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Nigeria, Others Spend $400m on Local Traffic Annually—Rudman

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Mohammed Rudman, managing director, Internet Exchange Point of Nigeria is a multitalented IT expert who has contributed immensely to the development of the industry in Nigeria. He has worked with Galaxy Information Technology Telecommunications (GTT) now Galaxy Backbone. He also pioneered Jigawa state government rural telephony project, Personal Handy phone System (PHS) before he joined IXPN. 

Internet Exchange Point of Nigeria

Internet Exchange of Nigeria is actually a spot where more than two Internet Service Providers do interconnect. Here, what we do is interconnect our service providers so that they can exchange local Internet traffic locally. What I mean by local Internet traffic is all local files or contents that are hosted in Nigeria locally. All over the world, there are lots of ISPs. The history of Internet Exchange of Nigeria actually began when ex-president Obasanjo visited Tunisia during the World Summit on Information Society; the Internet governance forum recommended that for the next 1 billion people to get connected to the Internet, an exchange point must be built across all the developing countries so that local content can be developed. When he came back, he gave the mandate to the minister of communications and then the Nigerian Communications Commission (NCC) gave us the initial funding to start the Internet Exchange Point of Nigeria. Without an exchange point, it means that all our local traffic would wander before coming home. For example, in the case of Joint Admission and Matriculation Board, University Matriculation Examination candidates in Lagos browsing the board’s website to register, their traffic would go round the world only to come back to Lagos and that does not make sense. Another example is when you have two communities between the border of Cotonou and Lagos and both of them are just living 10km apart, if anyone there wants to make a phone call, it would assume the status of an international call. Why is it an international call? It is because that traffic is not restricted to the Nigerian space. It goes from Nigeria and most likely to British Telecoms; from there it goes to France Telecoms and then to Cotonou because there is no direct relationship between those service providers like GSM operators and that is why GSM international calls were very expensive but when those GSM operators understand the benefit of agreement among them, they would then have a Memorandum of Understanding between themselves and Cotonou. That implies that whenever you make calls from Nigeria to Cotonou, it goes directly there and turns out to be cheaper and that is why you can see that international call rates are dropping. In data terms, that is not what is happening as it still goes round the world before coming back. That is why most Nigerian contents are hoisted abroad because it does not make business sense for them to be hoisted here as they would still be routed round the world before coming back. But with the Exchange point now, it makes more business sense for you to hoist that content in Nigeria; it means that the traffic would not need to go round the world. That is about the Exchange Point and its impact on the country’s super highway.

ISPs and IXPN

We have about 16 Internet Service Providers connected to the exchange; some of them are PTOs like Starcomms, which is connected too. Almost all the bigger players in Lagos are connected and we are waiting now for one of the GSM operators to get connected and they have indicated interest strongly. On the total, we have about 16 that are exchanging traffic and most of them are among the biggest players in Lagos.

Interconnect Voice

We do not interconnect voice; there are other companies that are licenced to do that – interconnect-clearing houses which connect all GSM operators. What we basically do is data connection but as long as you are connecting via Internet Protocol, you can even exchange voice as long as it is VoIP. But that is not our focus; we are really into promoting local content development in Nigeria and ensuring that there are seamless e-transactions in banks. We want to promote all those things using data, which happens to be our area of competence.

Benefit to ISPs

Linkserve and Direct-on-PC are actually Satellite link providers and the truth of the matter is, for some of them, there might not be a direct benefit because they sell Vsat across the place, they sell from the U.S because there hubs are not located in Nigeria. That means they connect in the U.S and sell here. So, there are actually no direct benefits unless for those who sell wireless links – they have a Vsat here and then sell the bandwidth as an ISP using different technologies, to the customers. The reason why I told you it is not beneficial for the Nigerian ISPs is because we do not have a Vsat in Nigeria and if you want to browse a Nigerian site, that Vsat most likely is connected to a hub in the U.S.

