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Connecting the next 10,000,000 people in Nigeria
Ernest Ndukwe, executive vice chairman of the Nigerian Communications Commission, delivered this speech at the third Telecoms Summit last year, where he set an ambitious target for the industry.
My presentation, which is the lead paper for this summit will be in three parts. First I will seek to give a quick overview of the telecommunications landscape in Nigeria and report on the journey so far. Second, I will look at the global ICT landscape highlighting where Africa and Nigeria are today. Third, I will seek to share my views on how we can sustain the gains made in the past four years and what must be in place to double the teledensity as soon as possible.
Your Excellencies, the changes that have taken place in the telecommunications industry in Nigeria in the last four years can only be described as phenomenal. The rate of changes has been breathtaking.
When Mr. President took over the reins of power in 1999 telecommunications was identified as a focus sector for the government as enunciated by Mr. President’s statement in July 1999: “We cannot be talking about creating a conducive environment for foreign investment if the performance of our transport, telecommunication and energy sector remain dismal and epileptic.”
This statement confirming government’s areas of particular focus perhaps has been the greatest driving force that propelled the level of development of the industry going forward. However no one was able to predict at those early days, the potential of the market and the speed at which the Nigerian network would grow.
Prior to the DML auction in January 2001, the prospective bidders were asked how many lines they could deliver in their first year of operation. The responses ranged from 75,000 lines to 200,000 lines.
Based on their responses and some market analysis we set a requirement of 1.5 million lines per operator for five years i.e. a total of six million lines by 2006. Needless to say that the industry has completely surpassed this projection within three years of operation.
The need to keep abreast of developments and remain relevant in the global information society became a priority for all those in government with responsibility for this sector. Hence, NCC’s dedicated commitment to promoting a regulatory environment that is fair, transparent and predictable within nationally and globally defined agenda for sustainable development.
Mr. Vice President, during a courtesy call on him by the some CEO’s of telecommunications companies last year attributed the success recorded in the telecom sector to “the commitment of the ministers and officials in the sector to the successful implementation of government market reform agenda.”
Overview of the current telecommunications landscape in Nigeria
Today, the figure for active subscribers in the mobile networks is around seven million lines and may surpass nine million by end of December 2004. The mobile subscription increased by three million lines in 2004 alone, up from about 1.5 million lines in 2003.
Though the fixed line subscription has not been growing at the same rate as the mobile lines, we have seen the number of fixed lines double between 2001 and today and is now hovering around one million.
Today there are mobile signal coverage in all the states of the federation; a number of our major highways are covered by mobile services; several rural communities have access to one form of telecom service or the other; our law enforcement community have the necessary tools to keep in touch with their bases; medical practitioners have had their work facilitated by telecommunications services; businesses (large and small) have been empowered by these vital ICT tools; the Nigerians economy has been impacted positively through job creation, improved business performance, and timely information exchange.
Indeed Nigeria has transited from what I had described as the telecommunications dark ages before 2000 to a telecommunication revolution that is opening up new possibilities and frontiers across our political, social and economic landscape.
With the current rate of network growth, the total number of connected lines (fixed and mobile) is expected to surpass 10 million.
Benchmarking Nigeria with the world
However, we live in a global village where ICTs have a direct impact on a nation’s ability to improve the economic well-being of her people and compete globally. We must therefore ask ourselves how well we have fared in comparison with other nations of the world in providing access to this vital infrastructure for our people.
The international telecommunications spending is currently estimated at about US $1.5 trillion for the year 2004 and is expected to rise to about US $2.0 trillion by 2007.
While countries like Sweden boast of about 100 per cent access, Nigeria’s figure is at a level of less than 6 per cent. Even on the African continent we are still far behind countries such as Egypt, South Africa, Botswana etc, in terms of teledensity.
In the United Kingdom where penetration of computers is already quite high, the provision of access to board connection was important enough to be embodied in their government policy. The British Telecom (BT) recently announced that all households in the UK would be in reach of broadband connection by 2005.
Also according to a new report from the Economist Intelligence Unit, Sweden emerged as the world leader in e-learning.
Korea’s government has consistently promoted the development and use of information and communication technology infrastructures since the mid 1980’s. Today Korea is one of the world’s most advanced users of information technology and boast of the highest broadband penetration density in the world.
