Issue #25   •   Quarter 3/4 Edition   •   December 2018

 

The National Broadband Plan (NBP) (2013-2018) gave a marching order to the Nigerian Communications Commission (NCC) as the country’s regulator and several other agencies of government to raise the level of broadband penetration from the paltry 5% it was in 2013 to at least 30% by the end of 2018.

It seemed insurmountable despite several initiatives put in place by the NCC and other agencies involved in this task. While some had misgivings that this task was near impossible, Prof. Umar Garba Danbatta, the Executive Vice Chairman (EVC)/CEO of the NCC was an incorrigible optimist.

And before the end of the 2018 deadline for the actualisation of this target, the news broke: Nigeria had surpassed the 30% mark by 0.9 percent. With 30.9 % attained, the NCC begins a new journey to take broadband to places that were underserved and unserved.

Prof. Danbatta tells this story in a no holds barred interview:

Excerpts:

Evaluate the 8-Point Agenda in 2018

2018 has been a very eventful year indeed because when we unveiled the Broadband Plan in 2016, we were busy trying to implement the plan in 2016, 2017 and now we are in 2018. We have gone almost more than half way and even though we are giving the progress on annual basis, especially when we engage the media like we did last week, because there are some broadband targets that have been set, it is expected that by now, we are supposed to have achieved or very close to achieving them.

The year 2018 is the target, that is, the end of 2018 December, will be the time during which we need to go out and see on the basis of facts if we have achieved the penetration or not. Whether it is a coincidence, it is the first item on our 8 - Point Agenda, which is Facilitating Broadband Penetration. And so it gives me pleasure to talk about this, because I am very excited about what we have done. You know we have achieved and surpassed the target to 30.9%. And this fact is based on computation conducted in-house, by the Department of Policy and Economic Analysis.

It is a computation that is available for anybody with access to data. So, what we did was, the 3G subscription for Broadband, as well as the 4G subscription for Broadband and sum up this and divide by the population figure of this country. This time around we didn’t use the 2006 population figure because we wanted whatever we compute to tally with what the ITU, UNESCO Broadband Commission for Sustainable Development is doing or has been doing when it comes to broadband penetration. That is why, when we use the current population figure of 190 million plus, which is a figure also endorsed by the National Population Commission, we feel the target we obtained through these computations is a reflection of the level of Broadband Penetration in the country.

That was how we came up with that 30.9%, so we have exceeded the target, as stipulated in the National Broadband Plan, by 0.9%. It is no small achievement for us. Because then, we can all prepare very well as we have prepared before to meet the next target, which is yet to be set. But we can realistically look at it at the level of Executive Management and we can agree on what our target will be and make our recommendation to our supervising ministry. But I have a feeling that achieving 50% in the next 5 years won’t be a tall order; this of course will be subject to deliberation amongst Management of the Ministry and the Committee that is reviewing the National Broadband Plan. So, a new target for broadband   penetration will be up for review by the Committee for the National Broadband Plan. What this means is that in terms of population and figure, close to 60 million Nigerians have access to high speed internet. There is the need to define what we mean by high speed internet as provided in the National Broadband plan, which is a speed of 1.5mbps (megabits per second), that should be achievable everywhere in the country. And it speaks of the pervasiveness of the broadband services in Lagos, Port Harcourt and all over the country. This speed of 1.5mbps should be achievable.

As we are aware, in addition to the spectrum, which is a necessary resource for driving telecom services, broadband services and infrastructure, the two work hand in hand. If you have one and don’t have the other, you have a challenge. If you have infrastructure and you do not have spectrum, you cannot provide any services and vice-versa. So, that is why 1.5mbps  kind of internet speed may not be attainable in some parts of the country because of infrastructure deficit. Specifically, we are talking about broadband infrastructure and it’s because of the realization of these deficits that the commission decided to again address an important aspect of the National Broadband Plan.

I remember the commission was mandated to deploy broadband infrastructure in the entire country. Which in fact provides broadband access points in all the 774 Local Government Areas of the country. A clear demonstration of this important mandate is the way and manner we granted licenses to infrastructure companies. So far, 6 have been granted. Lagos, when I assumed duty, was about to be granted license. We completed the process. The other geographical zones of the country, the South-West, South-South, South-East, because the plan carved out Lagos and made it a zone on its own and this is understandable due to the complexity of Lagos and because  it is  strategic in commerce and also it is there that we have the undersea cables.