400 million dollars are spent on local traffic in Africa alone every year. That is why some African countries have exchange points: South Africa, Egypt, Ghana; all have it. If you take a little part of that money and channel it into developing other areas of economy it is going to be beneficial as it is obtainable in western countries. We can achieve what they have achieved. Most of the ISPs in Nigeria only buy and sell while those abroad have value added services. For data, they provide web hosting, video conferencing, VoIP – these are value added services that go with the Internet but in Nigeria they buy and sell, that is all. People are now reaping benefits from companies like Google, Yahoo that offer free e-mails, which are hosted in the U.S and no matter what you do the traffic will go through there. That is why we are trying to promote local content development in Nigeria so that we can have good programmers and hosting facilities that would stimulate change for the better and the market would start drifting from mere service provision to content provision.

Today, the reason why Internet is expensive is because you have to get connected to the hubs in the U.S and that is tasking. But if they are located here, you do not have to pay anybody and that would eventually drive down the price. The Chinese have their own local content; in China they do not need to go to the U.S that much as they have their own exchange point. They are there and exchanging in tens of gigabytes per second. That is what we are trying to promote in Nigeria – we should understand the concepts of cooperation and competition. We need to cooperate as people so that we can move forward.

The Internet is no respecter of border integrity; if you do not control your traffic locally, it would have to go through other places before coming back to you. So, it is better for us to exchange local traffic than to allow international providers make money off us. That unfortunately, is what is happening today. You can see the proximity between UBA and Sterling Bank buildings, but traffic from Sterling Bank to UBA goes through multiple hubs as much as 16 equipment and that is not right. But I would like to think that things have started changing and that implies that when UBA and Sterling Bank are connected, the traffic between them would go directly. Nigerian Internet Registration Association (Nira) had to register the .ng domain – formerly they were hosted in Ibadan and before they got connected to the exchange point, it goes round the world just for it to get to Ibadan. But later on, they got connected from Ibadan and now their traffic goes through 6 locations instead of the 20 locations that it used to be. You can see it is quite significant and the reason why it is 6 locations is because it is in Ibadan; if it were in Lagos, it might have been reduced to about 2 or 3 locations.

Connection to the Exchange Point

All our service providers are supposed to get connected including those using Vsat. Even Linkserve is connected because they are among stakeholders in the industry and as business trends change, people also change. We still encourage Vsat operators to get connected – as you know, it is good for remote areas – we do not make exemptions.

Exchange and 3G Technology

Yes. As long as you are browsing and using IP, you have the benefit of being connected to the exchange point and especially those GSM operators that are providing 3G; if they get connected to the exchange point, it means that all their subscribers that are browsing using their handsets, browse local contents and the traffic would be local and does not have to be routed round the world before reaching targets. The data goes directly from the handset to the mobile operator and from there, the ISP that is hosting those contents in Nigeria. So, it gives them a lot of advantage more than being directly connected to the Internet switch.

Wimax Technology

You see, in spite of any equipment you have access to, as long as you are browsing on the Internet, you are using IP and as long as you are using IP, it is necessary for you to get connected to the exchange point. As long as you are connected to the Internet, you have an IP address because you browse not with your telephone number but with that IP address that an ISP provided for you. IP contains a lot of things: Voice, data, video, etc.

Exchange Capacity

Well, anybody that connects to the Exchange point gets a minimum of 100mbps port. You can also connect at Gigabyte – that is 1000mega byte per second, which is large. None of these ISPs have the capacity for international practice – none of them uses up to 100meg for their international cycling. But we are giving them that for local traffic, though for some of them, the traffic might be 1Meg but as the traffic builds up; as local content builds up and as we promote the .ng as our national pride and start hosting sites for .ng locally in Nigeria, the content would really grow and what we are charging them is really minimal compared to international prices; it is about less than 1% if they were to pay for international traffic. We have excess capacity and it would take a lot to weigh it down.

Regulating Internet Service Delivery

NCC cannot monitor anyone and find out which customer is getting the right service. I think it is left for the users to complain to NCC so that they can address it. There are Consumer Parliaments where NCC meets with the consumers every month and iron out issues with them. In most parts of the world, they have gateways – platforms that are used to connect to the Internet. But in Nigeria, we barely have such. We do not know what is coming in or going out of the country and that is why so many scam mails are moving all over and people are saying they are from Nigeria. How did they know they are from here? Most of the ISPs in Nigeria actually borrow their addresses from other Internet service providers in the world. That is why connecting to the Exchange point is very necessary and we always encourage people to always have their own IP address so that we can trace and Government can now intervene and trace all scam mails and ensure good quality of service. But without the Exchange point; without the national gateway, you cannot really monitor anything because everybody is totally independent.


