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Lagos fibre project to gulp N82b amid RoW charges concerns

By Adeyemi Adepetun, Assistant Editor (ComTech)
08 September 2021   |   4:15 am
The Lagos State Unified Duct Infrastructure Project (LASG-UDIP) is expected to gulp about $200 million or N82 billion (N410/$) on completion of the project, The Guardian has gathered.

• Uncompleted fibre pipes deface Lagos roads
• LASG pegs RoW charges at N796/Linear meter, operators seek further slash
• MTN, Airtel key into duct project, lease 2,100km of fibre

The Lagos State Unified Duct Infrastructure Project (LASG-UDIP) is expected to gulp about $200 million or N82 billion (N410/$) on completion of the project, The Guardian has gathered.

The project, which will see to the deployment of 6,000km fibre optic cables across the state, is expected to gulp about $100 million in each of the two phases.

Though details of the contract are not available in the public domain, it was learnt that the concessionaire is bearing the entire cost, while the state government provides enabling environment for the project.

Already, across the state, there have been notable construction of ducts and subsequent deployment of cables along major roads and streets in the citywide Internet connection.

The Guardian gathered that the project, which is part of Governor Babajide Sanwo-Olu’s smart-city initiative, initially targeted May 2022 for completion of the first phase that will see the laying of 3,000km fibre optic cables across the state, but the project is now expected to be completed on or before February 2022.

The project has defaced some roads due to repeated digging, with the fibre pipes littering many locations statewide. From Surulere to Ketu, Oshodi to Ikorodu, Yaba to Obalende, the pipes are everywhere.

Interestingly, some mobile network operators (MNOs) have started showing interest in the project with some 2,100km of fibre from the project already leased to them.

However, the state’s right of way (RoW) fees of N796/linear meter still remains a source of concern to telecommunications operators going by other levies and taxes they pay. Telcos claim they pay as much as 39 different taxes, which have in several ways impacted their operations.

A senior executive of one of the telecommunication firms, who doesn’t want his name in print, said a further downward review of the LASG RoW would do a lot to help service providers in the fibre optic segment of the industry.

He said the charge is not convenient for telecoms operators because it is over 500 per cent higher than the normal fees approved by the Federal Government, which is N145 per linear meter.

According to him, it means that under normal circumstance, Lagos residents should pay more for calls and data services because it cost operators more to deploy services in the state.

“I expect the Lagos State Government to be more considerate when putting a policy together in respect of telecoms infrastructure that falls under the Lagos State Infrastructure Maintenance and Regulatory Agency (LASIMRA). The international best practice is that RoW is paid once and for all. The idea of recurring payment is completely strange and is going to over-burden operators in the state.”

Executive Secretary, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbolahan Awonuga, said the body met with LASIMRA some months back and “we had a review with them. We pushed for N750 but they insisted on N850. If they now peg it at N800 per linear meter, it is okay.”

On May 14, 2020, the Lagos State House of Assembly approved the unification of fibre infrastructure for telecoms companies in the state. This meant the deployment of a single cable duct for all telecoms companies and other utility providers operating in the city.

This is also a ‘dig once’ policy that the state is implementing to prevent the fragmented and constant digging of state roads by different telecoms operators and Internet Service Providers (ISPs).

Findings showed that the state government partnered with two firms, Messrs Western Telecommunications and Engineering Services Metro Limited, to handle the project as the concessionaires.

It was gathered that some contents of the agreement showed that the project partnership will last for an initial term of 25 years, which might later be extended, and the companies are to pay the state 10 per cent of the revenue generated from leasing the fibre ducts to telecoms operators.

Besides, the companies are meant to provide the Lagos State government with fibre duct capacity to points of interest (POI) within the state.

At the end of the project, some 6,000km fibre optics cables are expected to be laid. This is expected to unify the city’s cable network, and with it, the government is expected to effectively overhaul the current telecommunications ecosystem in the state.

Confirming the progress made on the project thus far, Lagos State Commissioner for Science and Technology, Hakeem Fahm, told The Guardian that the state is ahead of schedule, and the project will be completed by February 2022.