China has been growing their ICT networks at an astonishing rate since the past decade and is currently the world’s largest telecommunications market, both for fixed and wireless networks. China’s figures for 2004 indicate 312 million fixed lines and 323 million mobile lines.
U.S. spending on telecommunications equipment has continued to grow and is estimated to reach $1 trillion by 2007, up from $720 billion in 2003.
The Malaysian government was one of the first to attempt to replicate the Silicon Valley model in a developing country in its attempt to move to the technology sector to attract domestic and foreign private investment, the Malaysian government investment in creating what was expected to be a world class physical and information infrastructure. This US$40 billion initiative, called the Multimedia Super Corridor, serves as the backbone for the country’s information superhighway.
From the foregoing it is obvious that while we are celebrating the giant strides that we have made in the sector in the past four years, Nigeria remains a “Lilliputian” in the international development index as far as ICT penetration and use is concerned.
While we are racing to increase access to basic telephone services, the more advance countries are increasing access to new technologies such as the Internet and broadband at an exponential rate. As at march 31, 2004,the total broadband connections worldwide had reached 111.7 million lines. The world’s biggest or “G7” economies are now in the broadband “top ten”. Broadband is no doubt an accelerator of social and economic development in the modern world with its application enabling and facilitating economic and social services such as public safety, national security, telemedicine, e-government, distance learning, utility applications etc.
There is already a major broadband divide between Africa and the rest of the world. There is therefore an urgent need to initiate national policy aimed at promoting ubiquitous broadband deployment. We must continue to work hard at narrowing the information gap to make sure that Nigeria is a major knowledge centre in the information age.
Sustaining the gains so far and connecting the next 10 million
We must therefore be a nation in a hurry to build a strong ICT infrastructure required to drive economic development and empower the citizens. There still remains a lot to be done. We still need a pervasive fibre optic transmission infrastructure spanning across the whole Nigeria. We still need a much higher penetration of Internet and broadband facilities at business premises, educational institutions and homes. An information economy can only be built on a solid and dependable ICT infrastructure.
Referring to the earlier graph indicating growth of subscribers’ lines in the country, we can see that from the estimated figure for December 2004 alone a figure of 1.5 million lines were added in 2003.
Can the growth of 10 million lines be achieved for year 2005? Can Nigeria achieve a double-digit teledensity by December2005? Connection the next 10 million people in Nigeria would require us to plan ahead and put policies in place to achieve this goal within the next 12 months, which I have identified has follows:
1. Information and Communication Technology should be placed on the front burner of priority sectors of government. We have been told that the priority sectors of government today are Energy, Agriculture, Transportation, Road, with information and Communication Technology conspicuously missing. When I ask why, the response was that so much success has been achieved and therefore attention has been shifted to other areas.
However, it is accepted that one very important chord that runs across all the sectors of the economy is information and communications technology. The statistics and information provided in this paper, clearly demonstrates that Nigeria is still far behind.
2. Connecting the next ten million people requires access to be more affordable. Today even when the cost of the SIM pack is N1 or in fact free, a subscriber would still require buying a telephone set to use it. With duty rate at the level it is today (about 35 per cent), the prices of basic telephone sets have remained high.
The situation is even more desperate in the fixed services areas where the cost of terminal equipment still remains high. Duty rates must drop to less than five per cent to encourage connection to the next 10 million people.
The drop in duty rate would also reduce the incidence of theft of phone sets in the country since basic phones would be generally available and affordable.
3. One of the factors that has militated against more rapid roll out of lines and improved quality of service is the inadequacy of transmission lines across the country. The optic fibre and microwave transmission lines are only available are only available in limited number. The national carriers and the major operators licensed to deliver such transmission infrastructure need to be encouraged to fast-forward their roll out.
Under the Wire-Nigeria (WiN) program, which aims at ensuring that all the states of the Federation are linked to a national optic fibre cable backbone infrastructure, the Commission intends to develop, in consultation with the operating companies, incentives that will encourage more rapid expansion of the transmission infrastructure with more emphasis on optic fibre cable transmission lines.
4. It has been observed that Nigerian operating companies are pay rather high bandwidth charges for satellite links in the country. This has discouraged extensive use of the satellite as alternative medium for long distance transmission requirements.
