The Impact of Broadband on Nigeria Economy – Citing best practises

Protocols, Distinguished

  • Barrister Adebayo Shittu, Honourable Minister of Communication
  • Prof. Umar Garba Danbatta, Executive Vice Chairman (EVC)/CEO, NCC
  • Engr. Gbenga Adebayo, Chairman, ALTON
  • Engr. Lanre Ajayi, Immediate Past President, ATCON
  • Captains of Industry
  • Other esteemed stakeholders
  • Ladies and Gentlemen

I want to sincerely appreciate the organizer of this very important event -Broadband Summit 2017, BusinessDay Media for putting this summit together. The Association of Telecommunications Companies of Nigeria (ATCON) is happy to identify with this strategic initiative and particularly the theme: Broadband as an Enabler of Economic Growth is very timely considering the situation the industry finds itself in.

Contextual Analysis

Globally, including Africa, telecommunications infrastructure is at the heart of any global business in the modern age. From data security and data resilience requirements, through cloud connectivity issues, to low latency and time-based stamping in trading transactions, robust, reliable and resilient networks are critical.
Today, telecommunications operators are increasingly seeking to expand customer-specific and value-added services (such as combining connectivity with application services) to retain relevancy and protect against margin erosion. At the same time, the growth of OTT (Over-the-Top) applications raises novel regulatory questions because service providers, many of whom have no infrastructure and often no physical presence at all in a country, can nevertheless use licensed operators’ infrastructure in that country to provide services (DLA piper, March 2017).

Two of the largest ICT markets in Africa – Nigeria and South Africa – adopted broadband policies and plans in 2013, to much international acclaim. Implementation in these two countries has however stalled; both identified open access as an instrument to drive broadband penetration.

While the acclaimed broadband plans of the two countries envisaged open access as a key instrument in delivering affordable, high speed broadband services to fulfil their economic and developmental potentials, in neither of the countries has the mandatory open access broadband strategy been successfully implemented within the four years since the plans were passed. Furthermore, the failure to establish functional open access or public ownership models, or to continue to enable or encourage commercial operators to expand and upgrade their networks and services, has resulted in neither country meeting their ambitious broadband targets to date (Odufuwa, 2017).

Back in 2012 when the Nigerian Broadband Plan (NBP) for Nigeria was being written, the committee leaned heavily on and adopted a number of working practices in other jurisdictions, one of them is Australia. The lessons from Australia and what we can learn from them are:

Their Telecommunications Act 1997 is the key legislation which regulates, amongst other things, telecommunications carriers in Australia – which in Nigeria, we have the Nigerian Communications Act 2003.

Their Act is supported by a range of other legislation, instruments and codes including the Telecommunications (Consumer Protection and Service Standards) Act 1999, which provides for the establishment of the universal service obligation with respect to standard telephone services in Australia, the ability of the Australian Communications and Media Authority (ACMA) to set performance standards and obligations on carriers, and the requirement for carriage service providers to enter the Telecommunications Industry Ombudsman scheme. To which one can argue our Communications Act is not clear and to which in the case of adopting an Ombudsman scheme will be most welcome in our industry at this point and time.
The regulatory framework for their National Backbone Network (NBN) was established through the National Broadband Network Companies Act 2011 and the Telecommunications Legislation Amendment (National Broadband Network Measures -Access Arrangements) Act 2011 which added to their existing generic telecommunications regulatory framework. In addition:
Non-discrimination obligations: The Australian Competition and Consumer Commission (ACCC) publishes guidance on the NBN Co’s non-discrimination obligations.

The Australian Telecommunications Industry Ombudsman’s main responsibilities include: The provision of a fast, free and fair dispute resolution service for small businesses and residential consumers who have a complaint about their telephone or internet service. Being an independent body that complies with the Commonwealth’s Benchmarks for Industry-Based Customer Dispute Resolution Services.

The Australian’s also anticipate future changes in their regulatory regime in the areas of data protection and privacy, data interception and metadata retention and access for law enforcement and NBN services.