So, in the Northern part of the country, we have the 3 geopolitical zones; North-Central, North-West, North-East, making a total of 7 zones as per the infrastructure deployment plan. Only one zone is yet to be licensed, North-Central. The zone was previously licensed with the license given to iConnect, a subsidiary of IHS Infrastructure Company Services Ltd. However, the company returned the license, thus giving us an opportunity to carry out another licensing process soon.

They wanted a National License, where they can deploy everywhere in the country and that will be in violation of the conditions of the Infrastructure License because we can only give zonal Licenses. So, the good thing is that we have since advertised for the North-Central Zone and a Licensee for the North-Central zone will soon emerge. I am sure you are aware we are driving this deployment on the basis of public private partnership (PPP) arrangement. Meaning the NCC will be involved in providing some of the funds needed for this deployment.

We have created a subsidy provision in our budget for 2017, 2018 and even the 2019 budget. An amount that we hope we can give to the Infracos to use as subsidy to complement their own spending, because it is highly capital intensive project and this a big country. So, there is this subsidy provided in our budget and I think the last figure I heard was up to N5 billion, in just one budget, and it’s going to run continuously. This subsidy will be paid upon evaluation of the level of deployment of each Infraco licensee. The milestones will be evaluated and subsidy will be paid commensurate with the milestone attained.

In addition, we have a map showing existing fiber infrastructure in the country, as well as what we are going to do to ensure the connection of the existing infrastructure with additional infrastructure, so that in the final analysis what we are hoping to get is a connection within cities intra-fiber and the inter-fiber between and within cities. Once we have this, then we have what we call the            ubiquitous/pervasive broadband infrastructure that will in turn provide the backbone needed to again raise the level of broadband penetration. If we can do this quickly, then I can see a very good condition for driving the broadband penetration to almost 80%, if not more. So, we are good to go, meaning with the infrastructure Llcenses and we also provided a condition for the licensees to deliver within a year of the License being issued, because we don’t have time and we have a provision to revoke the License if we see any sign of inactivity by any licensee.

 

On 9Mobile lingering issue

I will like to give a background to the 9Mobile issue. 9Mobile took a loan of about $1.2bn from a consortium of certain banks in the country, and used the loan to upgrade their infrastructure. Little wonder, I am not praising 9Mobile and I am not singling them out for any recognition, they have one of the best networks in the country for quality of service (Key Performance Indicators). They are about the only telco in the country, meeting the KPIs. The KPIs we know them (the call success set up rate, the channel traffic rate, call drop rate, congestion rate).

From the beginning of this year to date, I have taken special interest in the KPIs and I found every month 9Mobile meets the stipulated standard in terms of meeting the KPIs. So, returning to bank loan, the exchange rate of a dollar to a naira deteriorated. When they took the loan, the exchange rate was about a dollar to N150; all of a sudden, we woke up, although it was not so sudden, we saw a deterioration rate against the Naira. And there was a time the dollar peaked at N500 so it is not unexpected for any entity, any legal entity owing money to experience difficulty in meeting repayment obligations.

These are the circumstances under which 9mobile found itself. So you can see all together, it was not 9Mobile’s fault.

But then government has a responsibility to find a way to, as we have seen all over the world, governments of other countries where a similar situation is observed, give bail- outs in order to protect critical sectors of the economy. And the telecommunication sector is one of such sectors. The Nigeria government did not give bailout to 9Mobile, but there were instructions given by government to the Nigerian Communications Commission and the Central Bank of Nigeria to do whatever they can to ensure that 9Mobile did not go under, and that 9Mobile indeed continue to provide services to its over 18 million subscribers. This is what the NCC in collaboration with the CBN tried to do, protecting Nigerian jobs in 9Mobile, because we have about two to three thousand Nigerians on 9Mobile’s pay roll. And of course, Nigeria needed to protect her image globally speaking, because when you have the 3rd biggest telco in the country experiencing difficulty, investors who want to come in to invest, whether it is in the telecom sector or other sectors of the economy, will not be inspired by such developments. They will want to see what the government is doing to ensure protection and security of the masses. So, these are the three reasons that informed the joint intervention of NCC and the CBN.

