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Wednesday, June 23, 2010

A decade of telephony liberalization in Nigeria


As Nigerians continue to celebrate enhanced access to communication made possible by opening up of the industry. REMMY NWEKE x-rays a decade of realistic liberalization of telephony in the country.


Historically, the liberalization of telecommunications in the Nigeria may have started in 1992 with about 300,000 telephones, mainly fixed lines, with a few expensive cellular mobiles available and practically displayed as part of affluence by very little number of wealthy citizens in the country.

Defined as an electronic device, a mobile phone or ‘mobile’ which is also called cellphone and handphone; is used for mobile telecommunications via mobile phone calls, text messaging or data transmission over a cellular network of specialized base stations known as cell sites.

Experts at a free online encyclopedia, Wikipedia, highlighted that mobile phones differ from cordless telephones, which only offer telephone service within limited range through a single base station attached to a fixed land line. They cited an instance that ‘low-end’ mobile phones are often referred to as feature phones, while ‘high-end’ otherwise called ‘smartphones’ are mobile phones that come with more advanced computing ability, including support for Internet access, electronic mail (email), gaming, Bluetooth, infrared, camera, multimedia messaging service (MMS), Media Players (MPs), radio and Global Positioning System (GPS).

Notably, the first hand held phone was traced to a demonstration by Martin Cooper of Motorola in 1973, which weighed two kilos and 17 years later, in 1990, an estimated 12.4 million people worldwide had cellular subscriptions and also 19 years afterward, precisely in 2009, the number of mobile cellular subscriptions have reached approximated 4.6 billion globally, which is, about 300 times the 1990 figure, thus it became a phenomenal economic revolution, mostly in a developing country like Nigeria.

On the hand, fixed telephony or landline and in some instances referred to as ‘main line’ or fixed line,’ is a telephone line that is inflexible, therefore, attached permanently to a phone box through a cable from a major source routing into homes and offices.

Though reputed to have a solid medium, either through metal wire or optical fibre, as against a mobile cellular line, where transmission is via radio waves; landlines usually have a lower price for calling time, and the user hardware costs less than mobile phones, but they are less convenient in terms of accessibility.

A land line is also used to increase the security of communications, as it cannot be intercepted by a receiver without physical access to the line. So, a fixed phone line is the opposite of a mobile phone line, which could be hard-wired or wireless in modern age.

Although fixed wireless devices get their electrical power supply from the main utility stations, like Power Holding Company of Nigeria (PHCN), in contrast, mobile wireless or portable wireless tend to be battery-powered. Main difference could be located in the ability of the fixed locations; because the efficiency and bandwidth are compromised if comparing fixed systems against the mobile aspect. In more advanced nation’s mobiles act as emergency backups for fixed lines in case of a power blackout or natural disaster.

The Central Intelligence Agency (CIA) report in 2003 approximated that 1.263 billion main telephone lines exist globally, with China having 350 million, and the United States coming second with 268 million. Equally, in 2008 it was discovered that there were 1,270,000,000 fixed line subscribers worldwide, against estimated 4.6 billion mobiles as at December 2009, that is, 67.0 per cent growth.

However, in Nigeria it took the then Federal Minister of Communications, Chief Olawale Ige, an engineer, to sell the idea of harmonizing the existence and operations of telecommunications companies via a presentation to the Supreme Military Council (SMC) leaders at that time, headed by General Ibrahim Badamosi Babangada (IBB); on the essence of establishing a Commission to take charge of telecommunications, whose approval paved the way for what is known today as the Nigerian Communications Commission (NCC).

This consent by the Babangada-led SMC encouraged the Minister of Communications to engage the consultancy of another reputed engineer, Mr. Vincent Maduka, resulting in the enactment of Decree 75 of November 1992. Maduka was to explore the modalities within which the proposed Commission was to be established and the processes. This also gave birth to the founding of NCC as part of the Nigeria’s Federal Ministry of Communications (MoC) with Engineer Cletus Ogbonna Iromantu as the pioneer Executive Vice Chairman (EVC), who worked assiduously during the tutelage without a board, practically.

And at the expiration of Iromantu’s administration, Dr. Emmanuel Nnama was appointed into the office of EVC with the mandate of seeing to practical liberalization of the telecommunications industry in Nigeria. Although his leadership reportedly embarked on the process in what some experts described as ‘part-liberalisation,’ which gave rise to the persistent clamour by industry associations, for instance, the Association of Telecommunications Companies of Nigeria (ATCON) presided over at that time by Mr. Ernest Chukwuka-Anene Ndukwe.

Dr. Nnama’s leadership was short-lived, when Ndukwe, himself, was asked in the first quarter of 2000 to come and essentially implement the ‘holistic liberalization’ as being canvassed by his group hitherto, following the disbanding of the Ministerial Committee that organized the first Global System for Mobile communications (GSM) licensing regime under his predecessor.

By this time, the subscription of telephone lines, mainly fixed were a little in excess of 400,000, while mobile was 20,000 lines. These were nothing to write home about for a nation of over 100 million population and by 2001, despite debates on the kind of technology to be deployed by the operators under the GSM platform eventually, the repeat of the Digital Mobile licensing rounds took yet another centre stage, in collaboration with the Federal Government’s agency in-charge of privatization, the Bureau of Public Enterprise (BPE).

So, following the conclusion of the bidding process under Ndukwe’s watchful administration beside the World Bank’s interest in developing this sector, the exercise, was this time tagged ‘most successful auction’ due to the transparency involved. This saw to the emergence of the likes of MTN Nigeria Communications Limited, Econet Nigeria Limited and the third operator being the mobile arm of the state-owned Nigerian Telecommunications Limited (NITEL) – Mobile Telecommunications Limited (MTel), thereby, charging the telecom landscape in the country.

