Telecoms’ tariffs may crash as 60 firms seek broadband licences

Tier two operators, ISPs in keen competition

The move to enthrone a broadband-driven economy in the country has got a boost with the revelation at the weekend that about 60 firms are currently bidding for five Infrastructure Companies (InFraCo) licences in the telecommunications sector.

Just like the generating and distributing companies in the energy sector, the InFraCos are companies expected to deepen broadband services and ensure the availability of ubiquitous Internet services across the country at a cheaper rate. They would become wholesale providers of broadband capacities where smaller companies can plug in and distribute bandwidth to hinterland, especially to the Small and Medium Scale Enterprises (SMEs).

Extensive Internet access is expected to bolster economic growth in the country by creating opportunities for SMEs and entrepreneurs to develop their businesses. While boosting the country’s digital economic drive, it will also aid job creation, among other social benefits. Already, the World Bank has found out that an increase of 10 per cent in broadband penetration would increase the Gross Domestic Product (GDP) per capita growth by 0.9 to1.5 per cent, especially in emerging economies such as Nigeria.

Nigerian Communications Commission (NCC) has licensed two operators, MainOne Cables for Lagos and IHS for North Central region in 2015. The other five licences, which the commission is currently working on, will go to North East; North West; South East; South West and South South regions.

The Guardian learnt that the figure actually rose from 12 to 60 within the last seven weeks. An industry source, who is very privy to the processes, confirmed to The Guardian that the bidders were mostly the Tier II operators and Internet Service Providers (ISPs) in the country.

Tier II operators in Nigeria include Spectranet, Swift, Smile Communications, nTel, Vodacom Business Nigeria, ipNX, Cyberspace, among others.

When contacted, an official of a major telecoms operator (Tier I) in the country, neither confirmed nor denied the company’s interest in the process, but said, “as a leading operator in Nigeria, we are always ready to support government’s plans targeted at making life easy for the citizens, which of course include the enthronement of broadband services. But it is also necessary to say that government must create an enabling environment that would usher in fresh investment into the telecoms sector.”

The Executive Vice Chairman of NCC, Prof. Umar Danbatta, fielding questions from newsmen on the sidelines of an award programme organised by Tell Magazine in Lagos on Saturday evening, where he won ‘The CEO of The Year’ recognition, said the commission would complete the entire InFraCo process shortly.

Danbatta explained that Under NCC’s ‘Open Access Model for Next Generation Optic Fibre Broadband Network’, Licensed InFraCos are geographically focused to provide wholesale Layer 2 transmission services on a non-discriminatory, open access and price regulated basis.

The Guardian learnt that the InfraCos may also provide Layer 1 (dark fibre) services on a commercial basis. They will equally focus on the deployment of metropolitan fibre and provide transmission services, available at access points, Fibre to the Node or Neighborhood (FTTN)), to access seekers.

Danbatta said: “We are about to conclude the process. About 60 firms submitted bids for licences of the remaining zones. This is a massive number and as I am talking to you, we are about to conclude the selection process and very soon, I think by July, the commission should come out with information about the successful bidders and those to be offered the InFraCo licences consistent with the conditions of the regulatory framework of the Open Access Model that is driving the deployment of broadband infrastructure in the country.”

Speaking on MainOne and IHS, firms, which already have got the licences for Lagos and North Central zones, but are yet to roll out services, the EVC said: “InFraCo licence has been offered to two firms already, MainOne and Hi-Connect, a subsidiary of IHS for Lagos and North Central Zones. We have been monitoring the progress so far made. For Lagos, we are quite happy about how far the firm has gone with laying of fibre. But for the North Central zone, the commission is not happy. Action is being taken to ensure a remedial measure is put in place in order to speed up process of deployment in that region. We shall come out to announce new development around the process soon.”

The Chief Executive Officer (CEO) of Spectranet, David Venn, said broadband would have greater impact on the lives of Nigerians, hence, the need to ensure it got to every part of the country, including the hinterland.

Also, the CEO of MainOne, Funke Opeke, said though the administration of the former Executive Vice Chairman of the NCC under leadership of Dr. Eugene Juwah, had in January 2015 announced that MainOne and IHS won licences for Lagos and North Central, “but the new administration under Danbatta, when he came on board, reviewed the whole process and did a due diligence audit of what had been done. In July 2016, MainOne was formally awarded the Lagos InfraCo licence. We have also paid for the licence.”

To the President, Association of Telecommunications Companies of Nigeria (ATCON), Olushola Teniola, InFraCos are fundamental to the open access principle that NCC seeks to implement the neutral fair price access to metro fibre networks that are currently not available at an affordable price to non-infrastructure-based operators.