Telecoms: Stimulating Economic Activities in Other Sectors

Executive Vice Chairman, NCC, Eugene Juwah             
    

In the midst of operational challenges, which reflect in a regime of unsatisfactory quality of services, the telecoms sector has continued to provide the needed stimulation for other sectors of the economy including finance, aviation, advertising and entertainment among others, reports Festus Akanbi

It is indeed very easy to get worked up over the quality of service telecommunications operators provide in Nigeria today. The stark reality is that service quality across the industry is generally below expectations. Calls get truncated before callers are ready to disconnect; it takes unduly long time to connect calls even within the same room, billing imperfections or network glitches sometimes wipe off consumers’ credit and it is often an uphill task getting assistance from operators’ customer support centres. These are some of the issues telecom users contend with on a daily basis.

The problems have become amplified in the last 12 months or so. Last year was particularly characterised by one of the worst spells of sub-par quality of service in many years. The telecom industry regulator, Nigerian Communications Commission (NCC), yielded to public pressure to take action over the issue at least twice.

It imposed a total fine of N1.17 billion on all the major telecom operators in the country in the first half of the year. In the absence of marked improvement in the situation, NCC imposed a ban on all manner of promotions by the operators in the second half of the year. The two actions did nothing to bolster the poor quality of service across the sector.

Challenges
In fairness to the operators, there are a number of operational challenges, many of them unique to Nigeria, that have direct adverse impact on the overall quality of service of the operators.

The operators have made a sing-song of these challenges over the years, but perhaps, the experience of last year is all the proof the country needs to believe the operators that environmental factors contribute immensely to the quality of service they are able to deliver to their subscribers.

Year 2012 witnessed unprecedented operational challenges in the industry, and correspondingly, the quality of service plunged to what one commentator described as seven-year low.

The worst cases of equipment vandalism were recorded last year by virtually all the operators, beginning from January to December. But perhaps, more importantly, it was also a year of one of the most widespread natural disasters in the country. A series of floods described by experts as the worst in five decades ravaged most parts of Nigeria putting many base stations out of commission or out of the reach of maintenance engineers for weeks and months.

The flooding disrupted the roll out plans of operators. It threw spanner in the works of a nationwide network modernisation project being carried out by the country’s leading ICT company, MTN. The operator had announced that the project was aimed at significantly boosting the capacity of the network and enabling it to provide significantly enhanced quality of service for its millions of subscribers, among other things.

The network modernisation exercise was started in April and was to be completed in nine months before the flooding and terrorism incidents. For months, massive floods denied the operator’s engineers access to project sites.
Elsewhere, especially in the north, general insecurity of lives prevented engineers from carrying on with the project as scheduled, as time ticked by.

Attacks on Facilities
The past year was also the point when armed insurgents dramatically entered the telecom scene, hitting a number of telecom installations. In the first of the attacks, hundreds of mobile phone masts belonging to telecom operators and telecom infrastructure service providers in northern Nigerian cities of Kano, Maiduguri, Gombe, Bauchi and Potiskum were hit in two consecutive days of coordinated attacks.

Operators affected included MTN, which has the largest number of base stations across the country, and consequently suffered the most loss. Others affected included Airtel, Etisalat, Globacom, Visafone, Helios Tower and IHS Nigeria. Indeed, Airtel in a press conference later announced that about 53 of its installations were attacked, disrupting operations in 193 sites across the Northern part of Nigeria.

Millions of telephone subscribers in the affected regions were thrown out of service for weeks before skeletal repairs were quickly effected and some form of normalcy was restored. Till date, some sites cannot be rebuilt as members of the host communities have resisted efforts by telcos to carry out repairs and replacement of damaged infrastructure.

Multiple Regulation
Aside from the foregoing, 2012 was the year that most of the pre-existing challenges in the in the operating environment assumed alarming dimensions. The issue of multiple regulation, for instance, reached a stage in April when two agencies of government openly battled one another over a base transceiver stations (BTS).

MTN Nigeria’s base station at EFAB Estate, Mbora District, in Abuja was shut down by the National Environmental Standards and Regulations Enforcement Agency (NESREA) over what it called failure to meet setback requirements.

The regulator of the industry, the Nigerian Communications Commission (NCC) apparently was not consulted by NESREA before taking the action. Consequently, NCC officials, with newsmen in tow, stormed the BTS to reopen it a few days later, affirming that it met all requirements set by the regulator for BTS.

Not to be outdone, NESREA officials with its own entourage of newsmen returned to the site to reseal it, insisting on its right to enforce setback requirements for BTS. While this was going on, thousands of subscribers covered by the base station in Abuja were consigned to a long spell of off and on telecom coverage.

While the matter was later resolved, it was a poignant reminder of the absurd height multiple regulation and rent-seeking behaviour of government agencies had risen to, and the adverse toll it was taking on telecom service delivery.

Also within the same year, many operators witnessed some of the worst wanton damage to their infrastructure by thieves, vandals and saboteurs. In April, about 450 base transceiver stations (BTS) belonging to MTN in the Kano, Abuja and Kaduna regions were cut off from the rest of the network following multiple damage to the company’s extensive fibre-optic network. The development threw many subscribers in the region out of coverage for days before the operator could effect necessary repairs.Again in December, MTN’s fibre-optic network was cut in at least seven different locations namely, between Port Harcourt and Eket, Kano and Zaria, Abuja and Akwanga, Asaba and Owerri, Ahoada and Port Harcourt, Benin and Owo and finally, between Ikeji and Owo. All the cuts happened within five minutes of each other.
All through the year, the company recorded an average of 70 cuts in various locations per month, with some of them reportedly manifesting uncommon coordination.

