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Telcoms Industry Challenges and Impact on Rural Dwellers

26 Apr 2012

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Minister of Communications, Omobola Johnson

Although the telecoms industry has recorded significant growth in the past decade, due to increased foreign and local investments, experts are of the opinion that the sector is yet to fully make impact in the lives of rural dwellers. Amaka Eze writes


Since the launch of GSM in Nigeria, mobile telephony is rapidly becoming the most popular method of communication in Nigeria. This growth has been so rapid that Nigeria has been rightly described as one of the fastest-growing GSM markets in Africa and the world.

The Nigerian telecoms industry has therefore greatly excelled over the last decade with impressive statistics to show for it. According to the Nigerian Communications Commission (NCC), from barely a little above 400,000 lines in 2001, the telecoms industry has spread its wings, and expanded in leaps and bounds recording over 95 million registered active mobile lines.

With an investment profile of over $25billion in the last 10 years, coupled with increased Gross Domestic Product (GDP) contributions, experts see the telecoms industry as a benchmark to other sectors of the economy especially now that the country aspires to be a major economic bloc in the African sub-region, through the Vision 20:2020.

This success has aggravated the tendency to see the industry as almost devoid of challenges whatsoever, thereby giving in a general perception that the industry is the cash-cow of the Nigerian economy.

Though, factors portraying the industry as very buoyant are far too many than those showing  traces of distress, experts lament that the telecoms sector is battling, in a subtle way, with distress caused by multiple industry challenges that affect operators’ profitability.

They gathered at the NCCs National Stakeholders Consultative Forum held recently in Lagos, and unanimously agreed that the telecoms revolution, which was celebrated too early, might be an illusion if the entire country cannot benefit from various telecommunications service being offered.

Does the size really matter? Does the size determine quality?  What is the impact of the industry to its users in particular, and the country in general? Should it be more about growth and qualitative infrastructure than just having a name as the biggest or the fastest -growing market in Africa? These were some of the issues raised at the forum.

Stakeholders Opinion
Executive Vice-Chairman, NCC, Mr. Eugene Juwah, while speaking at the forum with the  theme: ‘Harnessing Communications Technology as a Catalyst for National Development’ said Nigeria’s growth has been mirrored by a concomitant boom in telecommunications in recent time, because the industry was a sector that holds the key to the realisation of Nigeria’s ambition to truly emerge as a dominant developing economy.

He said: “The importance of communication in any country whether developed or developing is so obvious. In fact the inter-relationship between the economic development of a country and effective telecommunication services is so interwoven that it is difficult to tell which one comes first.

“Communications has remained permanently visible, with its applicability to almost every human endeavour from agriculture, to food security, to manufacturing, energy and physical infrastructure sectors with ramifications for governance, e-commerce, and the provision of public and social services.

Juwah however stated that despite the achievements of the industry in the last 10 years notwithstanding, the sector was currently facing some challenges, which all critical stakeholders need to address in order to achieve pervasive service availability, penetration  and ultimately, improved quality of service.

Stating that the commission continued to advocate for greater penetration for the rural dwellers, and low-income earners, Juwah said the SIM card registration, which began on March 28, 2011, was nearing conclusion, the commission believed that shortly after verification the robust Mobile Number Portability (MNP) exercise, which is at an advanced stage of actualisation will kick off, and positively impact on network capacity, quality of service and stimulate another facet of healthy competition between the operators.

“That project will also broaden the choices available to subscribers and impose a code of behaviour on the operators to retain their subscribers, and increase telephony penetration,” he said.

Speaking also, the President, Association of Licensed Telecommunications Operators of Nigeria, Mr. Gbenga Adebayo, said although one of the most far reaching achievements in Nigeria in the past ten years is the revolution in the telecommunications sector, there is still room for improvement.

“While the achievements of the telecoms industry are laudable, the sector has room for further growth, because continuous knowledge drives development and for the country to remain competitive, it must continue to strategise and issue policies, laws and regulatory instruments that will ensure the continuous growth of the sector.

“Investment in telecoms generates a growth dividend, because the spread of telecommunications reduces cost of interaction, expands market boundaries, and enormously expands information flow, which makes for better delivery of societal services that enhance education, health, agriculture, and so on,” he said.

According to Adebayo, more emphasis needed to be placed on ICT as a driver of development in order to herald the next phase of the nation’s ICT sector.
Noting that the country should recognise the central role of ICT as a social overhead capital and accord it the importance it deserves, Adebayo lamented that the industry has been unable to increase the number of its base stations from the current 20,000 due to serious regulatory bottlenecks.