To ensure a level playing field in the industry, aspects of the NBP also took advantage of the good work already laid out by OFCOM, the UK regulator, especially drawing the committee’s attention to the LACUNA PERIOD, which allows OFCOM to introduce certain directives (& controls) whilst it determines what exactly is the best way forward for the industry in terms of fair competition in the UK Broadband market?

OFCOM’s work emphasizes a proposed voluntary commitment designed to meet the following criteria:
a) Transparency of charge setting structure;
b) Charge certainty for all stakeholders;
c) The desire to maintain price stability; and
d) Ensuring that the arrangements cover a sufficient period of time to allow for any timetable slippage.

The main outcomes and learnings is that most of the tenets of applicability already exists in the Nigerian Communications Act of 2003, however, may we be so bold to suggest that the time is right for a Competition Czar or Competition and Market Authority (CAMA) c.f. UK is now required to address the anomalies that prevails in the industry. This is one lesson that we all need to take seriously to ensure that our ambitious 2018 targets are met and are sustainable thereafter.


The recent launch of 4G technologies by new/late entrants and the eco-system created is now threatened by several factors:
a. Competition issues (NCA 2003 – Competition Practices Regulations, 2007)

Without a review of the data services provisioning market structure, there is a serious risk of market failure with the resultant ripple effect. Current evidence suggests that with inflation at 17%, input costs at a per unit per Mb level, that retail data prices available on the market are unsustainable even with economies of scale, hence a serious distortion exists that needs immediate regulatory intervention

b. Multiple taxation

In Nigeria today, the telecommunications sector is faced with the challenge of multiple taxation. This is not helping the industry to grow as the sector is being taxed by all tiers of government and the direct resultant effect of this is any Profit After Tax (PAT) being eroded which does not encourage the direct investment needed in the country.

c. Multiple FOREX windows creates uncertainty

The cost of capital involved in setting up a full fledge telecommunication outfit is very high as the interest rates in Nigeria are typically double digits and FDI relies on a guaranteed ROI. The current FOREX window mechanism structure needs to be unified with a smaller spread to encourage investors to fund capital intensive CAPEX programmes

d. Infrastructure sharing

There is a need for more of this to happen at both the passive and active infrastructure layer both on a fair basis policy. Already non-infrastructure players without wet capacity or national backbone fiber are competing in the same market as those that own the infrastructure (and collect rent from the non-infrastructure players) – this doesn’t encourage full network coverage obligations into un-served or under-served communities within States and/or Local Government Areas

Others are; very low incidence of 3G coverage across all parts of Nigeria; multiple regulation on the same infrastructure; long delays in the issuance of permits for new infrastructure; prohibitive charges to secure Right of Way; Under-utilized Right of Way by way of limited access; high incidence of vandalization of ICT infrastructure and severe power challenges for communication infrastructure.

The NBP 2013 has the following ambition in mind: Good Health, Education, Agricultural Service, Economic Growth and Cross-Industry Linkages and Improving Efficiency with a target of 30% broadband penetration by 2018.

According to a study carried out by NCC, Nigeria Broadband Penetration in 2014 was 6%, 2015 was 10% and in 2016 was less than 16% if we are to go by the trend we can safely conclude that the target set for 2018 may not be met.

The impact of Broadband in Nigeria:

1. To maximize the broadband utilization in Nigeria, National Information Technology Development Agency (NITDA) passed an executive order that all MDA’s under federal government to migrate all their respective services online. NITDA should also make it compulsory for all government establishments to host their websites within Nigeria.

2. One of the sectors that Broadband has impacted is the banking sector as the sector can now boast of 23% bank account penetration through 107% telephone and 55% internet penetration. We are confident that other sectors like agriculture, insurance, health, food and beverages, etc can be turned around if all these industries adopt digitalization, the same way the banking sector got transformed through the infusion of ICT in their service delivery process.

3. Broadband will create employment in various sectors, the one important part of this is the employment of our Youth and the support of Local Content within the ICT industry. NCC’s active support of ONC going forward is sought as a platform for the contribution of our burgeoning youth.

As we know, broadband is an enabler of economic growth. In the 21st century, it is impossible to imagine our lives without the web. It has proven to be tremendously useful for all facets of life.

Thank you all for listening.
Olusola Teniola
President, ATCON