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Dufil Prima Foods Brings Relief to Indigent Families in Abeokuta

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Dufil Prima Foods, makers of Indomie instant noodles, in partnership with the Human Rights and Grassroots Development Society, extended its goodwill to the shores of Abeokuta, Ogun state, at a product distribution event on Tuesday 24 April, where cartons of Indomie noodles were distributed to the underprivileged, as part of its ongoing efforts to support families worst hit by the ongoing economic hardship.

The event which saw a thousand vulnerable families go home with a carton of Indomie each, individuals present were also provided with cooked noodles to help relieve their immediate hunger.

The outreach had in attendance members of the disabled community, orphans, widows, the elderly, pregnant women, and vulnerable families.

The outreach is in alignment with the brand’s goal to feed two million consumers across various cities and communities in Nigeria, by collaborating closely with recognized NGOs to ensure that only the most vulnerable persons in the various cities and communities are invited and given a carton of Indomie and a fresh bowl of the nourishing tasty noodles.

The event was graced with the presence of notable dignitaries including the representative of the Commissioner for Women Affairs and Social Development in Ogun State, Mrs. Wonuola Kassim; the Ogun State Chapter Chairman of the Nigeria Labour Congress, Comrade Hammeed-Bello Aderinola; a representative of the Sector Commander of the Federal Road Safety Corps (FRSC), Superintendent Adeoye Adejoke Asake; the Chairman of the Ogun State Police Community Relations Committee (PCRC), Venerable (Dr.) Samson Kunle Popoola, Chairman of the Peace Initiative Network, Dr. Femi Sodipo , and Trace PRO, CDR. Babatunde Akinbiyi, amongst others.

Mrs. Wonuola Kassim in her keynote address, commended the efforts of Dufil Prima Foods Ltd, and acknowledged that this was not the company’s first CSR initiative as she recalled that it had embarked on a similar venture in 2020.

“This program cannot be more timely than a time like this, when to feed becomes very difficult for most people. This is the kind of gesture which would linger for ages in the hearts of the beneficiaries. The objective of the palliative distribution is to alleviate the hardship faced by the citizens due to the recent removal of fuel subsidy by the Federal Government”, she said.

Speaking in the same vein, Popoola of the PCRC said: “We believe in PCRC that food security and eradication of hunger will go a long way in reducing the level of criminality in our society. What we have seen today is a conscious effort on the part of the organisers to see to the eradication of poverty, eradication of hunger and to support the food security initiative of the Government”.

Other dignitaries present also expressed their gratitude for Indomie and the organisers of the event, the Human Rights and Grassroots Development Society. They commended their efforts for taking the right steps to ensure that families across the country are catered for in these challenging times.

Indomie Instant Noodles remains steadfast in its quest to provide satisfaction and put smiles on the faces of families across Nigeria.


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Defending the foundations for connectivity

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By Engr. Gbenga Adebayo

In 2001, when the first GSM call was made in Nigeria how many of us would have envisaged the digital world that we live in today? The pace of growth and the rate of adoption of telecoms solutions in Nigeria has been revolutionary. It is a globally acknowledged case study that we should be proud of and a clear demonstration of what can be achieved.

Almost all of us today are reliant on the network connectivity that it has enabled in different shapes and forms. From the simple need to communicate with loved ones, to the digital platforms that enable our access to and consumption of entertainment, financial products and other critical services. Our reliance on these systems is becoming more and more acute, whether it is citizens, governments, or corporations. System downtime is increasingly disruptive and offline manual redundancies are often in the advanced stages of being phased out. The pace of this transition is not slowing down. With the core infrastructure in place, innovation is driving the exponential growth of services that ride on it. From the fully adopted social media that has changed the way we interact, to the emerging Artificial Intelligence (AI) revolution.

While this innovation is enabling exciting new possibilities, there is a tendency to focus on those opportunities, to the detriment of the core infrastructure on which it rides. It is imperative that we retain a focus on the optimisation of that infrastructure and enable continued investment in its development. We have seen how the transition from 2G, through to 3G, 4G and 5G have each enabled the development of more and more sophisticated solutions.