It was with government’s approval; it was a directive from government. So we galvanized into action jointly; I cannot remember the number of times that I have been to CBN for series of meetings together with the old management and board of 9Mobile and CBN in order to find a way out of this situation for the sector, and for the Nigerian economy.

In the first step, we told the banks that you cannot take over 9Mobile and that banks have no business or the experience to run a telecom business. So we are not going to stand by as a regulator and watch that happen. The NCC is not going to stand by and watch a telecom company being taken over by banks. What will they do if they take over the company? So we averted that attempt to take over 9Mobile by putting in place an interim management, as well as an interim board for 9Mobile. This we did jointly with the CBN.

So the board was given the responsibility to set a process through which 9Mobile will be taken over by an interested investor, and the process went well. The entire 2018 saw series of activities for the new board, who invited bids and who appointed a consultant to drive the process.

 So, Barclays came in and they came with their experience in managing such situations. It is an acclaimed global business entity. They brought that experience to bear in driving the process of finding an investor for 9Mobile. Finally, Teleology came in for the takeover of 9Mobile. Teleology emerged as a front bidder with $530 million and Smile came in as 2nd bidder with about $300 million.

 Obviously, the preferred bidder was given preference because you won’t sell 9Mobile to an entity who submitted lesser bid than Teleology; it doesn’t make economic sense. So as a requirement for the takeover of 9Mobile, Teleology was required to pay a non-refundable deposit of $50 million, which they did. Subsequently they were supposed to pay another tranche of that $530m, they were to pay $250 million, because their bid was broken into tranches. $50 million first, then deposit $250million to the consortium of bankers and  $100 million that will be given to creditors, those providing infrastructure services to 9Mobile, namely: IHS, Huawei and Nokia and of course you have a component of Nigerian stakeholders with whom negotiations were made in order to address their concerns, because they have shares in 9Mobile.

Then the final component was fresh capitalization by 9Mobile, injecting fresh funds in order for it to continue to survive as a growing concern. So, on our side, the NCC did two critical things that many in the Commission might not even be aware of:  we were the ones who on request from 9Mobile transferred the shares of 9Mobile, (9Mobile is trading as 9Mobile, but the registered name is EMTS and they have operational license with recourse to the approval by NCC). EMTS is a trade name, so when Etisalat protested that EMTS should not be used as trade name in Nigeria, 9Mobile decided to write to be allowed to use 9Mobile as their new trade name. So whenever you say EMTS, then you have to add, trading as 9Mobile.

 So EMTS trading as 9Mobile wrote to the commission for the transfer of 99.99% of the shares. We were the ones who on request from 9Mobile transferred the shares of 9Mobile to United Capital Trustees, the Trustees appointed to takeover 9Mobile by the consortium of banks. So when we received this request from 9Mobile we gave them conditions, as always, there are always conditions attached to the transfer of shares, if there’s going to be a change in the shareholding structure in any telco entity, that will exceed 10% shares; that change in share structure, must be with recourse to approval from the NCC. Other conditions were:

First, pay your spectrum fees, which they paid 50% that is normally granted. So we conveyed an approval in principle to them with the following conditions and they paid.

At least they paid something. They paid the accrued AOL, they paid 50% of the accrued spectrum fees, in order for this transfer to take place and it took place. So after we granted the approval in principle, finally it came to pass.

The shareholding structure was the next stage, again 9mobile wrote to say; we want the  99.99% shares to be transferred from United Capital Trustees to Teleology, the preferred bidder and this is okay also. So again you know there are less stringent conditions for them to meet, which they met, including the payment of other administrative fees plus listing in Corporate Affairs Commission or evidence of listing of Teleology with CAC and legal fees.

 Again 9Mobile fulfilled this condition and there was final approval conveyed to 9Mobile for transfer of shares, 99.99% of shares from United Capital Trustees to Teleology. Without approval for these transfers from NCC, I don’t think the 9Mobile issue would have been settled. So, it was when the transfer of shares were completed that the 250 million dollars that was in Escro account which Teleology deposited, dropped and the banks were given this money to share proportionately.