By August 2003, another round of license was awarded to Globacom Limited as the Second National Operator (SNO), coming after NITEL which is the first national carrier. These licenses made the sector more competitive and most Nigerians who were staved of communication through modern technologies during NITEL’s monopoly era, welcomed this development with both arms, with people acquiring mobile phones and even for relatives and friends, so as to stay in touch.

March 2006 saw the regulator, NCC, advancing arrangements to grant the Unified Access Service Licenses, of which eight companies emerged successful in the exercise after paying the prescribed fee among other conditions.

Outlining the criteria for the unified license regime at the peak of the exercise, Ndukwe told ITRealms Online that existing licensees must meet the criteria, with an active and operating network infrastructure, have a customer base of at least 10,000 connected subscribers or justifiable evidence of financial capability for substantial network rollout in response to the call for expression of interest.

Applicants, he said, must be up to date with payment of all fees and charges due to the Commission such as Annual Operating Levy (AOL), spectrum and numbering fees, and must have submitted the annual audited accounts, up to date on payment of company tax and equipment type approval, while current in settlement of interconnection obligations.

For new applicants, the immediate past NCC chief executive officer, had said, would be subjected to the usual licensing application requirement. Explaining that the service area would be as in the original licenses issued by the Commission to the applicant, stressing that a nationwide mobile or Fixed Wireless Access (FWA) license would be converted in a nationwide Unified License and a regional FWA or PNL license would be converted into a Unified License that covers the same region.

He noted that the scope of license covered fixed telephony whether wired or wireless, digital mobile, international gateway, national long distance, regional long distance services respectively, even as the Commission proposed that National Mobility would cost N260m, while Regional Mobility was based on the tier structure, running between N9m and N33m for the licensing fees.

Then, in January 2007, Mubadala Development Company acquired a renewable 15-year Unified Access License (UAL) via the Emerging Markets Telecommunications Services (EMTS) as the fifth GSM operator trading under Etisalat Nigeria for the sum of $400million, about N516 million with 40 per cent stake sold to Etisalat.

According to the current president, ATCON, Mr. Titi Omo-Ettu, a telecom engineer, the 10-year tenure of Ndukwe at NCC as the EVC, has been severally described as the ‘Telecommunication Revolution era’ in Nigeria, because, apart from setting up a well accepted standard internationally, he was able to build an institution, which is unusual in this part of the world.

Still, investigations by ITRealms Online revealed that one thing that was missing in the most part of Ndukwe’s 10-year in office, was the database of development within the sector, which actually came to the fore at the end of 2005, when teledensity was calculated based on population estimate of 126 million as at December of that year.

While from December 2006, the teledensity evaluation was based on a population of 140 million, whereas from December 2007, teledensity was calculated on active subscribers due to avalanche growth in mobile phone access. This practically rendered NITEL’s over 400,000 fixed lines invalid, mainly due to the poor quality of service and customer relations previously, which existed prior to the advent of GSM in the country.

Nevertheless, as at April 2010, Nigeria has grown teledensity by 56.32 per cent with a total of 146,600,937 subscribers spread across all networks. The Fixed wired cum wireless platform amounted to 9,327,586; mobile based on Code Division Multiple Access (CMDA) accounted for 13,148,043, while mobile growth on GSM recorded 124,125,308, according to NCC’s datasheet, maintaining that mobile subscription has clocked over 78 million active subscribers.

In granting licenses since the liberalization of the industry began over a decade ago, NCC has classified this into Class and Individual licenses respectively.

As indicated by NCC’s sources, under the Class licenses exist sales and installation of terminal equipment including Mobile Cellular Phones and High Frequency (HF), Very high frequency (VHF) and Ultra high frequency (UHF) radio, to name a few. This is in addition to licensing of those who operate in the repairs and maintenance of telecom facilities, cabling, Tele-centre/Cyber CafĂ©, and public payphone.

On the other hand, Individual licenses comprised of what NCC tagged as ‘Basic Licenses’ namely Community Telephony, Internet Services, Prepaid Card Calling Services, Public Payphone Services, Sales and Installation, Voice Mail, even as the ‘Major licenses’ include Unified Access Service License, Digital Mobile License (DML) otherwise called the GSM, Electronic Directory Information Services, Fixed Wireless Access (FWA), Global Mobile Personal Communications by Satellite (GMPCS), Internet Exchange, International Gateway, Interconnect Exchange, Metropolitan (Fibre) Cable Network, National Carrier, National Long Distance Communications (NLDO), Public Mobile Communications Trunk Radio Services, and Public Mobile Communications Vehicle Tracking Services.

Under the Private Network Links (PNL) equally referred to as fixed, there are Very Small Aperture Terminals (VSAT) for hubs and international as well as domestic services, International Data Access, Fixed Telephony, Local Exchange Operators, International Submarine Cable Infrastructure and Landing Station Services, Value Added Network (Special Numbering) Services, Collocation Services, Central Equipment Identity Registry Services, Non-Commercial Closed User Radio Networks for non-telecoms companies, and Commercial Basic Radio Communications Network Services.

Above all, the Nigerian Communications Commission has approximated 35 licenses on offer and this figure is not static as the telecommunications market expands into a complete converged Information and Communications Technologies (ICT) sector, with Nigerians watching in anticipation the unification of about three various regulatory agencies of the government; involving communications, broadcasting and software management, which has been overdue since 2008 when the Ministries of Information and Communications were merged as one.

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