In this interview Managing Director/CEO of VDT Communications, ENGR. ABIODUN OMONIYI, discusses with CHIDIEBERE NWANKWO on the challenges and prospects of the telecommunications industry in Nigeria. He further throws more light on his company’s plans for the future after leading the quest to achieve Last Mile connectivity in Nigeria for the past 10 years, a fight he says has been successful, but requires more investment and expansion….Excerpts
About you and how you started
I am first, a Nigerian; An engineer by profession. I am also a family man, that is, a husband and a father. I am also an entrepreneur. More than 30 years ago, I graduated in Electrical Engineering from the University of Ilorin. While in school, I was highly fascinated by the advent of Computers, I did some internship in computers and communications. So, when I finished serving, I joined a computer engineering firm, and I worked there for two years, after which I set up a computer integration firm which I ran for 12 years. As that company was maturing it was broken into three different companies, one of which is VDT Communications, which I currently sit at the head now.
Tell us about VDT and what it does
VDT Communications is in the communications technology sector, building infrastructure and using it to provide services for people. We started off by trying to provide quality communication services to corporate organizations in Nigeria. This was about 18 years ago. And we have taken other mandates, and we have a lot of accolades that show that our services are appreciated. Now, we are also set up to reach individuals and homes. We started by focusing on enterprises, we are still doing that, that is what we have been doing for 15 years. But in the last three years, we have started taking a look and decided that we can actually extend the benefits and values being given to the Enterprises, to homes and individuals. That is the mission we are on now. So, we are hoping to influence people’s lifestyle.
Who are those you could call your partners?
We live in an ecosystem. Our suppliers are our partners. We actually go through a well-defined process in selecting our suppliers. We also partner with the MNOs who supply some of these services to us. I mentioned about adding value, so everything that we touch, we want to see how much value we can add to that process; That differentiates us from others. By taking services from these partners, adding value to it and is where we actually stand at. We have those, and we have some other smaller partners who actually supply some other services and products to us. The word, “Partners” from the way I have said it, means that we are a company by ourselves, we annex the values of the ecosystem through the symbiotic relationship of supply and purchases from these different groups, and we use that to create our services.
You also sit atop the affairs of BITFLUX, what is the relationship between the two companies?
About five years ago, in our quest to take our services to larger markets, so that we are not just known in the Enterprise market alone, we realized that to get across to all Nigerians, we needed spectrum. And there was no other way to acquire Spectrum than to go through the NCC bidding process, or to go acquire a company to realize that vision. So, that was how Bitflux came about. Bitflux was actually a child of necessity when the advert came up. We needed a vehicle to warehouse that wholesale license. So, Wholesale Wireless Access Licence was what Bitflux bought. And because we were going into that competition with the mindset of winning, in trying to position ourselves to win, we did not want to be disqualified by using any other name, we registered Bitflux newly and used it to apply for the license. So Bitflux was incubated right in this office to be able to take up that opportunity of winning the spectrum auction.
It is a sister company in the sense that it has taken its own life because the spectrum it acquired is quite unique in the market, it is for wholesale. And it is using it to achieve the vision that the owners set for it. It has a very big market, we needed to bring in other investors, other equity participants and that is what we did in realizing that particular vision. So, it is a sister company, but it is one and the same with VDT, but a separate company by itself. It has its own management, it has its own Board, different from that of VDT, and it has its own operations in order to maintain the dichotomy that the NCC wanted it to have if the license is given to an existing operator.
Bitflux got its license some years back and has not fully started operations. Are there challenges that inhibit the operations? And what are you doing to address them, if there are?
There are challenges. When we were setting out, we expected the process to have gone farther than this, especially seeing that we are investing and we believe so much in diversification. But what happened just thereafter with the Nigerian economy cannot be overlooked. There were so many challenges, which you know. We actually keyed into the National Broadband policy document that was issued by the last administration, which also gave a lot of support that made us a participant in that whole scheme. Thereafter, the economy tanked. VDT that is the main promoter of the venture, is a wholly-owned Nigerian company and operates solely in Nigeria. It does not have any foreign currency earning power anywhere. What that simply means is that to roll out became suddenly quite expensive. Not just double. There were a lot of other challenges that bordered on importation, no access to foreign exchange, and communication was actually delisted from accessing Forex. So, for a young company just starting out, you know that those are formidable challenges.
