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Submarine cable system underused after $1b investment

By Adeyemi Adepetun
01 November 2017   |   4:30 am
After several investments worth over $1 billion (N306 billion), the nation’s submarine cable system is still hampered by gross underutilisation.

• Woes blamed on poor implementation of broadband plan
• No profit for operators until 2030, says ATCON

After several investments worth over $1 billion (N306 billion), the nation’s submarine cable system is still hampered by gross underutilisation.

The cost of NITEL’s South Atlantic 3 (SAT3) fibre optic cable, which now belongs to ntel, for instance is put at over $600 million. MTN’s West African Cable System (WACS) costs $650 million. ACE cable, by Dolphin Telecoms, is worth about $700 million. While MainOne gulped about $300 million, the cost of Globacom’s Glo1 cable is estimated at $800 million.

Going by the capacity of the system with bandwidth potential in excess of 19.2 terabytes and over 340 gigabytes, a revolution, as witnessed in the mobile phone segment, should have been replicated in e-governance, e-health, e-banking, e-education, telemedicine and e-security, especially at a time the country is hoping to deepen broadband penetration by 30 per cent.

This, however, has not been the case, raising concern among operators in the sub-sector who claim they have not broken even yet, not to talk of making profit after years of investment.

Consequently, while there is a glut in bandwidth capacities at the shores, network expansion to hinterlands and expected falling prices in subscriptions that would fuel explosive growth in mobile broadband and other Internet related services, are still seriously constrained.

Already, over 200 communities housing about 40 million Nigerians still lack access to basic telephone services.

The World Bank, meanwhile, has found a direct correlation between rise in broadband penetration and increased economic growth, citing China, where a 10 per cent increase in broadband penetration boosted GDP growth by 2.5 per cent.

McKinsey & Company also noted that bringing broadband penetration levels in emerging markets to today’s Western European levels could potentially add $300 billion to $420 billion in GDP and generate 10 million to 14 million jobs.

Responding to The Guardian’s enquiries on the underutilisation, the President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, said there was a serious glut in the supply of bandwidth on the wet segment of the optic fibre ecosystem in the country.

Teniola, an engineer, noted: “Without data hosted locally, without local content being developed in PetaBytes, without more data centres and without prices being affordable, it is hard to see the case for a Return of Investment (ROI) until 2030 at best.”

The ATCON president admitted that the lack of a national backbone remained a challenge hindering ubiquitous broadband. However, the costs of running generators, running a parallel security network (personnel) and multiple demands of fees/payments from state and local governments over and above what is paid at the federal level deter many operators from venturing further afield. Hence what is evident is a concentration of investments in Lagos, Abuja and Port Harcourt by all operators in the country with reduced concentration in Kano, Kaduna, Katsina and the northeastern part of the country.

On what the Federal Government could do to assist the sub-sector, especially now that the country is looking for investors, the ATCON president said there was the need to solve the foreign exchange issue in respect of importation of telecoms equipment, remove Right of Way (RoW) barriers, harmonise the 26 taxes and levies, protect telecom infrastructure from vandalistion, adopt ICT in the way government is run and finally create an easy environment for businesses.

The Chief Executive Officer of MainOne Cables, Funke Opeke, who estimated investments in the country’s submarine cable system in excess of $1 billion, told The Guardian in Busan, South Korea at the recently held International Telecommunications Union (ITU) Telecom world, that only about 10 per cent of MainOne’s fibre optic cable system had been utilised.

A reliable Globacom official, who preferred anonymity, spoke in the same vein, saying utilisation had been low, despite several huge investments in the sub-sector.

A telecoms expert, Kehinde Aluko, blamed the low utilisation of the cables on the poor implementation of the Nigeria Broadband Plan (NBP) 2013 to 2018.

He said: “These are initiatives that would propel the consumption of bandwidth, which in the long run becomes highly beneficial to the economy. With Internet booming, people will become busy, doing stuff. All we would need to do then would be to ensure that these facilities are used judiciously and not for activities such as cybercrime.

“I still blame the government because the private sector has made the facility available. But when government is not forthcoming with ideas that can transform Nigeria into a knowledge economy, then there is trouble.”

The President of the Nigeria Internet Registration Agency (NiRA), Rev. Sunday Folayan, blamed poor Internet services being experienced by Nigerians on the lack of adequate Internet pipes that connect the shores to the cities and hinterlands.

Folayan, who led NiRA’s team to The Guardian headquarters, explained: “The way Internet delivery is done right now is that you have four to five submarine cable systems land at the coast in Lagos, but the pipes that take them from where they land, to where they are needed, is of doubtful and unknown size. It depends on what you negotiate with your Internet Service Providers. So, it is slow because most people don’t know. Some operators can claim to be giving you a big pipe, which is connected to the coast, but they may not. It may be connected to someone else’s pipe and that could be the challenge. Until you trace where the service is coming from, you may not get the very best.”

He said the lack of adequate infrastructure, especially the last mile that would take services from the coast to the cities and hinterlands, were issues government must look into.

Market observers have posited that broadband would lower the cost of real estate, as people would be able to work from anywhere, without necessarily meeting in urban areas and commuting.

The ITU also said that investments in broadband infrastructure and broadband-enabled applications and services facilitate long-term sustainable economic development, economic productivity and growth, and job creation, and generate significant returns.

According to it, investments in broadband are necessary if developing countries are to eradicate poverty and take part in the digital economy of the 21st century.