These high charges have prevailed in spite of the fact that the Nigerian business represents over 60 per cent of the African business portfolio for a number of the international satellite organisations. There is therefore urgent need to open up discussions on how to drive down the charges perhaps, by consolidating the requirement on a national basis and using that to negotiate better bandwidth prices.
This is especially critical at this time when satellite can be employed to bridge the gap, while the roll out of the terrestrial alternatives is being implemented.
5. Expanding subscriber base will also be achieved faster in the fixed services area by a move towards market consolidation. Some of the operating companies offering fixed services would probably perform better if they merge in order to take advantage of economies of scale. It will also reduce regulatory pressures and demand for and better utilisation of resources such as frequency spectrum. With the consolidation going on in the banking sector today, the local financial institutions may only be willing to adequately support a limited number of operating companies.
There must be adequate funding available from both local and international sources to finance a massive build out. Without a large deployment there can be no economies of the scale. In a low-income environment, the price per line for the systems must be right to guarantee a reasonable return on investment. Orders for equipment must therefore be of sufficient size to ensure the vendors can achieve those economies of scale and guarantee affordability for a larger number of people and profitability for the operator. It is therefore time for operating companies to consider merger options going forward.
6. Growth of subscriber base must also go side by side with improvement in the public electricity power supply situation in the country. Wireless deployment has contributed to over 90 per cent of new subscribers added to the network in the last three years. To work efficiently wireless systems require electricity to power the terminal equipment unlike the traditional fixed line alternative. Computers, DSL connectors, tabletop units, mobile units, base stations/cell sites, microwave transmission stations etc. must have reliable and always available electric power supply to work.
Conclusion
Access to telecommunications is critical to the development of all aspects of a nation’s economy including manufacturing, banking, education, agriculture and government. Nigeria’s immediate requirement for telecommunications facilities is enormous and the required capital and time investment needed to complete a full deployment are daunting.
The Federal Government must therefore continue to place the development of information and communications technology industry permanently on its priority list.
The target of connecting the 10 million people in one year is achievable if the enabling environment is in place.
I BELIEVE WE CAN MAKE IT HAPPEN.
We’ll have 20 million subscribers this year
Ernest Ndukwe, the highly successful executive vice chairman of the Nigerian Communications Commission, says the target he set for this year is achievable in this interview with Adewole Ojo.
Congratulations on your reappointment to pilot the affairs of the NCC for another term. You must derive a lot of satisfaction from the achievements recorded in the sector in the past few years.
Yes, thank you very much. I must say that I am excited about what has happened in the industry, judging from where we all started. Less than half a million lines in 2000 to where Nigeria is today. There is no doubt that we all have enjoyed tremendous satisfaction from that. At least, Nigeria today can boast among the nations that have embraced Information and Communication Technology (ICT) to a certain extent.
But we are also conscious of the fact that a lot needs to be done. We want to make sure that we don’t rest on our oars until majority of Nigerians have accessed greater capacity in this area.
How was the NCC able to overcome the general perception of government organs, that they are bureaucratic and largely inefficient? The commission has been very effective in regulating the telecoms industry.
Well, the Nigerian Communication Commission has been adjudged to be successful because of the effort put in by the staff and management. But if I can summarize, what is actually responsible for our success is, first and foremost, the fear of God.
Also, we have a culture of transparency, and we want to make sure that things are done well for the industry so that everybody is well looked after. We still have a culture of honesty of purpose, trying to make sure that when we say something, we mean what we say, and also that our actions are not driven by selfish motives, but by what will be for the overall interest of the nation.
Another important factor is that we have an honest and God fearing Head of State, because our job impacts heavily on people and Government, if he had not given us the needed support, it could have been impossible to carry out our mandate effectively. We are just like vehicles to be used by the Head of State, to achieve his overall vision.
I am also lucky to have a board that has been supportive and also have a chairman that is extremely honest, competent, and a very big asset to this country. Over the years I have had the privilege of working with four ministers since my appointment and who have given us the free hand to operate independently, in order to ensure that we do our work to the best of our ability. So we must recognize that and it’s really a plus for them.
