013. According to the Jumia Business Intelligence and GSMA ‘White Paper 2017: Trends from the Kenyan Smartphone and eCommerce Industry’ Kenya is currently leading Africa in internet penetration with over 30 million people – representing 67 percent, with access to the internet. The Kenya government has also constructed its own fibre optic submarine cable, ‘The East African Marine System (TEAMS)’. An investor also built 4,000km fibre infrastructure in 24 of Kenya’s 47 counties, while the government rolled out 1,600km cables as part of the National Optic Fibre Backbone Infrastructure (NOFBI) project.

Analysts at GSMA told this writer that the success of M-Pesa is certainly partly attributed to the regulatory model adopted in Kenya, where the Central Bank of Kenya created a level playing field by permitting both banks and non-banks to offer payments services.

“The importance of broadband to the digital economy and social development cannot be overemphasised,” said Austin Okere, Founder of CWG Plc. “This is underscored by the open letter from the Global Broadband Commission to the G20 leaders’ meeting as far back as 2012, wherein they enumerated the importance of broadband in moving the global economy onto a higher growth trajectory, and in generating sustainable and social economic growth of all nations, especially literacy development to address inequality and deliver inclusive growth for all.”

Should the President’s body language be taking lightly – as an insignificant misstep – and should Tony Ojobo’s posturing of “It will be done” come true, the problem is far from resolved.

Since 2015 when it was given its license, MainOne Cable and IHS have been unable to commence the building of infrastructure due to challenges that it is currently facing at the execution level as most states have imposed arbitrary fees on the laying of fibre optic cables. Apparently, the regulator did not carry the state governments along in the negotiation process, hence the difficulty the companies are experiencing with their licenses.

If or when the next licensing rounds commence, the NCC will do well to bring the host communities to the table. Host communities and the companies that won the licenses must agree on issues such as land and other logistics that will arise.

It is the relationship that exists between the companies and their host companies that will determine whether Nigeria will attain its target of 30 percent broadband penetration in 2018. As it stands and with the President’s ‘body language’ blowing cold, the target may not look feasible.