 I got to learn that already some amount of money was given out of that $100 million to IHS, Huawei and Nokia. Subsequently, there is a new board for 9Mobile (Because they have not written for the name to change to Teleology or for the license to be transferred) when that request comes, we will be ready for them because we have already done the technical evaluation of Teleology. And it is on the basis of the outcome of that technical evaluation, that we can say go ahead,  you can have your license or no there are one or two things that you need to do before the license can be transferred to you.

One of them is, we want to ensure that there is a Nigerian content, and it involves the board and the top management and we want to see reasonable representation of Nigerians. We want to see an injection of capital, so as to improve the services that 9Mobile is rendering. We even did a security check. You wouldn’t want to take a sensitive telecommunications company like 9Moble and just handover it to a bunch of foreigners. So, we did a security check and the National Intelligence Agency assisted in conducting a security check on the top management and board members of 9Mobile. But the good thing is, 9Mobile survived,  and the credit is jointly to NCC and the CBN and that’s how we concluded the matter; and looking back, indeed 2018 has been a very eventful year. I think the two regulators, NCC and CBN, should be credited for this effort.

 If you like, these are the types of strategic partnerships that we put in place; it’s one of the items on our 8 - Point Agenda. So if you are looking for a practical implementation of that item on the Agenda, this is a clear cut example. Without it, there’s no way you can approach CBN, apart from other engagements that we have with the CBN, in the areas of financial inclusion, improving mobile money service penetrations, among others. This is a big demonstration of collaboration between sister agencies of government that the NCC used to carve a niche for itself.

 

On collaborations to improve Quality of Service

Quality of service as you know can be affected by two factors, one is technical and the other one is non-technical. The technical factors, like we always say, the NCC has capacity to handle because it involves evaluating the quality of service nationally. As well as on the basis of what is the quality of service enjoyed at state levels, if possible, we should be able to monitor the quality of service in the 774 local governments of the country. We have this technical expertise to give the quality of service averagely in the whole country.

But we equally have the capacity to say, this is the area in the country where quality of service degrades and there is need to improve. But monitoring the quality of service will amount to a lot of challenges. One particular challenge is in the way and manner infrastructure that is being deployed to provide services is being vandalized. We experience fibre cuts all the time, some willful and others unintended for instance during road constructions. Because of the way the fibre is laid in this country, you won’t see any sign that will tell you that fibre is here, so people are to dig with care. There are no special tunnels built for fibre. We are not like other countries where the fibre runs through ducts that are made of concrete and are mechanically sound and will withstand any road construction. Here we just till the earth, dig and bury fibre. So we have these challenges and there are other instances where fibre is cut and stolen by unscrupulous persons.

 We have challenges of Right of Way. When you want to deploy infrastructure, there are places under the jurisdiction of states and they see this as an opportunity to ask for payments to be made, permit fees for deployment etc. Even though there is a provision in the National Economic Council report, it’s a document put together which specified the amount of money that should be charged for the deployment of fibre; it says N145 per meter length of fibre and no more. There is lack of adherence to this provision in that report.

 Some States even charge N6000, N7000 and even some charge as high as N8000. Not only states, even Local governments impose taxes on telecommunication companies. In some instances, even ‘Area Boys’ (miscreants). So there is, if you like, multiple charges, too many agencies of government coming in and their action creates fear to deploy successfully this critical infrastructure. So this is a huge challenge.

However, the NCC is not daunted by these challenges. We have been engaging the Governors, and we try to convince them to allow free deployment of fibre optics. They should make their respective states fibre-friendly, because in the end, the benefits that will accrue from the deployment of broadband infrastructure will surpass the limited gain we all get from the fees we charge. This has been proven all over the world and we are very happy when at the meeting of the National Economic Council, which His Excellency, the Vice President of the country, Prof Yemi Osinbajo, chaired with governors present; a resolution was reached emphasizing the need to adhere to N145 per meter. So, if you like, there is a resolution leading to the harmonization of the right of way charge in virtually all states of the federation with no exception. Lagos, Rivers, Kano anywhere that is the rate that should apply, whether this rate is being complied with or not, I don’t know, but there is need for some kind of check to be made to ensure adherence to the provision of the NEC report as emphasized by that meeting.

