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Published On: Wed, Jul 16th, 2014

Why infracos will fill infrastructure gap in telecom industry

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By Etuka Sunday

Last year, the Minister for Communications Technology, Mrs Omobola Johnson observed that the demand and pressure on the existing telecommunication infrastructure in Nigeria had reached breaking point. She made her observation during the maiden edition of the Telecoms Stakeholders Summit hosted by the Nigerian Communications Commission in Lagos.

According to her, though investment in the sector has improved, it was still not sufficient to enable supply meet up with the demand. In a similar vein, but in a different context, when asked what the major challenge facing telecommunications in Nigeria is, the Director, Public Affairs of the Nigerian Communications Commission, Mr. Tony Ojobo would say: “Infrastructure, infrastructure and infrastructure”. Lack of infrastructure has been the bane of development in Nigeria over the ages. From basic needs such as housing, to social and economic needs such as roads, electricity, health and education, there is no respite anywhere. This dreary scenario has made investment in the nation a difficult choice for foreign multinationals and entrepreneurs. Time and time again, international agencies have rated Nigeria as among the most difficult places to do business based on the foregoing and other reasons.

The shortage of infrastructure accounts significantly for the poor services Nigerians get from telecom operators. Likewise, it accounts for great operational problems in IT-dependent industries like banks and the media. Financial services and operations are often truncated when operators fail to connect with their servers because of low bandwidths or poor network coverage – a direct indication of insufficient infrastructure. Operating with poor infrastructure the challenges for telecom operators are quite enormous in many respects. Basically, they not only have to deal with land acquisition, official taxes and levies, unofficial charges and levies by communities, but also the provision of equipment and resources that will run the necessary services. One of the commonest challenges in Nigeria is the near total absence of electricity. Without exception, operators are compelled to install electricity generators to run base stations wherever they choose to locate one.

To compound the problem of inadequate infrastructure is the factor of insecurity. Widespread and persistent tampering of fibre cables, theft and pilfering of generators and other facilities from sites, and damage/destruction of fibre cables during construction or for other reasons.

These and other factors have been the reasons behind the agitation for a critical infrastructure bill to protect telecom facilities.

Where infrastructure exist, they are quickly overloaded, resulting in congestion and degradation of services. This factor imposes the limitation of how much expansion could be undertaken by the operator while sustaining an appreciable quality of service. In order to recoup their heavy investments in facilities, the operators often resort to sharp practices such as oversubscribing their capacities at the expense of qualitative signals. This is where the Nigerian Communications Commission (NCC), the responsible regulatory body, has been battling to address the situation of poor service quality,

sometimes by imposing punitive fines on defaulting operators. It is in this light that the move to licence infrastructure companies (otherwise called infracos) by the NCC come August 2014, is a very

welcome development. The pilot scheme which would cover Lagos and the Federal Capital Territory will kick-start the deployment of metropolitan fibre optic cables and associated transmission equipment for the commencement of broadband services.

The Nigerian broadband market is huge and according to the NCC, is one of the top markets in the world that guarantees highest returns on investment. The commission highlighted that the focus on broadband is a welcome development, as it compliments efforts to exploit the technology for Nigeria’s future ICT development. It is obvious that once the needed infrastructure is in place, there will be significant improvement in the quality of service.

“Today the internet speed is averagely low, you have low download speed, low upload speed because of the constraints of the bandwidth,” the NCC said. “But with the broadband, we are going to have huge capacity of bandwidth that will drive data communication, so all of the applications namely e-learning, e-governance, e-agriculture, e-health and all of those data services that drive human development can be enhanced.”

Nigeria’s communications sector contributes about 28.6 percent to the country’s GDP, according to NCC, making the industry second to oil and gas, in terms of the economics of scale. It is therefore imperative to emphasize that even in an era of private sector-led economy, the role of government is still very vital in the management of critical sectors such as ICT and communications.

Foremost among these is to grow the nation’s telecommunications infrastructure rapidly and ensure a competitive environment that will reduce price and make services affordable to the majority of people;

and to create the right environment for doing business. To paraphrase the communications minister, ‘government must intervene to transform lives, and to transform the nation by using the power of

the broadband’. “Broadband can increase business productivity, save lives, and increases the productivity of a nation”, she added. The licensing of the new Infracos would be a great step in this

direction to fill the infrastructure gap that has been the bane of development in all sectors of the economy.

 

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