GSM revolution: The good, bad and ugly

By ADEYEMI ADEPETUN   |   20 January 2015   |   11:00 pm

3310THE world has become a global village with communication being an indispensable tool in the entire globalization process. The roles of telecommunications and Information Technology (IT) have become highly essential in this process. 

     In Nigeria, development in this vital sector, though, not fully rosy, has been very phenomenal and the usage of GSM has become very prominent with noticeable effects on several economic aspects. It has been 14 years that Nigeria joined the race. ADEYEMI ADEPETUN writes on the safari so far.

IT is an established fact that the economic development of a nation can be accelerated by improvements in the country’s Information and Communications Technology (ICT) infrastructure. This is because ICTs, if well harnessed, provide a proper platform for development across all sectors of the economy. ICTs not only contribute to the development of commercial activities, education, health and governance, but are also key enablers of broad‐based social and economic development and of sustainable human development in a more general sense.

  Two reports, by the World Bank (Information and Communication for Development Report, 2006) and the World Economic Forum (Global Information Technology Report, 2005‐2006), underline the fact that economic development depends on overall progress in a country’s ICTs sector, and that, without such progress, both the economy and private enterprises suffer. 

   Indeed, ICT networks are now making it possible for developing countries to participate in the world economy in ways that simply were not possible in the past. This reality is reflected in the rapid growth telecommunications has been experiencing around the world: In 1999, there were 1.4 billion connected lines worldwide (490m mobile, 905m fixed); today, there are more than five billion lines. Thus in the past nine years, over 3.6 billion lines have been added to the 1.4 billion lines connected in all the years before. 

    In fact, to quote an ITU publication, “most of the planet’s 6.7 billion inhabitants are within reach of telephone service… There are now more telephone subscribers worldwide than there are households.” All these statistics go to demonstrate the importance the world attaches to the development of telecommunications infrastructure.

When the GSM journey started in Nigeria

January 19 this year marks exactly 14 years of the historic conclusion of the Digital Mobile Licence auction, which signposted telecoms deregulation in Nigeria, ushering in the Global System for Mobile Communications (GSM) operators, whose entry has changed the face of telecoms landscape in Africa and made Nigeria competitive.

   The auction ran from January 17 to 19, 2001 with Radio Spectrum International (RSI), Charles Rivers Associates, Chief Afe Babalola and Paul Usoro as consultants to the Nigerian Communications Commission (NCC). The auction’s success set a very important precedent by conducting the world’s first ascending clock spectrum auction, which convinced the global community of transparent government processes by informing the public of the details of the auction exercise. 

  The new telecoms era has been supported with the Nigerian Communication Act, 2003, which provides favorable regulatory regime for investors and all the players, even as the country has remained and will continue to be an investment haven in years to come, according to a Pyramid Research study.

    Analysis of the developments in the sector in the last 14 years is a pointer to the positive impacts the sector has been having on all sectors of the economy, notwithstanding existing challenges, which the industry still contends with, especially poor quality of service, which has continued to impact negatively on consumer confidence

   The sector has recorded tremendous growth with multiplier effects being felt in all other sectors of the economy, ranging from banking, education, e-commerce/retailing, agriculture, medicine, media, oil and gas, among others.

    Industry observers said for the sector to have recorded a growth from 450, 000 connected lines in 2001 to over 135 million active subscribers as at the end of 2014, the industry has, indeed, fared very well.

    Not only this, backed by the NCA 2003, which legal experts described as one of the best laws in any sectors in the country, the deregulation has resulted in geometric growth in the local and Foreign Direct Investment (FDI) inflow.

Impact on investments and infrastructure roll out 

    According to the Executive Vice Chairman of NCC, Dr, Eugene Juwah, “Over $32 billion investment has been recorded in the sector as at June 2014 from $50 million in year 2001. The investment stood at $18 billion in 2010 and $25 billion in 2012.”

   This, he said, represents giant strides, even as the chief regulator promised that the Commission would continue to regulate the industry in a way to continuously make it more attractive to global investment community.

    With the investment, telecoms companies have been able to successfully deploy 68,124 kilometre of fibre optic cabling as at the end of December, 2013 while in 2014 alone, additional 38, 000 kilometre of fibre optic cables were laid.

   Meanwhile, in the last 14 years, telecoms companies in Nigeria have also increased their base transceiver stations (BTS) expansion efforts from few thousands to over 27, 000, making it possible for more people to have access to telephone services thus covering many hitherto unserved and underserved communities across the country.

   Beyond carrying voice signals, the industry operators are also making their BTS either 2G-enabled or 3G-enabled to be able to carry adequate data services, with the country relying on the 11 terabyte of internet capacity brought into the country by the likes of Main One, Glo1, West African Cable Systems (WACS), among others.

   According to data from the Ministry of Communication Technology, between 2013 and December, 2014, 2G-enabled sites have increased from 22, 578 to 28,289 while 3G-enabled sites have increased from less than 10,000 to 15,048 during the same period.

    However, a backbone infrastructure project, started by the NCC, through the Universal Service Provision Fund (USPF), has also continued to bridge the gap between the served and underserved or unserved areas in the country, especially areas not considered commercially viable by the telecommunications operators.