These are the main technical issues: Stealing of cables, cutting them, electricity supply, which is key for driving the transceiver stations, connection to transceiver stations should be through fibres. Everywhere you talk about capacity, then you need commensurate infrastructure and the direction most countries are going, all over the world is fibre, broadband.

Unless we deploy broadband infrastructure, we are not going to see a remarkable improvement in service, because here we are talking about the volume of traffic, which we noticed is surging by the day.

Another important point that we need to appreciate is, if you do not have the fibre back bone in the hinter land, then this massive capacity that we have at the landing port in Lagos, 9 terabytes of capacity, remember some of these cables have even landed in Uyo. All these cables – SAT3, Glo1, MainOne, and we are even talking of Glo2, the total capacity of these cables is 9 terabytes which is massive capacity, but this capacity is restricted to the landing zone, perhaps, not even to Lagos metropolis, because, again, Lagos suffers in a number of places in infrastructure deficit.

So when you talk about others parts of the country, the deficit of infrastructure is the cause of poor quality of service. And unless this deficit is addressed, there is no way this capacity can be deployed to the hinterland. And if that is not done, the quality of service will continue to be a challenge.

 We are using the resources at our disposal to ensure we tackle those technical factors that degrade quality of service even as we engage authorities at the Federal, State and Local Governments, in order to find a lasting solution to the challenges that degrade the quality of service.

 

Impact of NCC interventions in sports, education etc.

When you said you want broadband penetration to the full, then you need citizens that are ICT compliant, because if you have citizens out there who are not even conscious of how they can leverage on the ICT in small ways, what have you done? In the universities to do content delivery, when you want to deliver your lectures, if you want to ensure that you are well prepared, you leverage power point presentation. Because it’s an elegant way of doing it. You need ICT to prepare for your tutorials. So these are some of the advantages of leveraging on Information Communication Technology, in content delivery, then the same is true in other sectors of the economy.

Name a task for me in any other sectors and I will tell you that we can leverage the power of the ICT to improve in the execution of that task. Generally speaking, we talk about efficiency because higher efficiency will result in higher productivity, whether it is in the provision of goods or services or governance including participatory governance, when people will have a say and they can contribute in the way and manner they want to be governed.

Take financial inclusion, they will tell you that there is need for ICT literacy in programmes and everything. For mobile money services, you need the knowledge of how to use a smart phone to transfer money, to receive money, to do so many things.

So, there are simple tasks that citizens need to learn in order for all the indices for development to reach the right acceptable level, otherwise we still sit down here and talk about the infrastructure and making available spectrum that is needed to provide telecom services, and many other things and if citizens are not fully sensitized on how to use these services, then there is no way they will use it. And to sensitize citizens, you need to put in place dedicated sensitization programmes whether it is training in schools, or tertiary institutions or even in communities.

 That is why NCC’s interventions cut across all sectors; education, communities, hospitals, everywhere, financial sector of the economy, transportation, sports, because it is through this holistic approach that you can improve on the fortunes of the economy. It is through these interventions that you will sort of transform socially, the country.

Through these interventions, we will see social and economic transformation. Because it’s not just about economic transformation, but even the way and manner we collaborate with each other. In fact, even the way and manner we self-organize. Look at my phone, my notes are there, every time I want to talk about issues relevant to the industry, I don’t have to search for them again. I have saved them. All I have to do is to upgrade if there are new developments. So self-organisation has changed.

Innovation is growing, we are seeing things that were never seen before. You think about an idea, as you are thinking about it, you find somebody out there is already developing it and is about to commercialize it; such is the speed that we are moving in this era of innovation. So, all these will need intervention by provision of resources and by extending ICT services to even communities and that is why when you look at NCC interventions, they cut across these sectors. Adoption and use that will in turn result in higher penetrations of mobile voice penetration, broadband internet and even data usage; there has to be a means to sensitize Nigerians by engaging them through the various NCC sensitization programmes that are put in place. Like the Town Hall Meetings, including when we dedicated 2017 as the Year of the Consumer to sensitize citizens on how they can protect themselves from unwholesome practices within the industry. All these you need to put them together in order to give that intervention you said a profile, a meaning, because it is a multitude of things that you need to bring together to define the interventions you are talking about.