However, it’s not just about talking and weeping on challenges. We have been around as VDT for 18 years, and we have always tried to see what opportunities any challenge presents. And that is what we have taken. Yes, the growth is slower than envisaged because we went on a Bullish note, and we hit a brick wall of challenges along the line. But I am happy we are finding our way around it now. Soon you will see us doing a proper launch of Bitflux services in the first half of this year. We have been selling the services, the implementation of infrastructure. VDT has been selling the services through VDT Retail Services. It will get bigger very soon. We have engineers and implementers working to expand that network. Our vision is very much alive, and we are going to launch it out very soon.
In the same vein, we know what has happened to many smaller companies around, so it’s the same challenges.
What has the regulator done in the bid to curtail the challenges?
I must commend the regulators. They are trying within the ambit of their powers, there is so much that regulators can do. The challenges are actually national, about the economy. The regulator is a very small part of the economy. The regulator knew when we were facing these challenges and they were quite worried. We went to explain and asked for assistance, which they did their best because today communication equipment is back on the FX access list. So, that is some of the efforts the regulators have made. But beyond that, the challenges are actually bigger than the regulators. Even the regulator wanted to promote the InfraCos, yet the operators are not able to lay even a kilometer of fibre. The regulator was willing to put funding into that venture, yet the venture could not move an inch.
They are trying, but there are bigger problems – the problem of the economy, multiple taxations, non-alignment of some other stakeholders into the vision of the National Broadband Policy. We have been talking about it. The regulator has been talking about it, trade associations keep talking about it. You know that till tomorrow, there are still some state governments that go about locking base stations. It is just a continuous effort, because when there was a paucity of fund at the state levels, anything that they see making money, whether it is profitable or not, they will want to cling and clamp on it. These are some of the challenges that are beyond the control of the regulator. So, I wouldn’t say they are not doing anything, they are trying their best, but it is obviously not achieving the result that we desire.
Is ICT achieving its potentials in Nigeria?
I will say yes, in the sense that we get the leaders we have. They are us. You cannot run faster than the general intelligence of the country. But could we have done better? Yes. There are a few that would want to make a change, but we need more than those few to come on board to make that change. So far, I will say the industry is doing what it can do going by the circumstance it finds itself.
Broadband and the Last Mile; Are we doing enough to address it?
In the first 10 years of operations of VDT, its mission was actually to advance the cause of the Last Mile through the provision of wireless access. Wireless Access is also one very good technology that could be deployed to solve the challenges of the Last Mile. And that was actually where VDT started from. It was our mission, our war cry at that time, and we were quite successful at doing that.
So, when you talk about the Last Mile, there will always be challenges because the Last Mile is the one that actually touches the last man. The easiest way to actually touch that last man is through wireless. But wireless itself cannot stand alone, given the big bandwidth that is required. Eight years ago, the average bandwidth demand of an individual was probably 256Kbp/s, today when you give an individual 5Mbp/s, which is about x20, they still complain. Of course, there has been an advancement in the Wireless Technology space, but the bigger advantage in terms of broadness of bandwidth is going to come through the supply of fibre optics. So, when I mention the InfraCos and the regulator, were they visionless? No!.
We need to enforce the law declaring telecommunication infrastructure as Critical National Infrastructure. If it is critical, State and local governments should actually make sure that Right of Way is given, we are not saying that they need to be forced, but they need to also key into the benefits, to know that this is actually a national aspiration. So that everybody will be in alignment; There is a misalignment. I won’t say the blame is on federal, and I won’t say it’s just on the state, but also on the local governments. There needs to be an alignment where we will agree that it is what we all want. It is not the money that you collect today, but what the infrastructure will enable for you tomorrow. If everybody is not seeing that, then that Last Mile that we are talking about will not make much progress.
So, for the initial 10 years of our existence as VDT, all we were talking about was the Last Mile, and we were successful in that. But user demand was also growing. So, now there has to be a support infrastructure to make the wireless to boom. Wireless is still very relevant in the Last Mile provision. But there is an intermediate infrastructure that will bring the demand back, which is missing. Once that is successful, we will see the reach.
4G services, real or hyped in Nigeria?
I have not tested everybody who says I am delivering 4G and not deliver 4G. 4G is 4G. The only way through which 4G can be delivered is through LTE. There is no other 4G apart from the LTE 4G. The main wave of technology, forget about the G, is what we call the Long Term Evolution, reacting to the data-centric world where we are now. The revamped core of the telecoms infrastructure, in the past, when it was 1G and 2G, used to ride on the TDMs (Time Division Multiplex). But we all know that Internet Protocols (IPs) have taken over. It was the 3G that was the intermediary suite, sometimes they use IP, sometimes they use TDM. When someone says I am on LTE, that person is strictly on IP. So, the LTE, the Long Term Evolution is the evolving part of that communication system onto the IP World. So, you won’t see 3G operating on LTE.