Generally, all these put together have been responsible for the success of the NCC, so to say, as an institution. Once you start mixing your selfish interest with national interest, then you are bound to have problems. And I think we are also lucky that NCC has been generating some revenue to enable us fulfil some of these requirements, because that has helped us to move ahead with plans in a very organized manner without having to fear where to go and source fund to meet our obligations.
We also have a very cooperative National Assembly which has been quite encouraging.
At the third Telecoms Summit last year, you set a target of connecting another 10 million subscribers, to bring total subscriber figure to 20 million. Is it achievable?
Oh sure. In fact with what has happened in the past few years, I don’t think it is a very ambitious target. We can describe it as a modest target. The reason I said so is that we are already at the 10 million mark, and just another 10 million to add. Within this year I think we can achieve that and even surpass it, because many of the telecom firms are rolling out aggressively, and there is a lot of competition in the market.
With the kind of investment that is going into the industry today, it will not be a big issue. In fact we had a hundred per cent growth last year.
Won’t factors such as quality of service and funding work against the realisation of the target?
Yes, the quality of service issues are being addressed as we speak. We know that a lot of investment is currently going on, because apart from Nigerian Telecommunications Limited, (NITEL) we have another national carrier, Globacom. They are rolling out aggressively. Apart from that companies like MTN Nigeria are rolling out their transmission infrastructure to support the kind of growth they are looking at.
With the combined effort of all these companies, and also the activities of some long distance operating companies that have been licensed, we have no doubt in our mind that transmission infrastructure will be expanded heavily this year and the quality of service will improve drastically.
What about funding?
Funding is definitely an issue, but bankers like to join networks that have large subscriber base. Companies like MTN have not found it difficult to raise funds from the international scene.
Recently we have a firm like Starcomms that experienced massive inflow of funds in order to expand their facilities. And I am aware some of them are gearing up to go to the stock market to raise long-term funds. And again our banking institutions are growing. With the new directive from the Central Bank of Nigeria, many of them which may eventually overshoot their capital base will have funds available, in partnership with international companies to be able to fund this growth.
What people will be looking at is the return on investment and so far the level of returns on investment in the country is comparable to other parts of the world, and because the market potential is there. I suspect that it might not be too difficult for efficient and viable companies to raise funds for their operations.
When a new round of licensing is done next year, and new technologies deployed that would blur the line of regulation between the NCC and the Nigerian Broadcasting Commission, where will that leave the NCC?
First of all, I am not aware that we will be doing a lot of rounds of licensing. What we said was that, and which we are still consulting with the industry, is adopting a unified licensing approach such that existing companies could provide certain services that they were initially restricted from providing.
On the activities of the NCC and the National Broadcasting Commission, what I can tell you now is that we are cooperating. When there are blurred lines we try to discuss it. It is possible that Government, in the future might decide whether the two agencies would be operating side by side or not, or whether they will identify better ways of doing it.
Yes, there are blurred lines at the moment, but it has not reached a stage where it is affecting our operational capabilities.
You are a strong advocate for the deployment of new technologies. What is the impact of this on the industry, and also in taking services to the rural areas?
Yes, I am definitely an advocate of new technologies, especially when they lead to reducing the capital layout of operating companies, which will in turn result to improved pricing for the end user. In Nigeria and indeed other developing countries, price is an issue, and any technology that will give a price advantage to the consumer and also provides the reliability and resilience required in the network is welcome.
And that is why the Internet Protocol technology is now gaining ground, and I know that in the years to come most of these networks will be IP based infrastructure. The Commission is not restricting the deployment of certain infrastructures. But we will come out with very clear proposals on the way forward, which will soon be translated to specific guidelines and pronouncements from the NCC, after the period of consultations are over.
Yes, talking about the rural areas, some of the new technologies have good applications and the operating companies will be looking at all of them, to see which of them best suit their roll out structures. I think some of them will need to improve their cost levels and cheaper connection and ownership fees for our people, whether they use voice or data facilities for communicating in the rural areas.
As unified service will be entrenched next year, won’t the job of regulating the industry be made difficult?
Well I don’t think so. One thing that is paramount and important is to ensure that you have good guidelines and good regulations to manage the industry. In fact in a highly competitive environment, regulation is easier. Because in such circumstance the regulator focuses on prominent operators making sure you don’t have anti-competitive behaviour.
