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TMCNet:  Telcos Up in Arms Over Open Access Broadband

[February 06, 2014]

Telcos Up in Arms Over Open Access Broadband

(AllAfrica Via Acquire Media NewsEdge) The intervention of the Nigerian Communications Commission (NCC), through its proposed open access broadband initiative, should come as a great relief given the prospect for growth in broadband services delivery. But it does appear that some big operators are against the move.


Arguably, Internet services have improved in the country as providers' capacity has grown exponentially in the last three to four years, with Main One, Glo1 and the MTN's West African Cable System (WACS) replacing epileptic services of the SAT III system managed by NITEL.

While mobile Internet density has grown to 26 per cent with about 45 million users, according to analysts, broadband connectivity remains abysmally low with a density of around 6 per cent.

Worried by the slow pace of development in broadband penetration, the NCC released a five-year national broadband plan in 2013 and went out to woo investors to come to Nigeria and invest in broadband facilities.

To further deepen broadband in Nigeria, the NCC came up with the open access model that will boost broadband development in the country. Surprisingly some big telecoms operators are not at ease with the development and are doing everything possible to frustrate the efforts of the NCC.

NCC's Intervention Ordinarily, an intervention effort like the open access, which seeks to support the roll out of critical distribution infrastructure needed to deploy reliable broadband services nationwide should present huge expectations for consumers.

On the other hand service providers who have over the years alluded to infrastructure challenges as the main reason for limited drive in broadband and quality service delivery are supposed to benefit immensely from the NCC's open access model on broadband penetration.

This is because the model is specifically out to promote infrastructure sharing, while enabling operators to focus on their core service delivery responsibilities.

In his views, a Lagos-based Public Affairs Analyst, Mr. Chukwuemeka Nnadozie, said the development would have seen all operators and ICT services providers to be at the forefront of drumming support the NCC's initiative, since it provides them the opportunity to improve their revenue from data services.

In fact, broadband is gradually becoming the major revenue earner as voice services revenue is on the decline as the Average Revenue Per Unit (ARPUs) in that service segment continually thins out.

On the contrary, industry feedback suggests differently. The major infrastructure owning GSM networks are opposed to the NCC's idea of open access infrastructure deployment and are actively taking steps to ensure that the project fails.

Opposition to Broadband Initiative Confirming the opposition to NCC's open access initiative to broadband penetration, Nnadozie said apparently from the tone of their media campaigns and body language, large infrastructure owning GSM operators are reluctant to embrace regulatory intervention, particularly those that would further open up the broadband market in Nigeria and the opportunities that abound in it for the people.

"Incidentally, these are the same set of operators that have failed to support the growth of broadband services. They view the NCC and government's intervention and the proposed changes to the market structure as a pariah initiative, preferring that business-as-usual persist at the expense of the country's chances of improving access to connectivity services and improving the lives of Nigerians - for as long as they profit from the structural imbalance in the broadband ecosystem." It is therefore not uncommon these days that they have become apostles of industry self-regulation, calling on the NCC to allow the market mature and self-embrace a workable infrastructure sharing model, at the same time spewing the now too familiar lines that increased regulatory intervention and negatively impacts on foreign direct investment in the Nigerian telecommunications sector, he said.

According to Nnadozie, operators, irrespective of sizes, simply have no basis to suggest that changes in regulation are not required to move the market in the desired direction, particularly where attempts at industry self-regulation have failed at the behest of the same large operators.

"If anything, regulatory interventions and changes are part of the process of ensuring that competitive growth is sustained in any given telecommunications market. Indeed, they are a salient feature of, and integral to, the sector's supervisory structures the world over. No Nigerian operator can claim that regulations passed in the early 2000's, which were instrumental in creating the multi-billion dollar communications giants in Nigeria, should continue to remain the status quo as the nation progresses into the broadband era," Nnadozie added.

Cue from other Jurisdictions Taking a cue from other parts of the world, all economies trying to move into the information age have tinkered with telecoms regulation to foster sharing of infrastructure and the growth of broadband through competition with infrastructure incumbents.

Examples range from Europe, US, Mexico, and Kenya closer to home. It is thus a surprise that after extensive industry consultations, numerous consulting and global benchmarking studies with input from reputable institutions including the International Telecoms Union (ITU) and KPMG Consulting, the major telecommunication services operators remain adamant and are opposed to the proposal by the regulator to open up the broadband eco-system and foster growth through direct intervention.

One may ask: has Nigeria reached a broadband peak in terms of advancement in service access and quality that no intervention is required and we can all sit tight and enjoy the bliss of pervasive access to broadband services? Or is it that these large operators are fledging corporations and the proposed changes in the regulatory rules will affect their survival? The answer is a resounding "NO".

Implications Clearly, when large operators vehemently oppose industry developments that ordinarily advance their cause and mutually furthers the interest of consumers, the Nigerian consumers and authorities must recognise that the motives are at best self-serving, driven by greed. It is not in the interest of the consumers or the country as a whole. It reflects a desperate ploy to protect, at all cost, huge and closely held bags of profits these players derive from business as usual . They will stop at nothing, including the subversion of public interest and policies that are aimed at protecting those interests.

According to Nnadozie: "Curiously If these players will stop paying lip-service to improving the lot of Nigeria's broadband services, isn't a 6 per cent broadband penetration level a key market incentive to pursue business opportunities more aggressively in that service segment and embrace the NCC's initiative? Is it because this requires additional investment on their part or they are comfortable milking consumers off their hard earned money through voice services that 13 years on is more or less still epileptic?" Sadly, rather than allow other potential investors enter the market and leverage their infrastructure and services, they spend a pittance of these profits heating up the polity and creating propaganda that changes will destroy the gains the country has enjoyed in telecommunications to date, he said.

Could it also be that the telecoms operators are persuaded by the current market model that guarantee 100 per cent or more margins return on their existing infrastructure when they lease transmission facilities to others, as verified by available market data? Is it that they would rather assume a sit tight position, given the prospect of the proposed NCC's model to liberalize access to common infrastructure at competitive rates and thus reduce the cost of services to consumers? . The process for establishing that framework is still active at this stage and continues to take more constructive feedback from stakeholders, to the credit of the regulator, Nnadozie insisted.

Global Indices Today, global indices on internet readiness shows Nigeria lags behind other African countries like South Africa, Kenya, Ghana, Egypt and Tunisia, despite the huge broadband capacity available at its shores. To move beyond mere abundance of upstream connectivity and achieve a broadband revolution in Nigeria, the regulator must be undaunted in its pursuit of positive changes to the market structure that will stimulate growth and encourage innovations and further investment.

The NCC must remain focused, and move decisively and quickly to change the status quo. Certainly, enhancing broadband access will reshape the lives of our poorly educated and unemployed youths, empower the global competitiveness of our businesses and economy and promote the overall well-being of our people.

Copyright This Day. Distributed by AllAfrica Global Media (allAfrica.com).

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