Editorial

Right of Way bureaucracies impede broadband penetration

by Editorial

January 17, 2018 | 12:52 am
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The fourth industrial revolution is premised on the importance of knowledge-based economies where technology, access to the internet (and broadband penetration) will play a significant role in achieving digital transformation. For this to happen, it is important that every country desirous of growing along with the rest of the world, implements policies which will see to the attainment of requisite internet and broadband penetration goals.

According to a World Bank research, for every 10 percent increase in broadband penetration in developing countries (like Nigeria), a corresponding 1.38 percent growth in Gross Domestic Product (GDP) will be achieved.

In 2013, Nigeria developed a five-year strategy to drive internet and broadband penetration to scale up the nation’s broadband growth to 30 percent by 2018. The penetration from 8 percent is now said to be around 20 percent, and 10 percent growth is expected to be attained in about one year. Achieving this will, by the World Bank’s finding, boost Nigeria’s GDP by at least 1.38 percent, while of course, translating into increased productivity across several industries in all sectors of the economy.

Achieving increased broadband penetration has been particularly challenging as telecommunication companies in Nigeria, weighed down by overlapping taxes and sundry levies across tiers of government, continue to grapple with daunting hurdles to improved broadband penetration, owing to a lack of uniformity in Right of Way (RoW) charges across states and bureaucratic delays that come with it.

In addressing Right of Way (RoW) controversies limiting Telcos from expansion, the Federal Government in 2015, before handover to President Buhari adopted a standard charge for Federal roads at N500/linear metre, the model was in turn adopted by the Lagos State Government but the remaining 35 states still seem unable, to come to terms with the need to release the strangleholds on Telcos willing, to expand and provide better services.

Olusola Teniola, president, Association of Telecommunication Companies of Nigeria (ATCON) expressed the view that; Right of Way (RoW) is charged in a discriminate manner in Nigeria at both the state and local levels of government. While RoW was ratified at the Federal Government level in 2015 at N500/linear metre by the previous administration and adopted by the Lagos State Government in the same year. However, across other states this charge can vary and thus causes planning problems for Telecom operators seeking to expand, and extend critical national infrastructure into communities. It is especially viewed by governors as a legitimate source of Internally Generated Revenue (IGR), and payable upfront as a one-off fee.

However, as different state governments continue to play-hard-to-get when Telcos request permission to expand infrastructure to provide better services, it also has a multiplier effect on the lost prospects for other businesses that would have been spurred on account of blossoming internet services.

Omobola Johnson, Nigeria’s former ICT Minister, who is now a partner at TLcom Capital, highlighted the importance of “educating the state governments; that you can’t really tax someone at the point of making an investment; which is what the right of way charges are akin to. What you should tax is the outcome of that investment. When there is broadband all over the place, there are new businesses, people are more economically active, then you can tax that; there is no point taxing them at the point of making investments.”

For broadband penetration in Nigeria to be deepened, and optimising internet speed throughout the country, telecommunication companies need to be saved from encumbrances which hinder them in expanding their infrastructure.

In the end, uninformed, baseless levying of Telcos at the point of providing infrastructure will imply higher costs to the consumers due to multiple charges made across Federal/State/Local Governments. The charges have to be uniform across the country, not arbitrarily done, and even reviewed downwards to make any commercial sense for an operator to roll out infrastructure requiring RoW permission. If it remains high, it acts as an inhibitor to ubiquitous Broadband roll-out.

An Ericsson Mobility Report on Sub-Saharan Africa in 2015 noted that; “While countries like South Africa and Ghana have long since passed the 100 percent penetration mark, other large markets like Nigeria and Kenya are still below 100 percent.” It will be a shame on Africa’s largest economy, if by this year the country still fails to achieve its 30 percent broadband penetration.

We appeal to state governments to reach a consensus, not higher than that which has been adopted by the Federal Government and in Lagos, on fees payable for Right of Way. In fact, these fees should be abolished and instead converted into a form of tax which would be paid only when the infrastructural investments by Telcos have started bearing financial returns. It is the logical thing to do in ensuring we are not taxing investments before they even commence operation.

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by Editorial

January 17, 2018 | 12:52 am
  |     |     |   Start Conversation

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