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Bello: Why Nigeria may not achieve 100% telecoms coverage

Engr. Stephen Bello is a former Acting Executive Vice Chairman of the Nigerian Communications Commission (NCC). In this interview with SAMSON AKINTARO, he speaks on the successes of the telecoms revolution in Nigeria and the impending 5G technology deployment

 

In August this year, Nigeria celebrated 20 years of GSM. As someone who was on the regulatory side at the time of the liberalization, how would you say the country has fared 20 years after?

 

What are the limitations and challenges you think the country still need to overcome in telecommunications?

 

I think when it comes to the telecom sector, Nigeria has achieved quite a lot. And then when you talk of somebody’s achievement, you look at where he or she started from and where he or she is today. Before the GSM operators were licensed in 2001, NITEL was the only telecom company in Nigeria.

 

This was because Nigeria operated an economic system, which we can not say whether it is socialist or capitalistic, a mixture of so many things. As a result of that, NITEL alone was the one providing telecoms service until 2001. When, Obasanjo, through the advice of then Minister of Communications, announced the liberalisation of the telecoms sector, we were all happy.

 

And then NCC was created. About the same time National Broadcasting Commission was also created to allow for private television stations and so on. Before then, many of the military ministers of communications were opposed to privatisation of the telecom system, they claim for security reasons, but we all know the benefits now.

 

One of the ministers was quoted as saying that the telephone is not where everybody but today, he has been proved wrong. And you know, we are getting to a stage now that we can say, telephone has become a fundamental human rights of Nigerians.

 

Well, the first 10 years of privatisation was rather slow, because most of the ministers were still on our military restrictions as to what could be done, the investment was mostly low.

 

So, we had CDMA operators. By the time of the privatisation and even up to year 2000, the total number of lines in Nigeria was still less than half a million. So, half a million telephone lines for a population of 150 million is as if we had no telephone.

 

And then the private people came in, the first private o p e r a – tors such as Intercellular. When they started, because of the economy of scale that was small, each line was selling for  N250,000. How many Nigerians could afford that?

 

So, because of that, the penetration was slow, the growth was slow, because it was costly. Very few businessmen could afford that, mostly in Lagos. So, the common man couldn’t afford it. But the milestone came in 2000, when eventually Obasanjo came to power, when he liberalised telecoms and gave NCC full freedom. He appointed a very technical board for NCC.

 

And so we now had a technical board, a board that was not there for politics. And as a result of that the spectrum auction took place in 2001 and that brought in competent international companies, that were able to attract investments.

 

The major thing that made investment to be attracted was because the number of operators who are limited to five licences were issued five licences. As a result of that, you know, each one of them was able to have a critical mass of customers that will ensure economies of scale.

 

Secondly, because there were only a few of them, GSM operators, they had enough spectrum for each. It was possible to have given licence to 20 GSM operators, but the network would be very inefficient, because the spectrum they will have would be so small. But with few operators, everybody has enough spectrum to roll out. And that was why MTN, Econet and others were able to roll out network very fast.

 

You said earlier that the GSM  operators were able to roll out faster than the CDMA operators then, but as of now, there are still areas yet to be covered by telecommunications service in Nigeria. Why is this so?

 

It is true that some areas are not yet covered.

 

There are two types of coverage in a telecom network, you have coverage of area and coverage of population. Those are two different types of coverage. Now, the operators, remember that these investors are not charity organisations and they are not productive service.

 

These are business people who have to recover the investment and they had to give account to their investors and shareholders. So, because of that, initially, they went for population areas where you know the people who c o u l d af ford t h e t e l e – com system, you k n o w , will be serviced and then they will buy, they will make calls a n d  they will recover their money back. That is why they’re concentrated in Lagos, concentrated in Onitsha.

 

They’re concentrated in places like porticoed condo, Abuja, something like that, where you have people who could afford the call, you know the charges and to buy the remember that you know, the cost of the card. At that time, SIM card was about 25,000 IRA.

 

So, the roll out in places where people could afford to pay N25,000 for a SIM card and then they will move costs at the rate at which you will be charged. So they needed to recover their money. So that’s why they concentrated on the urban areas I saw laid out. It will surprise you that Onitsha generates more traffic than many big cities in Nigeria because of the businessmen who keep calling China.

 

They are monitoring their containers coming from Hong Kong and other places like that. So, they generate a lot of traffic. And that’s what the telecom companies want. They want where they recover their money.

 

So that is why they concentrated there. Many of the rural areas are not economically viable and nobody wants to go there. And that is where government created what is called Universal Service Provision Fund. Part of the money that is paid to NCC by the GSM operators is set aside to subsidise cell site in rural areas which are not economically viable. So for them, a telephone supply is the social service.

