Telecom

Reducing Operational Cost through Infrastructure Sharing

Published

15 years ago

December 15, 2008

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Telecommunications service providers in the country have severally be lamenting on high cost of providing service, which they claimed is adversely affecting their ability to deliver quality of service as well as meet up with their social responsibilities.
For instance, compared to other developing economies, operators in the country are faced with multiple taxes by different tiers of government, provision of power as well as transmission infrastructure that are none existence. In most developing countries such as Egypt, South Africa, Ghana among others these challenges are not faced by telecom operators in these countries. But the most common challenge that operators around the world are faced with is duplications of infrastructure, where each operator has to deploy the same infrastructure its older competitor has deployed thereby wasting the resources as against sharing such infrastructure for better performance.
Against this backdrop that the International Telecommunications Union (ITU) published a report detailing a set of regulatory strategies designed to lower the costs of telecoms network rollout. The report notes that 2008 has been marked by unparalleled numbers of voice and Internet consumers in both the developing and developed world, the result of which is network growth and expansion.
Options available
This year the report added, has also witnessed an unparalleled global financial crisis which may make it more difficult for investors to obtain financing for continuing network development. Sharing strategies, examined in the new ITU report, are seen as conducive for infrastructure development in the telecommunications/ICT sector, particularly in light of the deepening global financial crisis.
Sami Al Basheer, director of ITU’s Telecommunication Development Bureau, said that sharing strategies are increasingly necessary to ensure that operators can deploy their networks at low cost while guaranteeing that consumers have access to affordable services. "Now, more than ever, sharing strategies make sense as operators are forced to reduce the costs of network deployment as they compete for scarce investment funds. This is a forward-looking perspective in light of the current financial and economic uncertainty," he said.
Sharing strategies he said include the sharing of civil engineering costs in deploying networks, promoting open access to network support infrastructure (poles, ducts, conduits), essential facilities (submarine cable landing stations and international gateways) as well as access to radio-frequency spectrum and end-user devices.
The "Six Degrees of Sharing" theme was first discussed in Thailand during ITU’s 2008 Global Symposium for Regulators last March. Few observers could then have anticipated the rough ride that would be in store for financial markets a few months down the road.
Yet, the guidelines announced in March seem almost prophetic in today’s circumstances. Taking a broad and innovative view of sharing, the world’s regulators sought to capture the productivity of global networks and use it to expand the scope of opportunities for service and content providers and, ultimately, consumers.
Developing countries embraced sharing to make more affordable the expansion of ICT networks to rural and under-served areas. Many developed countries are looking at sharing to reduce the cost of rolling out ultra high-speed broadband networks that reach customers’ homes and apartment buildings.
"Sound business and regulatory practices will contribute to extracting the greatest possible value from existing levels of investment in the telecommunication and ICT sectors. ITU is committed to working with member States and to assist regulators in marshalling the regulatory expertise they need to navigate these rough seas," said Al Basheer.
The booming volume of digital bits generated by the move to convergence and packet-switching has produced a need for increased network capacity. Regulators have a responsibility to create and maintain an environment in which operators and service providers can maximize network capacity and efficiency by fostering capital investment and market expansion as the sector continues to evolve.
The report highlighted that mobile penetration showed high growth rates through 2008. It noted that by year end, mobile networks and subscribers will rise to an all time high, reaching an estimated 4 billion mobile subscribers worldwide. The world it said also counts over 1.5 billion Internet users, a growing number of which use fixed and mobile broadband services. Dial-up is being replaced by broadband across developed and developing countries alike. ITU noted that in developing countries such as Chile, Senegal and Turkey, broadband subscribers represent over 90 per cent of all Internet subscribers.
A growing array of broadband wireless systems are now available, opening the way for users in developing countries to access the Internet on mobile phones and other handheld devices. At the same time, more developing countries are deploying national fibre backbones and backhaul networks to transport their growing data-rich traffic. In addition, several new international submarine cable networks are set to connect developing countries to the global network of Internet backbones – just as a group of high-tech entrepreneurs are working to revive plans for a constellation of broadband satellites to connect the developing world. The Trends report catalogues efforts by governments, and in particular ICT regulators, operators and service providers to expand the reach of affordable broadband services and meeting universal access goals.
How to grow the sector
What had been foreseen as ideal strategies to extend broadband network access in developing markets may now be viewed as a prescription for the entire world. If the sources of capital for network investment suffer a temporary drought, policy-makers could take steps to make their markets more amenable to the shrinking pool of investment, such as lower investment barriers that inhibit capital flows from one country to another.
Reduce of regulatory barriers (high licence fees or market-entry bans) that represent hostile environments for capital investment and market growth.
Share essential facilities, such as cable landing stations, local switching centres or fibre backbone networks.
Adopt rules to provide for infrastructure sharing, particularly "passive" sharing of towers, ducts, rights-of-way and other support facilities.
Overhaul and streamline cross-agency processes to create a ‘one-stop shop’ for various network-related authorizations, such as land management, port access, environmental and safety permits.
Add innovative spectrum management mechanisms that promote increased sharing and efficient use of spectrum.
Amend regulatory frameworks to eliminate discriminatory rules that favour one company or industry over another in a converged services market
Ensure that government policies and rules maximize the ability of incumbents and market entrants to choose between different opportunities for business plans and long-term strategies, including resale, wholesale, and niche markets.
Most of these initiatives are beginning to take root in the country’s telecommunications space, before now, idea of co-location of infrastructure was strongly opposed by operators who were fighting over subscribers, but, when the cost of providing service kept rising as well as intervention by Nigerian Communications Commission that began enlightenment of operators on the need to co-locate that they started adopting the option. Today, there are over 1000 co-located sites in the industry.
This also provided opportunity for investment as some investors have begun to build and operate cellular site for operators to co-locate. Notable among them are Infrastructure Hi-Tech Services (IHS), Hilios Towers, among others.
Mr. Gbenga Onakomaiya, chief commercial officer, IHS, said that the idea of building and managing of sites for mobile operators is to take off the problems being faced by operators in managing sites such as youth restiveness, generator theft and taxes.
He explained that an operator in the country spends average of $6,000 per month to maintain a site, but with co-location option such operator spends $2,000 per month. This according to him is cost effective as well as big relief for them. “Initially, everybody wanted to provide services by themselves but now they are seeing the economic sense as sites are growing, and maintenance is becoming big financial burden. They need to focus their attention to their core business of running the network,” he said.
Although NCC has been advocating for sharing of infrastructure as a faster way of expanding network roll out especially in underserved areas, and has expressed it readiness to monitor the implementation of the option by operator by next year. This ITU report is seen as a desired encouragement to some operators whose parent company may not be favourably disposed to it.
Industry watchers who spoke to Nigeria CommunicationsWeek expressed worry over implementation of sharing of infrastructure. They argued that as operators are encourage by every means to share infrastructure, measures should be put in place to address vandalisation which is likely to have adverse effect on service delivery. They explained that if a shared infrastructure is vandalised, it will affect all the networks sharing that infrastructure.

