digital-graphThe above, in a nutshell, was how participants at the recent Commonwealth Telecommunication Organisation (CTO) Broadband forum held in Abuja described the Nigerian broadband market. It was hosted by the Nigerian Communications Commission (NCC).

Nigeria is not only Africa’s largest economy, it is also Africa’s largest market. It is on record that Nigeria was ranked the fastest growing mobile market in the world for five consecutive years, a demonstration of the limitless capacity of its market. The NCC has effectively leveraged on this and has readied the market for the inevitable broadband revolution.

The Executive Vice Chairman (EVC) of the NCC, Dr. Eugene Juwah who was represented by Executive Commissioner, Stakeholders Management, Dr. Okechukwu Itanyi, noted that “the catalytic role and contribution of broadband services to an economy is well documented. Some of these are its positive impact on education delivery, health care provision, energy management, security, and information dissemination. For Nigeria, the lack of a robust fixed network infrastructure and the need to rapidly develop the infrastructure to provide universal broadband services required a coordinated national approach. This led to the crafting of a National Broadband Plan covering the period 2013 to 2018.”

Juwah added that: “It is important to state briefly where we started from before the articulation and coordinated implementation of the Nigerian National Broadband Plan (NBP) commenced”.

According to Juwah, as at the time he took office in 2010, there were three International submarine cables, SAT3, GLO1 and MainOne landing at our shores; 3G mobile Internet services was available in less than 20 towns and cities across the country; no broadband infrastructure framework was in place; less than 15 million Internet subscriptions across the country; about 22,000km intercity fibre deployed across the country with low utilization due to duplication in several routes and lack of metropolitan fibre deployed in several routes across the country.

Other landmarks at that time were that the country deployed  mainly voice-based networks; relatively high cost of Internet subscription; low Internet speeds; low levels of metropolitan and last mile fibre deployments; regulations and policies were mainly aimed at driving voice services rollout across the country.

This was why the NBP was articulated to increase broadband infrastructure across the country and deepen Internet and broadband access. To accelerate the process, the NCC adopted the Open Access Model following industry-wide consultations.

In the words of Juwah, someof the objectives of the NBP include; “achieving a 30 per cent broadband penetration rate by 2018 from 6.1 per cent in 2012; to have a coordinated strategy towards the provision of a broadband infrastructure ecosystem in the country and to develop strategies based on the peculiarities of the different geographical areas to enable the deployment of broadband infrastructure, among others”.

Nigeria is not walking through the broadband alley blind-folded. It has set timelines and landmarks as it journeys through the five-year period. Juwah explained that to facilitate the provision of a roburst broadband infrastructure across the country, Nigeria set some target to achieve during the five-year Broadband implementation plan. They are: License seven Infrastructure Companies (InfraCos) to rollout metropolitan fibre across the country; auction available slots in the 2.3GHz, 2.6GHz and 700MHz band for wireless broadband access; implement cost-based pricing model and price caps for leased transmission capacity to drive affordability; implement cost-based pricing model and price caps for leased transmission capacity to drive affordability; implement open non-discriminatory access to broadband infrastructure for all service providers; open new high capacity spectrum bands for licensing (70/80GHz); interconnect all Internet Exchange Points in Nigeria with fibre optic cable transmission; provide incentives to drive the rollout of broadband infrastructure and increase wireless broadband access across the country.

There is bubbling enthusiasm among operators that Nigeria would witness yet another revolution in telecom, this time, in broadband deployment if stakeholders especially the regulator is able to cobble the right mix of policy with implementation. 

One of such enthusiasts and believer in the Nigerian market is Mr. Mathew Willsher, Chief Executive Officer, Etisalat Nigeria who predicted that the nation is set to reap Gross Domestic Product (GDP) growth dividend of over N400 billion via Broadband by 2018 if the various stakeholders get things right.

Mr. Willsher took the CTO audience on a tour through the nation’s broadband labyrinth, showing off the opportunities and prospects. He said: “Broadband is clearly no longer just a service but a critical economic enabler. It is therefore important that all stakeholders take necessary action to ensure that Nigeria’s Broadband is developed to its full potential. Studies show that Broadband has the potential to drive GDP growth in excess of N400 billion between 2014 and 2018. But only if we get it right.”

