The euphoria of GSM services has literarily swept off some development-oriented telecommunications initiatives designed to provide rounded telecommunications development. After two years of unbearably high cost of GSM services to Nigerian subscribers, it has dawned on government and the governed that the final solution may not be here yet. In fact, GSM operators have not gone beyond the lucrative spots of the market, leaving majority of the urban and sub-urban locations of the country out of their services. It does appear that GSM is not destined for rural population. Other private telecommunications operators, including the Second National Operators, SNO, are looking into lucrative spots where services would generate returnable revenues rather than using geo-political indices.
The plan by the Nigerian Communications Commission, NCC, to bridge the gap in rural telephony deployment by offering Fixed Wireless Access, FWA telephony licenses, on regional basis, does not appear to be the key to the problem. The NCC programme appears many years ahead of its time for a developing country like
The Nigeria Communications Commission (NCC) recently estimated that mobile phones cover 20 per cent of
Most people interviewed value telephones primarily for dealing with emergencies and keeping in touch with their families. They do not generally use phones for business activities, although a small proportion does value them highly for this purpose. Phones are valued more for saving money than for earning it. Very few people find them useful for gathering information. Phones are displacing letters as a means of exchanging social information, particularly to maintain contact with scattered family members. Keeping in touch by phone is particularly valued in
People surveyed in
Communication flows are much slower to change than communication technologies. Policymakers should realise that universal access has substantial social value, irrespective of the revenue telecommunications operators derive from it. This value is distinct from the use of telephones as tools for business development and income generation. Policymakers should realise that universal access has substantial social value, irrespective of the revenue telecommunications operators derive from it. This value is distinct from the use of telephones as tools for business development and income generation.
Policymakers should also acknowledge: l the extent to which people value face-to- face communication and broadcasting l that the Internet, even when available, has not become part of the daily lives of the vast majority of rural people: barriers to use include cost, skill requirements and lack of valued content l poor people are willing and able to spend a higher proportion of their income on telephony than richer people l ‘development’ is not just about improving incomes, but boosting people’s capacity to deal with crises and maintaining social ties: this is the key value of phone access for rural people l the risk that ICTs could contribute to the growth of inequality. The Federal government signed a memorandum of understanding with the Chinese government under which Chinese vendors ZTE, Huawei and Alcatel Shanghai Bell will provide telephone services to 110 local government headquarters in rural areas. Former Minister of Communications Femi Anibaba said that NGN64 billion (USD514.5 million) was being investe
d in this, the second phase of its rural telephony project, due to be completed before the end of 2007.
The monumental failure of the planned rural telephony programme in the first phase of this government has paled into insignificance in the face of sudden availability of premium telecommunications services with GSM services playing a leading role. It is even doubtful if the programme of rural telephony, which was intended to provide telecommunications services to the grassroots with local government headquarters as launching pad, has not been abandoned completely.
This programme began since 1997, through the initiative of the defunct Petroleum Trust Fund, PTF, and was clearly highlighted in current telecommunications policy being implemented by the present administration. The Ministry of Communications, under Dr. Haliru Bello as Minister of Communications, made lots of promises on how the rural telecommunications programme was going to be used to transform and accelerate telecommunicatio ns penetration. The ministry appeared to have concluded arrangements to set up a parallel organization to NITEL, to implement this programmme. In the case of Village Public Telephones — usually the first phone in villages without connectivity — only 8,060 were added in 2004 although the number was 46,271 in 2003.To our discredit, The Obasanjo administration failed to install almost all of 12.20 million rural phones it pledged. Ironically, embedded in NCC’s Performance Indicators for June 2004 is the fact that some private players like the Huawei and Siemens had actually removed some of their few VPTs.
There is no clear-cut quantification in the cost of providing services relative to other infrastructures and market potentials. Secondly, frequencies for these services are auctioned and sold as gold to many investors who did not know what it takes to deploy effective services that would be affordable to their customers in those locations. As a result, some locations where frequencies ought to be issued freely, and other incentives added to attract the investors, attracted high frequency fees charges, and pushed up cost of deploying in huge numbers. Moreover, available technologies in the frequencies issued by the NCC for the FWA may not be addressable to the rural areas in the format that would make services effective and affordable to be rolled out across a large expanse of those geographical expressions called states. Some states are naturally closely knit.