The continued development of core infrastructure has to be sustainable, and over the last few months we have begun to see the challenges that the operators that provide it are facing. Both MTN and Airtel have declared significant foreign exchange (FX) losses in Nigeria, and the stress is not linked to them alone. The entire ecosystem is battling with a range of challenges that must be addressed. If we fail to do so, the downstream impact on innovation will be severe. Telecoms infrastructure requires a base level of investment to maintain its current capabilities, and significant additional investment to expand and grow. It is capital intensive and that capital has to be generated through sustainable business models.

At the heart of the challenge the industry faces is the issue of rising costs. Recent financial losses are directly linked to the cost of operating towers that rely on inputs like diesel, which have increased significantly as the Naira has depreciated. The provisions large telecom companies have had to make, and the consequent losses and impact on their reserves is a red flag. It tells us that business as usual is not sustainable. If we continue as we are, then those companies will struggle to continue to invest in and maintain existing services.

But those costs are not the only challenge. General cost inflation, multiple taxation, regular and damaging vandalisation of infrastructure and the costs associated with regulatory compliance all help contribute to the high cost of operations. We cannot continue to follow a path that asks those companies to simply accept those rising costs. It is no longer sustainable, and we have reached an inflection point.

This is a critical moment for the industry. How we approach and resolve it will define the future of Nigeria’s digital economy. If you want to be able to enjoy the benefits that digitisation brings. If we want the infrastructure that enables AI and helps us drive growth, then we must take action now.

Cost-reflective tariffs, like it or not, are simply non-negotiable. We have seen the impact of price controls in other segments of the economy, like power. If providers cannot operate sustainable business models, then they stop investing. When that happens, the existing infrastructure starts to crumble. For power, a consumer can choose to take ownership of the solution by buying a generator, or a solar panel. For fuel, the government can step in as the provider of last resort and manage a subsidy regime that mitigates the impact on the population. Those options are not available in the telecoms sector. There is no self-help solution.

We fully understand and appreciate the financial stress that Nigerians are experiencing today. The cost of living is the single most significant factor in most people’s daily lives. But those people are still able to enjoy the benefits that connectivity brings, at the price they paid before these challenges became so acute. Imagine a future in which the gains of the last twenty years are reversed. Nigeria, and Nigerians simply cannot afford it. The pain that we would feel under those circumstances would be exponentially worse.

We need to find a long-term, sustainable and manageable solution to this problem. Prices will need to rise, but action needs to be taken in a measured way, through sustainable conversations and partnership with the government. It is time to address this head on.

Engr. Gbenga Adebayo is the Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON)


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LCCI Urges FG to Simplify Trade Procedures to Boost Economy

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The Lagos Chamber of Commerce and Industry (LCCI) has said that the government needs to simplify and harmonize trade procedures and address bottlenecks in order to boost economic growth in the country.

President of LCCI, Mr. Gabriel Idahosa, gave the charge at a Quarterly media briefing on the State of the Economy yesterday in Lagos.

He said that the government has to create an atmosphere that promotes export growth and competitiveness, which is projected to boost export earnings, raise domestic revenue, improve citizens’ welfare, and increase business productivity.

“We recommend that reforms must include simplifying and harmonizing trade procedures as well as addressing bottlenecks such as port logistics, congestion, and transportation costs. This is expected to position the country as the commercial centre of the region and a springboard into regional value chains,” he stated.

On managing the persistent high inflation, the LCCI president said both monetary and fiscal authorities should focus on the factors driving the inflation rates by tackling the supply-side deficiencies instead of focusing too much attention on the demand-side management.

“We urge the Central Bank of Nigeria (CBN) to continue with its foreign exchange (forex) market reforms with intense discipline, as the high exchange rate against the naira is a major driver of the skyrocketing inflation rates.”

Idahosa acknowledged the improvement in the naira exchange rate in the last few days, moving towards the level of N1000 per dollar or lower.

“CBN needs to sustain its policy and regulatory reforms in the FX market, adopt policies that would attract more FX inflow into the economy as well as build market confidence in the performance of the FX market,” he added.

 


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