He noted that the current industry structure is incapable of supporting the attainment of Nigeria’s Broadband development goals to fully achieve the expected GDP growth impetus by 2018.

“The inability of the majority of operators in the industry to achieve the scale necessary to support Broadband deployment is perhaps the most critical challenge. Broadband involves considerable amount of fixed cost and struggling operators who, as a result of their size, are unable to attract the volume of reasonably priced, long-term funding required to deploy and operate Broadband infrastructure profitably, are leaving a major investment deficit which even an outsize incumbent is unable to fill.”

According to him, the resultant shortfall is underlined by Nigeria’s ICT investment as a percentage of GDP of 2.6% while the average for peer countries is 5.5%, stressing that while mobile Broadband penetration in Nigeria stands at 10.1%, the average figure for peer countries in Africa is 30%. In the same vein, while peer countries have an average smartphone penetration of 26%, Nigeria can only boast an average of 12%.

Also, in terms of mobile Broadband affordability, the Internet Society estimates that Nigerians spend 9.8% of their average GDP per capita to access Broadband while the average for peer countries is 4.3%. “Notwithstanding the appreciable progress in Broadband deployment in Nigeria, considerable effort is still required to move Nigeria towards its Broadband targets,” Willsher told delegates at the Forum.

“When benchmarked against peer countries, it is clear that there is a considerable gap between where we are and where we should be, given the size of our industry and economy,” he said.

 He also noted the presence of struggling operators, many of whom are barely active, in an industry the size of Nigeria’s, which he said, is indicative of serious underlying issues with value distribution across the industry.

“Where is the industry value going to? Why are so many operators unprofitable amidst so much value available? Is there a need to provide tailor-made regulation to ensure that value is better distributed among operators in the industry?” he queried.

He believes that “inadequate Spectrum to Support Broadband Deployment is another key challenge in the provision of Broadband services in Nigeria”, adding that “mobile Broadband is clearly Nigeria’s best route towards achieving its Broadband coverage objectives, given the high cost associated with fixed Broadband.”

Experts argue that the level of deployment  of broadband is directly proportional to the level of liquidity of operators. Telecom, they say, is capital intensive and with broadband, it is even more so. This fact is not lost on Mr. Wilsher particularly when weighted against the plummeting value of the naira.

He said: “Broadband equipment is largely manufactured outside the country and the recent devaluation of the Naira has greatly increased the cost of importing equipment. Related to this is the recent closure, by the Central Bank of Nigeria (CBN), of the Wholesale and Retail Dutch Auction windows, where telecommunications operators would previously have sourced foreign exchange to fund equipment purchases at lower rates.

“Operators have therefore, been compelled to source foreign exchange at significantly higher rates through the interbank foreign exchange market which is mostly unable to meet demand. Moreover with very high cost of borrowing in Nigeria, funding capital investment from long-term instruments adds as much as 30% to the purchase price over the repayment term.

 “Broadband, as the key enabler of technology diffusion to business, government and people, therefore has a direct impact on GDP growth. Policies which accelerate Broadband deployment are essential to the success of the economy.”

The Etisalat boss enumerated other factors for the acceleration of broadband to include: buy-in to Smart State Initiative by States for nationwide Broadband deployment; passage of the Critical National Infrastructure (CNI) Bill to protect telecom equipment; avoidance of untimely increase in customs duty for imported SIMs; review of current industry structure to ensure equitable value among operators; non-duplication of investment in terms of infrastructure; expedite action on digital migration to free up the 700MHz band for use by the telecommunications industry and downward review of spectrum fees and USPF subsidies to drive last mile connectivity.

Whereas Mr. Wilsher spoke what may amount to the mindset of operators, their fears and anxieties are already being assuaged by the NCC which has lined up incentives to encourage investors in the lucrative broadband market.  The initial pain may be much in terms of fiscal demands on the operators, but the gains far surpass the pains in the long run. Juwah is optimistic that the operators would recoup their investments in broadband far more than they did in mobile telephony.