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Telecom

Tariff Hike Threat: NCC Urges Telcos to Reduce Operating Cost

Published

15 hours ago

April 29, 2024

Comms Week

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Nigerian Communications Commission (NCC) has urged telecommunications operators in the country to embrace infrastructure sharing to reduce their operating cost.

Tariff Hike Threat: NCC Urges Telcos to Reduce Operating Cost

Aminu Maida, executive vice-chairman of NCC,

This is coming on the heels of calls by both Association of Licensed Telecom Operators of Nigeria (ALTON) and the Association of Telecommunication Companies of Nigeria (ATCON) for cost-reflective pricing model after 11 years.

But during the 2nd edition of the West African Telecoms Infrastructure Summit and Exhibition at the weekend in Lagos, Aminu Maida, executive vice-chairman, NCC, said operators in the telecommunications sector could reduce their cost and enhance service delivery through partnerships.

Maidan was represented by Mr Victor Adoga, head, Next Generation Technology and Standards at the NCC.

He said the short-term remedy is public-private partnerships, infrastructure funds, and innovative financing models like Infrastructure as a Service.

He said, “Today, we boast of over 219 million mobile subscribers and a burgeoning tech-savvy population eager to harness digital technologies.

“However, while our growth has been remarkable, it has not been without its challenges. Issues such as uneven service distribution, infrastructural deficits, and regulatory uncertainties have occasionally hindered our progress.

“Yet, each challenge also presented a unique opportunity for growth and innovation.”

The NCC boss also advised the operators to embrace Artificial Intelligence (AI) and machine learning to optimize network management, predict maintenance needs, and enhance customer service through automation, and advanced analytics is also necessary.

“Another strategy is developing smart infrastructure, because as cities become smarter, telecom infrastructure must evolve to support an array of smart city applications, from traffic management systems to public safety solutions,” said the EVC.