Fahm said MTN has leased over 1,600km and connected over 334 base station sites to the unified fibre project, adding that another 400 sites are under ongoing connection to Lagos Unified Duct Infrastructure and are rapidly swapping out 3G radios for 4G radios to deepen broadband penetration and provide more efficient broadband services all over Lagos.

He said Airtel has also leased close to 500km in the first instance and negotiating to lease another 500km, while connecting over 300 of their base station sites to the Lagos Unified Duct Infrastructure. He said the telecommunications firm is also swapping out 3G Radios for 4G Radios, adding that the other MNOs and ISPs are concluding negotiations with the connection of over 1,500km to the Unified Duct Infrastructure.

The Commissioner, who confirmed that the Phase 1 will see the deployment of 3,000km of Lagos Unified Fibre Duct infrastructure costing over $100 million, said the state is also concluding connectivity of all data centres in Lagos to the Unified Duct infrastructure, “and international clients such as Google, Facebook, WIOCC, Liquid Telecoms, Dolphin Telecoms are speedily finalising their negotiations to connect their bandwidth capacity requirement through the infrastructure.”

Fahm, who said funding is fully from the concessionaire, noted that public facilities such as hospitals, schools, markets, and libraries will also be connected to the Unified Duct Infrastructure.

“Already, we have completed over 2,000km and have a full offtake agreement and commitment on what has been completed. The last 1,000km will commence in about 30 days and will be completed by February 2022,” he added.

The Commissioner explained that the concessionaire will run the project on Open Access Model with uniform pricing model for all the local and international telecoms companies willing to lease the infrastructure when completed.

While states like Ekiti, Imo, Katsina, Plateau, Kwara, Kaduna and Anambra charge between zero and N145/linear meter as RoW charges for fibre deployment, which is according to Federal Government’s 2013 recommendation and agreement with the Nigerian Governors’ Forum, to fast-track broadband infrastructure expansion across the country, Lagos was charging as much as N4,000 per linear meter as of last year, but the fee dropped to N1,500 at the beginning of the year, as confirmed by LASIMRA.

Fahm is optimistic that the RoW levy will reduce the CAPEX requirement of MNOs/ISPs, which will help them deploy more infrastructure to expand broadband penetration.

With concerns about the state of the roads at the completion of excavations, Fahm claim that the Lagos State Monitoring and Evolution Team is conducting regular patrolling on the project route, adding that any concerns identified will be immediately reported to Lagos State Technical and Project Evaluation Committee, which will be addressed immediately.

While it was difficult to get an official of Engineering Services Metro Limited to comment on the project, a source very close to Western Telecommunications, the second concessionaire, who spoke on the condition of anonymity, told The Guardian, the concessionaires are Special Purpose Vehicles for the project.

The source said the project is also getting support from key telecommunications industry players, both locally and internationally, and some, outsourced to an independent civil engineering asset management company. He added that the fibre duct connectivity allows the neutrality of players and avoids conflict of interest.

But with concerns that the likes of Glo, MTN, and MainOne have been building Internet infrastructure in Nigeria, especially fibre cables, and whether this won’t amount to double expenses, Fahm and the Western Telecommunications sources went same direction. They claimed that new infrastructure has not stopped the private deployment of service providers, as in the long run, they will have to key into the Lagos project, which some have started.

MEANWHILE, a techpoint.africa report noted that projects of this nature seen in countries like South Africa, Rwanda, Mexico, Russia, and Kenya have also attempted to build a single wholesale network, but with little success. It noted that though the wholesale networks of Rwanda and Mexico have gone live, expectations aren’t being met.

According to the report, in Kenya, the project never saw the light of day due to a complicated negotiation process with various stakeholders. It added that projects in Russia and South Africa were delayed and eventually abandoned.

Nonetheless, the GSMA has maintained that building a single wholesale network comes with lot of disadvantages, which could be better avoided by alternative means. It stressed that a unified fibre network brings the promise of better coverage, lower prices, higher competition, and efficiency.

However, the GSMA highlighted that fibre is still built in places that already have existing coverage. Rather than competition, a monopoly sets in since a single operator or the government determines price. The monopoly means telecoms infrastructure upgrades will be handled by one company — the wholesaler.

The GSMA contended that a better way is for governments, regulators, and mobile operators to collaborate on long-term solutions.