Your 3G can deliver 512 and 1MBp/s to you. So the way the NCC actually measured it is that the 3G coverage and adoption is more than 60 million. The document sees broadband as that which can do up to 1MBp/s. but why we became doubtful is that the need has shifted, and people now want 5Mbp/s, 10Mbp/s. so if you ask if 3G can deliver 5MBp/s or 10MBp/s, definitely no. But in terms of achieving what is stated in that document, it has. But that document is not supposed to be stagnant. So, the NCC achieved the dictates of the document. So if you look at it and say it’s a type of 4G, so 4G has covered 60 million, obviously not. People have doubts because they are not seeing 5Mbp/s or 10Mbp/s working in their homes in that volume, and the technology that will be able to do that, given our penchant for wireless, is the 4G and not 3G. 4G is actually limited. The 4G that Bitflux delivered through VDT, we actually deliver 10Mbp/s to customers. The least we deliver on that infrastructure is 5Mbp/s.
When you notice a disappointing service with your service provider, it is either because of congestion on the particular operator’s infrastructure, it could also be because of the width of their channel. There is a standard called 3GPP, which actually allows someone that has 5MHz of a spectrum to actually operate on LTE (4G). So, you can take in multiples of 5MHz. If I am an operator, and everybody is shouting 4G, and I don’t want to be left out of the market, I will simply go and do a revamping of my spectrum, and take 5MHz out of it. And by the time 20 people are on that channel, it will be grinding to a halt. And it is still 4G. This is because nobody is telling them to declare their channel bandwidth, which is not the spectrum bandwidth. The Channel is the orifix through which all the traffic go through, so if that traffic is choked, then there will be slowness. But Bitflux uses 30MHz of spectrum, that is why services deployed on the Bitflux network is very fast. And with 30MHz, Bitflux actually deploys two carriers and of big spectrum channels.
Is the regulator doing good with the Universal Service Provision Fund (USPF)?
As much as we want to use the standard that exists in advanced economies to judge the performance of our regulator, we will be missing it because they are operating within the limitations of our environment. However, with the USFP, I actually believe that things would have been done better. This is because the fund should have been an enabler fund for underserved communities. But what I see is that the majority of the fund usage actually goes to schools to build computer labs for schools. Maybe that is why they are responding to it that way. But there could have been other means, like forcing services to rural areas. But I have had cause to talk to the people in USPF, and what you see is that not many people would want to go to the rural areas and deploy services. And that is how it is everywhere, and that is why such a fund exists.
When they don’t have people with the spectrum or with the know-how to deploy services, they are simply not interested in going there. Also, their conditions may not be favourable too. So, it is an issue of interest. They are not putting enough resources to extending that services to the rural areas. And there is an easier way out, award contracts for the supply of computers in rural schools. The judgment is for you and me, to see if that is the purpose or not.
FG Local Content drive, is it anti-competitive?
That is a brilliant policy, But it’s about the implementation. I have been reading about the National Information Technology Development Agency (NITDA) and what it has been doing, making sure that things that we can do in Nigeria are done domestically. It actually grows our economy. There is a lot of capital flight that goes out through software. Software is the reason round-tripping of money thrives.
With many of these policies, implementation had always been the bane. That is one way to keep our content local. If we make sure our data is kept local; that our software is given preference, then we are going to have bigger ICT companies. Because there is enough data, there is enough money that moves within the economy. And these people make products that are as good as any other. We cannot develop by throwing our gates open to every comer. If you do that, you are developing other economies, you are also doing capital siphoning. And you are going to impoverish your people, and there will be a lack of knowledge to grow bigger companies. That is a beautiful policy, but we have to make sure that all the agencies involved in policing that policy are serious enough, they have people that buy into it and enforce it. It is not even for MDAs alone, but let us even make sure that it is successful with MDAs, within the ambit of the federal government. If it is successful there, they can now come on to private companies. Then what we will see is that if ICT is contributing 10 percent to the economy, it will be contributing a lot more. Most times it is personal interest that impedes against the policy.
Where do you see VDT/Bitflux five years from now?
When you have stayed for so long, five years become so short. However, five years is still a decent time by which companies measure the success or failure of their strategies. And we have been doing that. Every five years, we take time out to re-envision what we want to be.
I see a company that is known among the general populace of Nigeria. We are proudly a Nigerian company. We still see a lot of opportunities in this market. Further, than what we have done in the enterprise market, I see us having the same effect in the general populace; so I see our gadgets and devices in peoples’ homes and powering the IP revolution in the next five years. I see us being present in homes and mobile gadgets.