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Telecom

Wale Owoeye Shines among Nigeria’s Top 50 Digital Economy Leaders

Published

17 hours ago

April 29, 2024

Ugo Onwuaso

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Wale Owoeye, the Managing Director/CEO of Cedarview Communications Limited, a leading ICT firm based in Lagos State, has been honored as one of Nigeria’s 50 most influential personalities in the digital economy.

He received this prestigious recognition at the recent “50 Most Valuable Personalities in Nigeria’s Digital Economy” event held in Lagos.

Organised by IT Edge News Africa, the event brought together key stakeholders from various sectors, including prominent industry associations such as the Association of Telecommunications Companies of Nigeria (ATCON), Association of Licensed Telecoms Operators of Nigeria (ALTON), and the Association of Licensed Data Protection Organisations of Nigeria (ALDAPCON).

Dr. Vincent Olatunji, the National Commissioner/CEO of the Nigeria Data Protection Commission (NDPC), Ike Nnamani, CEO of Digital Realty Nigeria, and Prof. Nentawe Goshwe Yilwatda, a distinguished scholar and politician, delivered keynote presentations.

Olatunji emphasized the crucial role of data protection in the digital economy, while Yilwatda outlined essential steps for Nigeria to maximize opportunities in the digital economy and the Fourth Industrial Revolution (4IR).

Nnamani, whose presentation focused on the “Myths and Realities of the Nigerian Digital Economy,” underscored the accelerated digitization of both consumer and enterprise sectors in Nigeria, driving demand for digital skills and data center capacity.

Gathering recognizes Owoeye’s exceptional contributions to Nigeria’s digital economy

The gathering recognized Owoeye’s exceptional contributions to Nigeria’s digital economy. With a remarkable career in Nigeria’s ICT/telecoms sector, Owoeye has successfully steered Cedarview Communications to expand its presence to Port Harcourt and Abuja, offering a wide range of Value Added Services (VAS) in the telecoms market.

Cedarview has also established strategic alliances in Asia, Europe, and the US to facilitate growth in its operational areas. Additionally, Owoeye serves as the VAS Coordinator for the Association of Telecommunications Companies of Nigeria (ATCON), further solidifying his impact on Nigeria’s digital economy.

Published since 2009, IT Edge News Africa is one of Africa’s leading technology and business publications.

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Telecom

The NCC, Telcos and the Tariff Discourse

Published

17 hours ago

April 29, 2024

Ugo Onwuaso

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By Dr. Falade Muritala Adesola

The telecoms sector in Nigeria is viewed by some as a model of regulatory excellence. Other African countries often visit Nigeria to study the sector, aiming to understand the regulatory framework established by the NCC. This regulatory excellence is evident in the growth and success of the telecoms industry, which currently contributes over 16% to Nigeria’s GDP.

Aminu Maida, executive vice chairman, NCC

The telecoms industry in Nigeria is a source of pride for everyone; it’s arguably the only sector that can be considered a successful model of liberalization in the country.

Amidst all the successes, the industry is still faced with multiple challenges, including multiple taxation, vandalisation, and changing macro realities. Noteworthy of mention is efforts by the NCC under the new Executive Vice Chairman, Dr Maida to further reposition the industry. Whilst the focus in the past has always been quality of service (QoS) the direction under the new EVC has shifted to quality of experience (QoE) which is more customer-centric and places more demands on the telecoms operators.

The EVC has continued to emphasize this at various engagements with stakeholders in the industry. Beyond advocacy, the visible steps taken so far by NCC under Dr Maida aimed at safeguarding telecom infrastructure deserve commendation. The recent incident of multiple fibre cut, which resulted in widespread network disruptions for one of the major telecoms operators, prompted swift action from the EVC. His advocacy for stricter penalties against perpetrators led to moves by the government to criminalize cable damages and vandalisation of telecoms infrastructure. This proactive stance not only deters future recklessness but also instils confidence among telecoms operators regarding the safety of their investments. However, the long-term viability of the industry hinges on a multifaceted approach that will include protection of telecoms infrastructure, which the NCC is currently spearheading, and sustainable pricing mechanism.

The Nigerian economy is currently grappling with new economic realities that continue to threaten its stability. These realities are not unique to Nigeria but rather a global phenomenon affecting countries around the world. A complex set of factors are exerting considerable pressure on the global economy and causing a slowdown in global growth. This is occurring alongside a marked increase in inflation. As a result, businesses are confronted with a range of challenges including rising costs of capital, a tight labour market, and geopolitical risks. These challenges have been worsened by disruptions due to the COVID-19 pandemic, the war in Ukraine, Israel, and the tensions between the US and China. Many countries are revisiting their policies and implementing new strategies to navigate the turbulent waters.

