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Progress in the Midst of Storm:
A
review of the telecommunications industry in 2007
by
‘Gbenga Sesan and Titi Omo-Ettu
Is a reason once used to explain high
telecommunication tariff also useable in the explanation
of poor quality of service?
Mobile
operators in Nigeria did not bargain for what they got
when, midyear, quality of telephone service degenerated
to an unbearable level and condemnation of mobile
services became widespread. Federal legislators stepped
in and the music changed as they dragged the regulator
in to share in the bashing for the mess. The latter also
didn’t bargain for what it got, or so it seemed. But for
the fact that Nigerians and their politicians are not
exactly good bedfellows, both the regulator and mobile
operators would have been thoroughly bruised.
Dysfunctional public power supply (the
same condition under which telecom operators and
everyone else in the economy operate); arbitrary taxes
(‘multiple taxation’ in operators’ parlance but hardly a
unique problem of the telecom sector); theft of
infrastructure (‘armed’ and ‘unarmed robbery’ in
consumers’ parlance, a mantra of the Nigerian system);
dysfunctional NITEL (the very reason why the operators
were let loose on the consumers in the first place); and
much more. These are the reasons mobile operators gave
for why consumers have to pay more than in other climes
where the markets are smaller and the business, even
less lucrative.
It was when the same reasons were being
advanced for why quality had to dip so low and text
messaging -- a cheaper and more convenient communication
solution -- started to play annoying games that
Nigerians woke up to the reality that they were in fact
in deep ‘shit’.
In the days of NITEL, the problem was
about getting a phone. When the better days came, the
problem changed to using a phone. Among other myriad of
problems of its monopoly days, a notable malady of NITEL
was its emphasis on engineering to the detriment of
product marketing and customer care. The new comers
changed the music, and rightfully so. Technology is a
tool for solving peoples’ problems, albeit as good
business. It is not marvelous just for its own sake and
that point is now succinctly made. The new comers,
however, have now over-emphasized the marketing aspect
to the detriment of the engineering. Something must give
– and when it actually did, chaos reigned. Lessons must
have been learnt by all concerned: the regulator,
operators and the hype-loving consumers.
Looking back at the expired year, it is
important to recognize the good (network expansion,
improving internet access, commencement of market
induced consolidation, etc); the bad (poor services,
lack of human capital); and the ugly (political
interference in industry regulation and the attempt by
state governments to take a huge bite in the cake which
the industry is baking, among others).
Only three of the five operators
forecast for buy-over in the expired year actually made
it into buyers’ hands while another two, which were not
known to be ailing, got bigger players to buy heavily or
totally into them. One was particularly a good buy.
Reading from the performance table, and going by feelers
within the industry, this year may witness the
acquisition of five ailing operators by existing and
incoming big players while those who are migrating to
higher technology platforms may also expand into
underserved locations, thus boosting the spread
campaign.
NCC has published
a figure of 37.9 million which it calls ‘active’ mobile
lines as at October 2007, with another 1,4 million being
the figure for fixed and wireless lines. Discounting
attrition, multiple-ownership and allowing a little
inflation of figures on the part of every provider,
there may well be some 30 million active mobile users.
That may account for a 21% penetration, which means the
market remains good in terms of unmet but suppressed
demand. Emerging technologies abound, begging, to
provide smart solutions and major providers are expected
to eye the Nigerian market, a queer one that is both
difficult and lucrative. A few weeks ago, France Telecom
got Kenya’s nod to take control of its national carrier
while India’s Reliance Communications Ltd picked up a
license in Uganda, just as our own Globacom also won a
license in Republic of Benin – where it has already made
initial test calls on its ready-for-service network.
Globalstar Inc. announced recently that it is backing a
Nigerian company, Globaltouch West Africa Ltd, to
commence
Global
Mobile Personal Communications by Satellite (GMPCS)
services in Nigeria by the second half of 2008.
Reluctant licensee, Mudabala-Etisalat’s
emergence is important but really and largely to the
extent of the big bucks it placed on the table. It will
be a pleasant surprise to see a radical influence
similar to how Globacom forced every player to go ‘per
second’ and to make SIM card price roll down the hill
with high velocity when it emerged in 2003.
For 2008, two players to watch are
Starcomms and Visafone.
Starcomms has shown indication of
optimum marketing of a technology standard just as it
carefully watches over its engineering flank while
Visafone, a new entrant which immediately bought over an
ailing operator, has the challenge of spread as mandate.
The promoter of Visafone comes necessarily into analysis
since he has a record of aggressive approach to
marketing banking products with a strong base in
Information Technology. Considering the complimentary
strength of his earlier and new efforts, he may spring
some surprises and make good strategic influence in the
fixed wireless services arena. Will he take Visafone to
the capital market the way he did Zenith? Only he and
time can answer.
Inadequate human capital may haunt the
industry more than any other thing, even though it may
not be a topic of common discourse. It has really never
been. Lack of improvement in available indigenous
capacity, especially in technical areas, may stall rapid
bailout from the poor quality of service syndrome that
taunted the industry in the expired year and ever since.