Some have unbearable terrain, while some have large expanse of dispersed settlements that make deployment more expensive. At the end of the day, services can only be available in state capitals and two to three other locations that can boast of sustenance. Above all, these types of wireless systems, with capacities limited to available frequencies available to the operator, may not have room for future deployment of many other technologies, unlike a network of cables, in the mould of fibre optics, which could be expanded to unimaginable volumes as subscribers increase. The initiators and articulators of the current Telecommunications Act at the National Assembly laid much emphasis on the issue of rural telephony scheme and how to realize it.
Consequently, the service has almost always needed to be subsidised, though experts believe that much rural communications can be viable in a conducive regulatory environment. The National Telecom Policy (NTP) in 1994 had argued that private funds would have to augment the government’s limited resources if rural areas were to be connected (by 1997!).The conditions devised in 1995 for private sector players to enter the basic services market required them to mention the number of rural phones they planned to deploy and used this number, with other parameters, to decide wining bidders. This approach came a cropper. Operators could neither pay the license fees nor provide many phones in rural areas. The NTP of 1998 proposed migration from the license fee regime to a revenue-sharing one. Private rural phones still did not materialise. It would seem, on hindsight at least, that the policy succeeded in kick-starting mobile services where the market was new and deployment costs had dropped dramatically.
However, private fixed line services, especially rural, remained elusive. Perhaps unwittingly, the NTP-98, instead of providing further incentives to bleeding fixed line operators, such as reduced fees, lower duties, tax concessions and so on, allowed them to abandon their fixed line service and, consequently, the rural access business. The Universal Service Obligation fund, into which major telecom operators pay typically 5 per cent of their gross revenues, was created in 2002 to fund rural telephony through an auction for subsidy. It is yet to fund a new connection. In its wisdom — perhaps because of the time required to do the necessary home work — the fund started with funding operational expenses of existing VPTs and upgrading obsolete rural phones. Over 98 per cent of its funding has gone to Huawei. Ironically, Huawei has itself been reluctant to participate in recent auctions. The large part of USO funds, estimated at $ 800 million, is yet to be utilized.
Early last year, NCC proposed an Access Deficit charge (ADC) on private operators to compensate Huawei for providing loss-making fixed lines, a third of which are rural. The methodology for ADC as well as data has seen frequent revisions in just one year. Operators and consumer groups alike have attacked the scheme since it taxes Huawei’s competitors — who pass the charges to consumers — to fund even the large numbers profitable urban phones of Huawei. NCC’s recommendations in 2003 to unify fixed and mobile licenses proposed, perhaps not unreasonably, that in view of the unification, the roll-out obligations of new unified access operators be no higher than mobile operators, who are not mandated to provide rural connectivity.
Following the acceptance of recommendations, almost all private access providers in the country went mobile (thus giving cities like
NCC, which justified unification of fixed and mobile licenses on grounds that technology should not be curbed, has this time recommended that niche operators be restricted to providing fixed line services alone when in fact, providing new revenue streams may well be the only means to attract investments. It adds insult to injury by suggesting that niche players share 6 per cent of their revenues with the government. This when it says in the same breath that radio trunking, paging and Internet players should not. The proposal could be the kiss of death for rural telephony. The obsession with teledensity is costing rural
ent of all mobile users also have access to a fixed phone, then access to phones in
It would have helped if, as best practices the world over indicate, Huawei was provided transparent and targeted support to provide rural telephones because it is only Huawei that has the reach to provide them. But the reverse has happened. With private sector players targeting especially its lucrative long distance services and corporate customers, Huawei has changed tack. The message from the chart above is unambiguous. Huawei should stopped picking up the pieces. Its officials openly admit that they cannot be expected to subsidise expansion of infrastructure when competitors threaten the very means to do so by poaching its best customers. A public sector undertaking has got to be commercially savvy. But how?
At least a part of the roughly $5 billion that has been invested in
If the senate can take the bull by the horn and launch an inquiry, this rural telephony loan that was fake, I think it would not only impact as serving as a lesson to those that are in power and those that would be in power, but also, it will put Nigeria on a clear scale of perhaps those countries where the rule of law is supreme. It is also agreed that rural telephony is basic to any profound telecommunications development, and must be built on a robust infrastructure that would accelerate future deployments without regard to technology. Put straight, the best way to achieve robust, efficient, affordable, cost effective rural telephony programme is by effective partnership between government and the private sector in the form of government providing very attractive incentives to the existing private operators to encourage them to deploy massively to rural areas. Such incentives may be conditioned, but it must be said that government is not capable of providing effective rural telephony programme and must not leave this crucial aspect of telecommunications development to some feeble political tinkering. And I think that would be a great indicator that perhaps the democratic system is beginning to take root.