In Nigeria, the struggle to strengthen the value of the naira to the dollar has continued to gallop as the Central Bank of Nigeria (CBN) continues to pursue new approaches to address the situation. However, challenges such as infrastructural deficit and security concerns continue to persist, further exacerbating the issue. Yet, Nigeria continues to face a significant rise in food prices over the past few years, worsened by the removal of subsidies on petrol, amongst other things. This has resulted in a weakened purchasing power for many citizens with attendant effects on businesses.

In recent times, Nigeria’s naira has tumbled across both official and unofficial markets due to increased forex demand, causing a significant spike in prices of goods and services across the country. The National Bureau of Statistics (NBS) reported that items contributing to the inflation’s headline index on a year-on-year basis are food and non-alcoholic beverages (16.42%), housing, water, electricity, gas and other fuel (5.30%), clothing and footwear (2.24%), and transport (2.06%). The NBS explained that the rise in food inflation on a month-on-month basis is due to an increase in the average prices of bread and cereals, potatoes, yams, and other tubers, fish, coffee, tea, and cocoa.

These developments paint a bleak picture of the current economic situation in Nigeria and amid all these, discourse around telecoms tariff review is beginning to take centre stage, drawing attention to the need for a delicate balance between economic realities, quality of experience, which impacts directly on customer satisfaction, and telecommunications industry sustainability. For over a decade, major telecom operators like Airtel, MTN, and GLO have maintained their pricing structures, despite mounting challenges such as currency devaluation and inflation while other sectors have adjusted prices to cope with economic fluctuations.

For instance, entertainment giant, DStv, has increased its prices more than two times in the past year. Netflix has also reviewed its prices. Nigerian Breweries have also adjusted their prices to reflect the current realities, but telecom operators have maintained their pricing despite economic fluctuations, grappling with a devalued currency and rising operational costs.

In Nigeria’s telecommunications sector, diesel consumption is a critical factor influencing service reliability and progression. With numerous sites dispersed across the nation, a substantial portion operates on generators 24/7, necessitating continuous fuel supply. This escalating cost of diesel not only directly impacts operational expenses but also cascades into broader challenges such as site accessibility and infrastructural maintenance. As prices soar across various sectors, the telecom industry continues to grapple with the dilemma of maintaining quality services while operating within constrained pricing frameworks.

The prevailing reality suggests that the long-term viability of the telecoms sector now hinges on striking a delicate balance between affordability and quality of experience for consumers on the one hand, and profitability and survival for operators on the other hand.

Quality of experience stands at the forefront of consumer expectations in the telecom sector. However, the telecoms operators must continue to invest to maintain superior quality of experience. In the same vein, continuous and increased investment is a function of profitability. The telcos can only invest from their profits. There can be no investment without profitability. One way to gurantee profitability and sustainability of the industry is a review of the existing pricing structure.

Pricing autonomy is a linchpin for industry sustainability. The ability to set cost-reflective tariffs is indispensable for ensuring adequate returns on investment and fostering long-term viability. Telecom operators require a more transparent and collaborative approach to tariff adjustments, emphasizing the importance of a pricing framework aligned with operational realities. The current pricing window, sanctioned by regulators, is a foundation, but the industry needs greater flexibility to navigate cost fluctuations while ensuring service quality and accessibility remain uncompromised.

The clamour for cost-reflective tariffs is not merely about short-term gains but a strategic imperative to sustain the sector’s growth trajectory. The transition from 2G to 5G and with 6G on the way symbolizes the industry’s evolution, made possible by substantial investments that fuel innovation and expand service capabilities. However, without conducive regulatory frameworks that incentivize investment, the industry risks stagnation, jeopardizing future advancements and undermining service availability.

The telecommunications industry in Nigeria is currently at a crossroads where infrastructural challenges, pricing dynamics, and regulatory frameworks intersect, offering a unique opportunity for swift and collective action. A thriving and resilient telecommunications ecosystem has the potential to empower individuals, drive economic growth and enrich lives across the nation of Nigeria. Whilst the industry regulator has delivered commendably, prevailing realities demand a new approach to ensure continued viability of the sector.

Dr. Falade Muritala Adesola is a Senior Lecturer and former HOD, Computer and Information Sciences Department, Trinity University.

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