Deliberate effort may just be required to put the
industry in shape in that regard. The Nigerian
Communications Commission, NCC, did well by establishing
the Digital Bridge Institute a few years ago and it must
have been evaluating what influence the Institute made
on the overall available capacity. It has been mentioned
that the NCC was granted the right to acquire NITEL’s
former Training Centres in Lagos and Kano. Hopefully, it
will consider licensing smart trainers to meet the
challenge of putting the facilities to good application
rather than doing it by itself.
The telecommunications industry has
grossed $10 billion, and still counting, into the
Nigerian economy since deregulation. Figures for the
direct inward financing for 2007 are yet to be put
together but things are certainly looking up.
It is a pity that a few state
governments have been unable to appreciate the direct
benefits of the nationwide spread of telecommunications
to their citizens, hence their desire to take a direct
bite in the cake which the industry is baking in their
backyard. Some resorted to drama in the pursuit of the
objective. One has acted ultra vires while at the
same time over-dramatizing the benefits which
co-location of infrastructure could yield to the
industry. Their pronouncements, desperate and combative,
sound like co-location is war (which it is not) rather
than an industry management tool (which it is). When the
chips are down, there is really nothing sacrosanct in
co-location of infrastructure going by the interplay of
emerging technologies.
The National Assembly added an ironic
twist to a brewing confusion by commencing a regime of
issuing directives to operators as if there were no laws
governing the industry. Good a thing they have been
largely ignored. If committees of the National Assembly
begin to issue industry intervention directives whenever
they get annoyed with one industry player or the other,
we may expect a rise in the number of litigations -- a
potential drawback to rapid growth in the
telecommunication industry. Nigeria has enjoyed an
unusual speed in its telecom growth partly because the
industry has been managed in such a way that due process
guides regulatory intervention and the negative effects
of rash litigations have been curbed so far. At a time
when legislators would do well to study the industry and
fine-tune existing laws to make sanctions issued to
erring operators more prompt and effective, they went
about chasing the shadows of an accomplished Commission.
A few legislators, in a show of
annoyance, told us that the Nigerian Communications
Commission was incompetent. Of course that is untrue and
the whole wide world, knows it. Things may be
slower than we all want in some aspects of regulatory
intervention but who does not know that due process is
slow but that it remains the best option when the chips
are down. There are lessons to learn in all of these as
part of our growth, including lessons on the
relationship between legislative oversight functions and
industry regulation.
Are research establishments also
industry/business managers? Or should they be?
The question begged for an answer when
managers of Nigerian Communications Satellite Company
Ltd, NIGCOMSAT (a subsidiary of National Space Research
Development Agency, NARSDA), claimed they got President
Obasanjo’s nod for their participation in
telecommunications service delivery, apparently in
mindless disregard of the need for a license to do so.
The issues eventually brought to fore a few other
monstrous creations of the past government, all in the
name of providing rural communications -- a path once
traveled with resounding failure and wasted resources.
The Rural Telephony Project, a loan initiative of a
consortium of Chinese investors, had gulped N5 billion
before it could no longer fly while those who run
NIGCOMSAT asked the National Assembly to appropriate
$150 million for their operations. The rest is
history-yet-to-unfold and maybe 2008 will complete the
story for the records. Would NITEL reincarnate in
‘NIGCOMSAT’ in 2008? The world must be watching.
NITEL finally took a bow in 2007 when
privatization managers gave it out, the year earlier, to
a government ‘conglomerate’ known as Transnational
Corporation, Transcorp. That was the final step needed
to make it sleep for a long time if not forever.
Unification of ICT as one industry took
a step forward, two backwards as federal authorities
took decisions that showed either that there must have
been competing power blocs within the bureaucracies
which concern the subject matter or that the whims of
the ultimate decider was yet unclear.
On the international scene, Apple it was
that used AT&T as official carrier to drive its iPhone
into the US market, and much later Europe, thereby
making itself a company to watch in 2008 and beyond. Did
someone say that the Google’s Android Challenge is a
sure sneak-in on the Apple/AT&T plan? Well, whichever
way the various competitions go, such innovations and
the recent electronic numbering (ENUM) protocol -- which
is the result of the Internet Engineering Task Force’s
work, and supported by the ITU -- will bring the
customization of our phone lines along our personal
identities closer home. We cannot wait to see it happen.
And for Google? When some folks put
billions of dollars on the table for frequency under
auction, it makes it a reality that they are on the 2008
watch list.
No doubt, 2007 drove home the point
around the role of ICTs in effecting socio-economic
change but that change has to be embraced and led by all
stakeholders -- regulators, industry players and
consumers. It was a turbulent but certainly remarkable
year with good lessons to learn.
The regulator would by now have
commenced a regime of taking measurements in all its
ramifications and at all times while operators should
have learnt how not to make product campaign a
replacement for the product itself; just as the
consumers, sooner or later, will live to love hype less.
Lagos, December 31, 2007
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