 

Recently at the NCC Tennis League final the Minister of Sports praised NCC for its commitment in sports, your impression on this?

I feel proud that I came and met an intervention in the sports sector and as usual in order to ensure continuity, continued with the tournament. We are even increasing the prize money and by so doing, we are empowering youths to play the exciting game of Tennis and like I said, it will not be surprising when you see these exciting players participating in global tournaments like Wimbledon, US Open, Australian Open, just give it some time, because what I saw at the finals is a clear indication that one day this will happen.

So, it was good to have the Minister there to endorse what the NCC is doing but more than the endorsement of the Minister, you can see the way and manner the NCC ensures the sustainability of its interventions. No EVC will come and scrap such interventions, every EVC who comes in will continue to support these types of interventions, thereby giving it the required sustainability that is important. We will continue to impact the sporting sector and other sectors of the economy, may be because this is a highly enlightened organization, we don’t only see the industry, we see far beyond it with the programmes and projects we embark on.

 

Average revenue per user (ARPU) is declining but GDP is rising, how can we sustain this?

Well the correction here is, the GDP has just dipped to 8.39, if you are talking about the global GDP average, yes, from the beginning of the year to date, and yes it is rising. This is a difficult question, but I will try to answer. The average revenue per user is declining and that is according to reliable information from the Department of Financial services of the commission.

But we have not been able to point our finger on what is responsible for this decline. I am an Engineer, if there’s a problem, it’s important to identify the source of the problem. Is it that we are not collecting the right AOL (annual operation levy) and tried to find out what exactly we can do? We did something. We put in place a Revenue Quality Assurance that will look at the formula and there is a company now that is about to embark on a proven concept on checking the amount of money that we are being paid as AOL by the telcos. And we hope this will address the decline in revenue generation.

The other issue you need to look at is inter-connect fees by telcos. Huge figures, almost $165 billion. Telecommunications companies are simply not paying each other for terminating calls on their networks, and this is not good. We said no telecom operator being owed money should deny termination of call on their network because we see it as treason or close to treason and vice versa. But, we must appreciate that people who subscribe to telecom services must learn to do so on pay as you go. So, you pay in advance, you get your card, then you load and use this until your credit is exhausted, then you load again. So, it beats my imagination why telcos who collect money this way will not want to pay their interconnect commitments. In fact, a telco will deduct for the service you have rendered and yet not want to pay the other entity on whose network you terminated the service. It doesn’t make sense. I can understand the owed vendors that is debts being owed companies like IHS, Nokia, Ericsson and Huawei. So it’s together, these two components of debt that gave rise to this huge interconnectivity debt. But debts are debts and operators must fulfil their obligations to each other.

Recently, we issued an order that we are going to publish the names of defaulter companies in the national dailies, and this has started yielding positive results because we notice some payments already taking place. No telco will like to see its name published in the newspapers, being listed for failure to settle their inter-connect debt.

But we intend to carry through the threat, if we don’t see much improvement, because when I came, it was nowhere near this huge amount and I believe it is on-going even as I talk to you. Hopefully it will start decreasing and we will monitor and see the effectiveness of this measure that we are going to take, to put a finger on exactly what is contributing to the decline. And then, ultimately, we may have to take the last regulatory action to solve the problem. We’ll do it, but, it will be the last resort, which is to disconnect.

 

Implication of Nigeria being re-elected to the ITU Council

We went to the ITU in Durban and campaigned hard. This was after campaigning in different parts of the world during ITU sponsored events, so that fact then showed members of the ITU that we are interested in retaining our seat in council, plus the contributions of our representatives, (those we normally send), these are people who substantially are from the NCC, chairing many committees of the ITU, some from the Ministry, especially Eng. Festus Dauda, who by the way has just become a Permanent Secretary. It’s like the International community appreciates the contributions of Nigeria to the ITU. We are an important member, a vocal one too. We have had a lot of dealings with the ITU and I think this is a massive vote of confidence for the NCC in our ability to ensure that Nigeria is well represented at all ITU events. That’s all I can say. Thank you