   The NCC project is a subsidy-based project designed to facilitate the connection of rural and semi-urban areas to the national transmission backbone infrastructure with the intention to facilitate the build-out of backbone transmission infrastructure.

   The project is to be implemented in all the 774 local government areas in Nigeria, using targeted subsidies.

    Through the project, Minister of Communication Technology, Dr. Omobola Johnson, said about 1, 200 kilometres of fibre optic cabling has also been run so far.

   According to the minister, over 170 base stations, in total, had been deployed only through the USPF to un-served and underserved areas by the end of 2014, with each of the base stations serving a cluster of communities.

  Consequently, telecoms sector has grown from obscurity to limelight, emerging as a major contributor to the country’s economy with its current contribution of 10 per cent to the national Gross Domestic Product (GDP).

    Perhaps, one area that has been of significant measure of how the industry has fared in the last 168 months of its revolution has been in the area of service tariff, cost of owning communication devices and cost of acquiring Subscriber Identity Module (SIM) card or telephone line.

    According to findings, from N50 per minute of phone call in 2001, the cost has crashed by 78 per cent today as telecoms subscribers now make call for as low as N10 or N9 per minute across networks.

   The NCC adopted in 2013 progressive reduction interconnect termination rates whereby New Entrants and small operators had termination rates for voice services pegged at N4.90 in April 2013, N4.40 in April 2014 and by April this year it will drop to N3.90 for all networks.

    Also, SIM cards are almost given pro bono by telecoms networks today, whereas, 14 years ago, Nigerians were paying between N25, 000 and N20, 000 to acquire a SIM card with only net-worth individuals being able to own telephone lines.

    The NCC introduced the Mobile Number Portability (MNP) whereby subscribers are at liberty to navigate across networks without losing their SIM number. 

   Reminiscing over early days of GSM revolution, a telecoms subscriber and Lagos-based businesswoman, Mrs. Shade Bakare, said, “In 2002, I remember I bought my first SIM card for N20, 000 and another N30, 000 used to buy a Nokia feature phone. That is to tell you that I spent a month salary to own a functional phone then. But today, you cannot find the kind of Nokia I bought then in the market.  “Side by side with the growth of the sector is the creation of multiple jobs for skilled and unskilled manpower.

Impact on other sectors    

Interestingly, telecoms sector is having great impacts on other sectors of the economy, especially the financial services, retail, among others.

    According to the Chief Operating Officer of Computer Warehouse Group Plc (CWG), James Agada, “Apart from multiple job creation and the multiplier effect on other sectors of the economy, telecoms sector is driving the growth of e-commerce with the likes of Jumia.com, Konga.com, Dealday.com, Kaymu.com, wakanow.com as major players.”

    In the same vein, Chief Executive Officer and Executive Secretary, E-Payment Providers Association of Nigeria (E-PPAN), Mrs. Regha Onajite, noted that the increasing volumes of e-banking transactions, being driven by the cashless policy of the Central Bank of Nigeria (CBN), “are all resting on the shoulder of the telecoms industry.”

    In a similar submission, Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, said the telecoms sector has performed well as an enabler of most of the ICT-driven activities that have brought about efficiency in the country.

    He said: “Today, we bank with ease, we do online cash transfers, we use Automated Teller Machines (ATM), mobile money operators, e-wallet in agriculture, telemedicine, among others, but we forget that all of these activities, in addition to their traditional duty of providing voice and internet service, run on the networks of telecoms companies. Yet, cashless transactions are on the rise every day.

Short comings/challenges

Though, Adebayo agreed in some of his interviews with journalists that there are still shot comings as regards quality of service, which has been a major challenge in the sector, he disclosed that the operators are working to ensure subscribers get quality for their money. 

  “So, rather than criticize the sector for its little shortcomings, we should commend the players for helping the country to manage all these loads. I can imagine what will happen if telecoms companies decide not to carry any traffic (voice and data) in a day the way we witness it in the oil sector, where companies suddenly stop petrol distribution, thereby creating scarcity,” Adebayo stated.

    Another telecoms expert, Kehinde Aluko lamented what he described as ‘shortchange’ by the operators, stressing that he could not have imagined that by now, operators are still struggling to get voice services right, “what will now happen when the data revolution begins?”, he queried.

    Aluko also complained that subscribers are still been cheated, “and no form of sanction for that from the regulator. I believe that NCC has monitoring team, these are what these quys should be doing, not for them to just sit in Abuja and collect salaries…tax payers money for that matter.” 

    According to him, other ugly side of the GSM platform is that the SIM cards are till being used to perpetrate crimes, including kidnapping, despite SIM registration. 

    Making this observation, ATCON President, Lanre Ajayi, listed some of the extant drawbacks in the sector. “A number of challenges are affecting the spread of infrastructure and they include multiple taxation by different levels of government; environmental hostilities like bringing down BTS, especially in parts of the North by terror groups and some government agencies; permits challenge as well as vandalism and theft of telecoms equipment from sites.

    While noting that the last 14 years of telecoms revolution has been rewarding, Ajayi said more still needed to be done by the regulator and players in order to continue the auspicious march towards fully transforming Nigeria into a truly knowledge economy and a major player on the global ICT development map.




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