Everyone Loses with Poor QoS
The simple reality is that when service difficulties prevail, telecom consumers are unable to make and receive calls as they want, and their spending on the networks is consequently limited. A subscriber who initially plans to spend 10 minutes on a discussion may end up using only three minutes due to service disruptions. Indeed, a recent study by a renowned hardware and software company, Oracle, indicated that telecom operators lose an average of $2 million (about N312m) an hour to network glitches in Nigeria.

Aside from all this, operators have sunk trillion dollars of investment into their networks in the hope that they will attract customers and keep them to reap the dividends of their investment. However difficult it may be to believe, the truth is that no operator would want to jeopardise their massive investment by continuously providing poor quality of service to its customers.

Superlative Performance as Nemesis
Perhaps because of the astounding performance of the telecommunications sector over the years, growing against all odds from a meagre 400,000 lines in 2001 to  over 113 million active lines today, most people tend to see the industry as insulated from the general malaise of the Nigerian society. However, if there is to be a lasting solution to the lingering challenge of sub-optimal quality of telecom services, there is a need to put issues in perspective, so that pragmatic solutions can be obtained. Putting issues in perspective begins with recognising the huge blessings that telecommunications, and particularly, the operators have brought to Nigeria in the last 12 years or so. The meanest of critics would readily concede that telecommunications has positively impacted all aspects of the Nigerian life.

Telecoms as Golden Goose
Nearly all that Nigeria has as telecom infrastructure is the creation of the private sector, led by the ambitious GSM operators. State-owned NITEL, which was supposed to provide transmission backbone and other support infrastructure for the newly licensed operators in 2001 was incapable of doing so. Hence, the private operators had to set about creating necessary telecom infrastructure for their own use and the benefit of the country.

Today, for instance, the leading operator, MTN Nigeria has built the most extensive and sophisticated ICT infrastructure on the African continent here in Nigeria. International experts have acknowledged the expansive infrastructure as the springboard of an ICT revolution in sub-Saharan Africa.

Indeed, MTN’s network is basically a national backbone with a 9,500 kilometre fibre-optic superhighway, the most extensive private fibre-optic network of its kind in Africa and the Middle East, and an 11,500 kilometre microwave infrastructure covering 90 percent of the population of Nigeria. MTN alone has sunk over N1 Trillion in capital expenditure (CAPEX) over a period of eleven years. Every year, with the support of its shareholders, the company consistently approves more resources to be invested in the ever absorbent Nigerian telecom environment.

In 2012 alone, MTN committed over $1.3 billion on capital projects, including an extensive network optimisation and swap out exercise to replace legacy equipment and install hybrid alternative energy solutions in its base stations.

Till date, the telecom sector remains the fastest growing sector of the Nigerian economy and contributes more than 3.5 percent to the Gross Domestic Product (GDP) of Nigeria.

And when the consideration is Foreign Direct Investment (FDI), the telecom sector has clearly outperformed most other sectors in the last 11 years. Since 2001, the telecom industry has attracted in excess of $23 billion in FDI.  The sector pays huge taxes and levies into the coffers of government. MTN Nigeria alone has paid almost N1trillion in various taxes since 2001.

The sector has created millions of jobs directly and indirectly. The market leader, MTN alone is responsible for a large chunk of these figures, with over 10,000 permanent and contract staff, over 100 direct dealers, who in turn have their own employees and about 4000 sub-dealers with an informal chain of at least 100,000 sales outlets across the country.

Telecom has stimulated massive economic opportunities for a multiplicity of sectors of the economy – the financial sector, advertising, PR, entertainment, music, fashion, broadcasting, consultancy, among others. Telecommunications companies have opened new vistas of opportunities for millions of Nigerians through various capacity building initiatives, mega sponsorships, promotions and CSR. Again, the market leader, MTN alone has invested over N7.5 billion in social projects in the areas of health, education and economic empowerment across the nation. Its CSR vehicle, MTN Foundation, has won many local and international laurels since it was created in 2004.

Apart from the generic telecommunication services such as voice and text, the sector provides the backbone for all electronic payments, point of sale terminals (POS), and ATMs. The sector provides electronic logistic support such as data warehousing among other business solutions for numerous businesses. Such services as Mobile Money, Cashless Banking, and internet banking ride on the backbone provided by the telecom operators.

In a nutshell, it is a sector that has positively impacted all aspects of Nigeria’s national life and by that same token, deserves careful considerations when it seems to be falling short in certain areas.

Solutions
Operators spoken to averred that even though the industry has recorded giant leaps in the last 12 years, it still lacks the capacity to adequately meet the demand for service at the market place. With Nigeria’s huge landmass and population, the 20,000 odd base stations owned by all the major networks are grossly inadequate. MTN alone which owns a little over 12,000 base stations is involved in a very aggressive roll out initiative to grow the number of base station exponentially  and wire Nigeria with fibre optics over the next few years. Again, in spite of the willingness and the availability of necessary funds, progress is slowed down by a string of factors enumerated earlier, including multiple regulation, difficulties with or outright denial of right-of-way, among others.

Industry insiders spoken to insist that if the necessary capacity is to be achieved, stakeholders must guarantee an environment where all the operators are able to effortlessly and aggressively build more telecom infrastructure over many more years.

“Repeated sanctions and directives will not resolve the fundamental problems that pose hurdles for us” said MTN Corporate Services Executive, Akinwale Goodluck. “We appreciate the efforts of the NCC and our Minister in tackling the root causes of poor quality of service by quietly liaising with the relevant organs of government and lending their voice and support to the developmental initiatives that are enablers of growth for our industry. That is the only way we can surmount the challenges.”