As Nigeria marks eleven years of full liberalization of its telecommunication market and the achievement of 105 million active phone subscriptions, [Silicon Nigeria Magazine] looks at the broadband revolution unfolding in Nigeria and the opportunities that abound for investors. Today, Nigeria boosts of four major operators of Global System for Mobile communications (GSM) controlling over 90 per cent of the telecom subscriptions and large chunk of the internet retail market. Other operators providing services on Code Division Multiple Access (CDMA) technology have been holding their ground albeit with limited financial muscle. They’ve been outstanding in data service provisioning competing with Internet service providers (ISPs) on that level. With progress made in the telecom market in 11 years, the frontier is shifting from providing voice telephony to broadband service. Nigeria is still a high cost market for internet connection. Despite having SAT3, Glo 1, Main One Cable Company and West Africa Cables Systems (WACS) landing points in Lagos, distribution and access is still a difficult and tortuous journey as the nation lacks effective linkages from the major cities to the semi-urban and rural communities and to the households.  Executive Vice chairman, Nigerian Communications Commission, NCC, Dr. Eugene Juwah notes that Nigerian operators spend between $400 million and $500 million yearly on bandwidth imported from foreign satellite service providers and it has cumulative negative effect on the end users who have no choice but bear the high cost of this all important tool for fast internet speed and data transmission. Though he admits some progress is being made in providing bandwidth locally through the submarine cables and the recently re-launched NigComSat-1R satellite, the cost of acquisition is still high. “We want to tell potential investors that Nigeria remains the haven of investors. In fact, this is the preferred investment destination in Africa’’, Dr. Juwah explains. At a forum on July 26, 2012, NCC unveiled its broadband vision for the country. The broadband forum attended by Mr. Desire Karyabwite, representative of the ITU Secretary General; Mr. Abdoulkarim Soumaila, the Secretary of the Africa Telecommunications Union, ATU, and a wide range of experts and Nigerian stakeholders, agreed that there was need to replicate the revolution in voice telephony experienced a decade ago in the provision of broadband.

Open Access Model

Nigeria needs ubiquitous internet capacity and a national backbone to provide critical ICT infrastructure to carry data traffic to all parts of the country. This is as important as having power, transportation and water infrastructure in today’s globally connected and increasingly knowledge based world. NCC has opted for Equal Access Model to facilitate the development of broadband in Nigeria. It is similar to the model implemented in countries like Singapore and Australia. The Equal Access Model encompasses the current State Accelerated Broadband Initiative, SABI, and the Wire Nigeria Initiative, WIN, programmes of the commission. “The Open Access Model is expected to help Nigerians plug into the global knowledge grid and stay competitive with other countries”, Dr. Juwah says. The key elements driving the objective focus on open access deployment of fibre infrastructure, according to Dr. Juwah,  is to achieve high level of penetration across all geo-political zones, contribute to GDP growth and development of knowledge economy, provide competitive and affordable pricing, ensure intelligent incentives to support industry players while equipping Nigeria with  leading infrastructure in Africa. Engineer Titi Omo-Ettu, former president of Association of Telecom Companies of Nigeria (Atcon), says the moment the policy protects investment it has got it right. He notes the broadband policy should seek to protect investment in such a manner that there can be an Open Access regime in the industry. “Open Access in the sense that once there is something anywhere, all of us will have access to it without discrimination provided you meet commercial terms,” he says.  “There are three things you need to invest’’, says Omo-Ettu. “The first is infrastructure which needs to be there. The second is content that you can sell if the infrastructure is there and the third is the advantage of ruralness – what you can get from rural areas. We’ll talk to anybody who wants to hear and who has any of the four things: the brain, will, enthusiasm and resources. We know where the money is. We were the people who wrote paper to government to establish USPF (Universal Service Provision Fund).”  The Nigerian government has promised to provide enabling environment for the development of infrastructure that will support the growth and access to broadband services at affordable cost to consumers. Also it plans to make available spectrum in the 2GHz band to drive mobile broadband penetration and availability in Nigeria, while ensuring different category of services are developed to suit the different needs of various customers. NCC plans to issue 4G licences by 2015. The regulator says it will provide subsidy through USPF for broadband deployment and penetration in Nigeria and build a business case with states and local governments to understand the need and importance for Right of Way, (RoW) for the provision of telecommunication services.