He therefore called for the installation of more base stations for nationwide telecoms service coverage, and said the lack of it, seriously hampers on telephony penetration.

“We note that there are currently a little over 20,000 base station sites in Nigeria serving a population of over 150 million people by the end of year 2011. For Nigerian networks to provide best in class services compared to the UK, Europe and other countries, it is expected that the industry will need to roll out additional base station sites in excess of (fifty thousand) 50,000 nationwide,” he said.

He also said that in order to sustain provision of the highest quality of services, operators must continue to pursue our focus to provide best in class services despite the well-known challenges in our operating environment like multiple taxation and regulation by myriad ministries, departments and agencies of the federal, state and local governments.

“We note that these interventions increase considerable the lead time to roll out and costs of deploying such infrastructure.

“It is increasingly apparent that the protraction of administrative processes involved in successfully deploying network sites is hampering networks’ ability to effectively meet their roll-out obligations in a timely manner.

ALTON believed that streamlining of these procedures into a more concise, efficient format would go a long way towards attaining the best interest of all the relevant stakeholders; we therefore seize this opportunity to propose the establishment of one-stop shop permitting model.

This permitting system will coordinate and harmonise the relevant government MDAs in one location for the purpose of a singular permitting point for telecoms site-build operations.”

Adebayo also called for the passage of the Critical National Infrastructure Bill for the protection of the telecoms infrastructure in the country, and said if Nigeria must harness ICT for economic growth, local and foreign investment in the telecoms industry must be encouraged.

Qualitative Factors

Also speaking, the Corporate Service Executive, MTN Nigeria, Mr. Akinwale Goodluck, said the operator was very much aware that increasing rural telephony penetration was very critical to economic growth, noting  that to have a successful rural access, some qualitative factors must first be addressed.

According to him, epileptic power supply increases the cost of access, thus the supply of electricity needs to be optimal to enable the provision of seamless services through local area networks, wide area networks and the Internet.

“Inefficiency is the word to describe a situation where everybody has to depend on power generators, as the primary, reliable power supply. This constitutes a barrier to growth and sustainable development. The growth of telecoms cannot take place or be very significant in an environment with unreliable public power supply.

According to him, in 2012, telephone operators will use over 25 million litres of diesel monthly to fuel 20,000 generators located at over 15,000 cell sites in the country, which will be at a current pump price of N153 per litre of diesel.

This, he said, would amount to operators spending about N3.82 billion to fuel their generators monthly and N45.9 billion by December.
Furthermore, Goodluck noted that addressable market size was determined based on an extent of income distribution of the population, adding that coverage tended to follow addressable market distribution, traffic flow and demand.

“In Nigeria, a large proportion of the low-income population resides in rural areas, some of which are hard to reach. Cost of delivering services is higher
According to him, operators like MTN must find feasible and sustainable ways to offer communications services to low-income customers in rural areas, adding that with the right support from stakeholders and the right business, the next wave of growth in subscriber numbers should come from rural areas.

He added that there was need for consideration of operating environment by ensuring staggered implementation of policies, regulatory initiatives with high impacting financial implications.

“Encouragement of industry self-regulatory initiatives and light touch regulation is also needed”, he affirmed.

Also speaking on behalf of the Regulatory Affairs Manager, Airtel Nigeria, Mr. Osondu Nwokoro at Titans of Tech forum recently held in Lagos, Mr. Shola Adeyemi, said there was insufficient power for the people, much less for the operators, and this had increased the challenges of providing standard services to consumers especially those on the rural areas.

“The market is large, the biggest in Africa, were a lot of opportunities abound. But more needs to be done to encourage investment in ICT, especially on the state of infrastructure.

“If most ICT providers are faced with the problem of multiplicity of taxes, as is the case now, is this in sync with the growth that is needed? Multiple taxation has hampered a lot of growth, and caused far too many distractions. This also affects the number of base stations that the operators can invest on, and the kind of service that the subscribers will desire,” he said.

Ministers Position
Meanwhile, the Minister of Communications Technology, Mrs. Omobola Johnson has said it was imperative for government, all stakeholders, and the public to put heads together in order to fashion a way around the expansion and telephony penetration in the country.

According to her, the challenges facing emerging economies, such as ours are the ability to prepare citizens for the growing information challenges.

“I believe that an enabling ICT environment can help the country to leap frog and compete globally. We must however,  find feasible and sustainable ways to offer communications services to low-income customers in rural areas, and with the right support from stakeholders and the right business, the next wave of growth in subscriber numbers should come from rural areas.” she said.

Tags: Business, World, Featured, Telcoms Industry, Challenges, Rural Dwellers

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