BROADBAND: Operators’ Challenges Pose Threat To FG’s Agenda …Calls On NCC To Resuscitate Tier II Operations

Godfrey Efeurhobo
Godfrey Efeurhobo

Challenges being faced by telecommunication operators might pose a threat to Federal Government’s plans towards implementation of the Broadband Agenda.

This came to view at the visit of the Tier II operators to the Executive Vice Chairman (EVC) of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta in his office at Abuja recently.

The operators decried the difficulties they face in obtaining capital expenditure (CAPEX) for network capacity expansion to improve quality of service as one of the many challenges that might derail the good plans of the federal government towards accelerating broadband access in the country.

They asked the NCC to take immediate and decisive steps to avert the looming threat of strangulation, which its members currently face.

The Tier II operators, made up of notable broadband companies in Nigeria, was represented at the visit by the Managing Director of Smile Communications, Mr. Godfrey Efeurhobo; Managing Director of Spectranet, David Venn; Director Regulatory and External Affairs of nTel, Mr. Osondu Nwokoro and Chief Commercial Officer of Swift Networks, Mr. Chuma Okoye.

The operators further noted that the Network OPEX of Telecommunication Operations has sky rocketed in the last 15 months by over 85 percent with Revenues remaining relatively flat.  Most Operators, they observed, are currently struggling with meeting obligations to their suppliers, particularly Network Vendors, Tower Companies and servicing Loan obligations. This worrying trend, they noted, includes even some of the Tier I Operators.

According to them, a perfect storm is brewing and if not headed off will result in the collapse of key players in the industry.  This is because the domino effect of bankruptcy of any of the Tier I or Tier II operators on the entire ecosystem, particularly Banking, Employment, Corporate and SME businesses constitutes a major threat to the economic recovery and growth plan of the current administration. Such bankruptcy and consequent collapse will also substantially lessen competition with its attendant injurious impact on consumer choice and attainment of the Broadband objectives of the country.

The MDs stated that the NCC’s declaration of 2017 as the Year of the Telecoms Consumer can also be derailed by failure of telecom operators to deliver on the expected quality of service particularly on data throughput and experience due to the weak investment case to support additional CAPEX as a result of deteriorating market conditions.

Symptoms of the declining fortunes of operators, they stated, are already evident in the market as debts continue to grow and overall service quality continues a downward trend.   As it is, there is a grave threat to the Broadband agenda of the Government and expected dividend from growth in Broadband penetration envisaged in the Economic Recovery and Growth plan 2020. This threat, they warn, will materialize if the market is not sanitized and the Tier II Operators are not protected to encourage and justify the Capital Investment required to continue to invest and improve Broadband penetration in the country.

While applauding the various interventions of the NCC in ameliorating the difficulties that Operators face, the Tier II operators also bemoaned their deteriorating fortunes due to predatory pricing and cross subsidy of data using voice by Tier I operators who possess significant market power and said it is a challenge the NCC must intervene to stop.

They further expressed their gratitude to Danbatta for intervening with the CBN to reduce the burden of Forex liquidity. They also commended him for his role in leading the campaign to educate the populace that base stations do not cause cancer.  They however implored him to protect the Tier II Operators so that their operations will not collapse.

 

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