Latent demand for broadband

To Engineer (Mrs) Omobola Johnson, Nigeria’s Communications Technology Minister, broadband has the potential of enabling entire new industries and introducing significant efficiencies into education delivery, health care provision, energy management, public safety, government/citizen interaction, and the overall organization and dissemination of knowledge. “It is, therefore, no wonder that empirical data tell us that every 10 per cent increase in access to broadband in developing countries results in a commensurate 1.38 per cent increase in GDP. These compelling statistics should provide the impetus to meet broadband demand and if it is not there create that demand’’, she says.  Engr. Johnson notes that in Nigeria there is already clear evidence of demand for broadband in many facets of its economic and social lives such as broadband for education, for health, for business, for entertainment and leisure.  “There are very few aspects of our lives that are not impacted or affected by the internet. So, the demand is there. In fact, so is the supply when you take into consideration the internet capacity that we have landed on our shores’’. She says the challenge for Nigeria is not the proverbial last mile but the last hundreds of miles – taking international bandwidth from the landing points at the shore to cities, communities, institutions and homes. There are many stories about how the business plans of the early investors in Nigeria’s GSM market were surpassed by many multiples. For instance, while they planned for half a million subscribers in the first three years, they were surprised to surpass that in the first six months reaching a million subscribers in one year. There was the known demand and there was that huge latent demand that was stimulated once the services became available. “We stand at the cusp of a data revolution and there are many corollaries between where we stand today and the contextual factors that were present pre the telecoms revolution. For example, the demand for broadband services, just as the demand for voice services is known but also latent’’, said the minister. Engr. Johnson, a former managing director of Accenture Nigeria, notes that “Pricing and the availability of broadband today bears many similarities to the pre GSM telecoms market – access to voice services was expensive if you got it and it didn’t always work because of infrastructure issues – remember those days of picking up the phone from the cradle and waiting for a dial tone!” Average broadband speeds today, according to her, are slow and with a penetration rate of just six per cent or thereabouts and it is not ubiquitous – demand has already far outstripped supply.

LTE as Holy Grail

Five African countries namely Angola, Namibia, Mauritius, Tanzania and South Africa have launched commercial LTE 4G networks. While Vodacom has launched, MTN South Africa has trialed LTE in few cities while waiting for regulatory approval. Nigeria, Kenya and Egypt are  expected to follow. In Nigeria, almost all the operators are queuing for the same thing. They see LTE, a 4G technology as the holy grail of mobile telecom that will skyrocket the speed to deliver efficient voice, video and data quality on their networks. Starcomms, Multi-Links and MTS, three CDMA operators are currently in discussion about a possible merger to cash in on 4G licence and deploy LTE technology. During a workshop for ICT media practitioners in Lagos, Mrs. Funmi Omogbenigun, GM, Corporate Services, MTN Nigeria said “We are looking forward to the convergence and the migration path to 4G and LTE. We are channeling our resources to  join the rest of the world’’. She said the “The industry needs more spectrum and the NCC is aware of that’’. MTN has deployed over 7,500 base transceiver stations (BTS), over 7,000 kilometres of fibre network and is investing $1.3 billion in 2012. Mobile operators would prefer the government make spectrum available, at least, in the next 12-20 months so that they can begin addressing the technology migration and 4G devices design and production from equipment makers. Already GSM operators are seeing data growing at the rate of 50 per cent per month. There is enormous pent up demand for broadband for people to access the internet at good value and at reasonable price. Mr. Steve Evans, CEO, Etisalat Nigeria said “What we would like to see is 4G spectrum which is up at 2.5GHz band of spectrum. The government should be working hard to release, at least, 100MHz of spectrum in that band. The reality is that in mobile communication you have to have deep pockets to fund this kind of business, you can’t split that sort of spectrum up and give it to 10 small companies and hope that somehow they are going to do something. “You have to give it in big chunks of spectrum to GSM operators so that they can really continue the good works they’ve been doing in terms of taking Nigeria forward into the next decade with a world-class broadband service’’, says Evans, adding that LTE is going to be the future of mobile communication in Nigeria.

The message

The NCC and the ComTech Ministry are taking the message of the abundant opportunities in the ICT market abroad. “We will explain to potential investors areas that still need their attention since we have made a sizeable progress in voice telephony, and that internet penetration is still poor due to limited access to broadband’’, says Dr. Juwah. Engr. Johnson says the same three things that fueled Nigeria’s success in voice will fuel her success in the delivery of broadband services in Nigeria, listing clear government policy, effective and independent regulation that attracts the necessary investments and enough spectrum.