 

It is not a commercial service and government had to subsidise it. So, that is why today it is too difficult, you know, to cover every geographical area of Nigeria. We have been able to cover up to 90 per cent of the population. But to cover the land area is still very difficult.

 

No country in the world has covered 100 per cent of the land area. Not even Israel, which is a relatively small country and which has a very high standard of living and    technologically advanced.

 

Having successfully upgraded the networks from 1G to 2G, 3G and then 4G, Nigerian is currently planning to deploy 5G networks. This has become the buzzword in the industry and a lot of conspiracy theories have been flying about. What makes 5G special?

 

I think the issue of 5G or the controversy surrounding it started with the trade war between Donald Trump and China. So, whether right or wrong, true or false, whether deliberate or by chance, whichever way, Americans have come to conclude that 5G switches installed by Huawei can be used for spying. That cannot be proved beyond reasonable doubt.

 

So, it’s just speculation, nobody can prove that. Now, talking about what is special about 5G, 5G will enable services, which hitherto were not possible. That is the main advantage of 5G and that is what is called machine to machine communication.

 

With 5G, a telephone can talk to the fridge. Technically, you can use your telephone to talk to a switch, you don’t even need to tell the telephone or put on the telephone, you can programme your telephone, we say that telephone at nine o’clock, switch off my generator, if you don’t need to intervene.

 

So, you can put 5G in your car in such a way that when your car gets to the gate, your car will speak to the gate, the gate will open itself, you don’t need to come out from the unit. So, the major advantage of 5G is that it is going to make possible services which are not possible with 4G, 3G and the older generation.

 

Now, coming to the economy of 5G, you know, there are already concerns that 5G may not be affordable to many Nigerians due to high cost of spectrums and the cost of rollout. What do you think the government or the regulator can do to make this service affordable when eventually deployed?

 

 

Well, the same happened when CDMA started operation, and they were charging N250,000 for a line. People who could afford it bought it at that time. Later on, because of government intervention and the rollout of 3G, the economy of scale brought the price down.

 

So, the same cycle will also happen with 5G. Initially when you roll out 5G, it will be mostly for the rich people in areas like Banana Island or Maitama in Abuja.

 

These are the people who will be able to afford 5G when it starts. But by the time you look at the economy of scale, you’ll find that within six months to one year after, the price will come down when the economy of scale comes in, and more people will be able to afford it.

 

But I can tell you that that 80 per cent of Nigerians do not require the extra services provided by 5G as of today. So, we don’t need to bother about that for now.

 

The people who need it will key into it once it is launched.

 

You are planning to launch two books about regulations and compliance across sectors, what informed your decision?

 

Yes, I have published two books. One is the Principles and Practice of services and utilities regulation, and then the second one is practical guide to regulatory compliance. The first one is designed to be as a handbook and the reference material for regulators of services and utilities. Utilities are things like telecom, power, water, etc.

And then services are things like banking, insurance and so on and so forth, goods or services, including medical service. So, with regards regulation, we are talking about the administrative and the technical skills, which can be used to reconcile stakeholders interest in any industry, that is what regulation is about. What a regulator is trying to do is to balance the interests of all the stakeholders in a particular industry.

 

For example, the power industry, you have many stakeholders, the consumer, the transmission companies, the generating companies, distribution companies, the gas suppliers, then government.

 

If want to supply service to the rural area, you have equipment manufacturers like Siemens, and something like that, you have a power consultant, so many interests, including that of a regulator of and make you must sure that everybody’s interest is protected.

 

And where the interest clash, the regulator, will reconcile the interest. The service provider wants to make maximum profits, sure, the buyer wants to buy things cheap. So, your regulator is there to make sure that the supplier, the customer has value for money.

 

And also the supplier, who is supplying power, most recover his investments. So, he wants to charge as high as possible for you, so, you’re aligned to charge in order to recover his costs and make moderate profit, but you don’t allow profit sharing at the expense of your consumer.

 

So, you know, the regulator is there to make sure that all this is a balanced, and that is basically what regulation is. It also talks about how does technology affect regulation? How does the regulator adopt technology?

 

Do you regulate technology? Or do you adapt technology or do you use technology to enhance yservice and so on. So, all those things are well put there, so that the regulatory bodies will have a reference material to know how they should have lead into regulation is very important, because it helps to develop an industry. The reason why we are having good telecom industry today is because we have a good regulatory body.

 

And the reason why we are having problem with the petroleum sector sector today is because there is no independent regulator in the petroleum sector. The day you have an independent regulator in the petroleum sector, in fact, it will just go on autopilot.

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