The reason being that for the smaller operators the market takes care of such operators. Take for instance if you have ten people providing a particular type of service, and one is not doing well, the vote of the consumer will drive that person from the market. That is why all over the world, regulators concentrate on dominant operators. That is, operators that can easily raise price by itself and make their services such that people will be forced to use them whether they like it or not. But if the consumer has enough choice, then issues about whether the service is good or not, the consumer will now decide and say this network is useless. But once it’s a dominant operator, it comes under the radarscope of the regulatory body; the regulator now makes sure all efforts are put in place to protect the consumer. Really in a liberalized, open and competitive market, the job of the regulator is not as difficult as people envisage.
Do you have any plan to change the existing numbering plan?
We are consciously reviewing numbering plans just as you have said. Some of the operators, even the mobile operators especially one of them has written to us about the fact that their numbering bench has been exhausted, under the 080 ranges.
But I guess what your mind is thinking is that in future when this private telecom operators intend to go mobile, they will have to approach us and we still have up to February next year, we will have to decide before that could come on stream. But we will look at it and see what we can do about it.
In the United States today there is no difference between the fixed and the mobile lines. They are almost the same. We are trying to see what will happen in the future but I guess there may be changes because some people might want to change from fixed line to mobile with the same number. In this case there will be no need for segregation between mobile and fixed lines. Before that time comes the commission will issue guidelines to that effect to keep operators informed of any development.
The Consumer Parliament has been touted as an avenue where telephone subscribers get solutions to any problem they may have. How effective has the parliament really been?
Well, I don’t know whether I should be in the position to answer that question since I am the one implementing the Consumer Parliament. I just felt the subscribers be given the opportunity to decide. But judging from the comments we have been receiving, consumers consider it generally a very good move for various reasons.
Firstly, it is an open and transparent process, where you don’t have predetermined positions and access. People are able to come to the parliament and are free to ask any question or air any views as the case may be.
Before the Consumer Parliament came into being, many of the operators and indeed their top officials did not know how to gauge the mood of their subscribers. But now the consumers have direct access to the operators. Even if we have to pass the consumers complaints to the operators, they may not take it seriously. But now that they deal directly with the consumers, they now identify a particular problem and move ahead to rectify it.
Secondly, since the coming of the consumer parliament, we now have cases of companies coming forward to make promises. There was a case of a consumer, who complained that his validity expired after sixty days, and after careful consideration, the operator extended it to 120 days. Now as we speak, they are even demanding that it be extended to 180 days! These are some examples.
Also, there are many deals that have come out from the consumer parliament. The issue of N100 being charged in transiting from per minute to per second, the NCC and the operating companies took it up and that led to the present situation, where there are no more hues and cries.
And a very important aspect of the parliament is consumer education. Many times consumers are saddened because they don’t have enough information to work with. During the parliament, they are free to ask questions and get answers without hindrance, and so they are educated a bit more, not just about their own problems but also some of the problems of the operators.
It was even at the parliament that some of the companies complained about ills and sufferings they encounter, such as fuelling their generators for base stations at critical fuel crisis situations, and security concerns for their infrastructure. Some of these things come to the fore in an open discussion at the parliament, and the consumer is better informed that when there is network failure, probably he knows that a generator may have been stolen from a point or suspects another problem.
Another reason why the consumer parliament came on stream is because our people have just come from a monopoly situation. They are not really used to making complaints. They don’t have that complain culture, because when it was a government monopoly, it was either take it or leave it. Many of them don’t come up even if they are aggrieved. They swallow up their problems. The parliament has now made many of them to come out of their shells to vent their grievances and this has a feeling among the consumers that they can actually complain and get redress.
At the end of your tenure, what will give you the biggest satisfaction?
My biggest satisfaction will be to see a very robust telecommunication infrastructure in Nigeria, and that is as good as anywhere in the world. With our own transmission network because we are working on what we call the Wire Nigeria Project, which we hope to see transmission infrastructure all over Nigeria within the next three to five years.
When all these things are in place and we have a strong, purposeful regulatory institution that the NCC is building, and we have a strong consumer awareness situation where people are able to demand their rights and get those rights, coupled with the robust telecom network, not only with the provision of voice services but also multimedia services. This is the kind of situation I want to see at the end of my tenure, such that telecom standards are comparable to any other in the world.
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