Telecom
Reducing Operational Cost through Infrastructure Sharing
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.
Dimension Data has said that the proceeds from its Series 1 corporate bond, will support the expansion of the company’s fibre infrastructure to meet Nigeria’s growing demand for digital connectivity.
This followed the successful subscription of the corporate bond.
Recall that Dimension Data Limited said that it has completed the signing ceremony for the issuance of N4.05 billion (approximately US$2.9 million).
This sum marks the first tranche of a N20 billion (US$14.7 million) bond programme announced earlier this year.
The bond programme was raised under Dimension Data SPV Funding Plc, following approval from the Securities and Exchange Commission (SEC) of Nigeria.
The company says the proceeds will support the expansion of the company’s fibre infrastructure to meet Nigeria’s growing demand for digital connectivity.
Speaking at the ceremony, Olugbenga Olabiyi, managing director of Dimension Data Limited, said the investment reflects the company’s long-term commitment to strengthening Nigeria’s digital economy.
The planned investments will fund the continued expansion of Dimension Data’s fibre network, supporting increasing demand from financial institutions, fintechs, enterprise customers and other technology-driven sectors.
Founded in 1983 and headquartered in Johannesburg, the company has grown its footprint across the Middle East and Africa.
Today Dimension Data is a member of the NTT Ltd Group, one of the world’s leading technology companies.
As cloud adoption, digital financial services and data-intensive applications continue to grow, the company believes resilient fibre infrastructure will remain a critical enabler of Nigeria’s digital economy.
The Federal Government has announced that work will commence within weeks on a 90,000-kilometre fibre optic network expected to connect every state, local government area and ward in Nigeria, marking what officials describe as one of the country’s most ambitious digital infrastructure projects.
Dr Bosun Tijani, Minister of Communications, Innovation and Digital Economy, disclosed this on Tuesday after briefing President Bola Tinubu at the State House, Abuja, on the progress of three flagship digital transformation initiatives being implemented by his ministry.
According to the minister, all resource mobilisation and contractual processes for the nationwide fibre project have been completed, paving the way for physical deployment.
“We’re now at the point where, in a few weeks’ time, we should start to lay those fibre, so people will start seeing us around the country deploying the fibre. This is going to transform Nigeria for good,” Tijani said.
He explained that the project would deliver fibre optic infrastructure to every geopolitical zone, state, local government area and ward, significantly expanding broadband access and improving the quality of internet connectivity across the country.
“This is a project where every state, every geopolitical zone, every local government and every ward in this country will be covered with fibre optic cables, which will transform the quality of connectivity,” he added.
Bosun Tijani attributed the progress in the digital economy to a series of reforms approved by President Tinubu, including the designation of digital infrastructure as Critical National Infrastructure, tariff adjustments and tax harmonisation measures sought by industry operators.
“I think our sector has been extremely fortunate. Mr. President has given us quite a number of things that the sector has been demanding for a long time. Whether it’s the Critical National Infrastructure designation for all digital infrastructure, the slight adjustment in tariff, or the tax harmonisation, these are reforms the industry has long requested.
“I think it’s probably the sector that is most appreciative of this government because when we came in, the sector was contributing between 16 and 18 per cent to our GDP, but today it is tracking close to 21 per cent. That represents significant growth,” he said.
The minister noted that the reforms had also improved the financial performance of major operators in the telecommunications sector.
On efforts to bridge the digital divide, Tijani disclosed that the government would begin deploying about 3,700 telecommunications towers from October to provide network coverage for more than 20 million Nigerians currently living in underserved communities without access to telecom services.
He said the President had approved the project after months of capital mobilisation and planning.
“Today we’re at a point where, before the end of the year, we’ll also start to deploy close to 3,700 towers. It’s taken a lot to put this project together and raise the required capital, but we are now ready to begin deployment around October,” he said.
The minister also announced that Nigeria would officially launch an alphanumeric postcode system on October 1, a move he said would place the country among a select group of nations operating an advanced digital addressing system.
“Nigeria will be amongst maybe 10 or 15 countries in the world with an alphanumeric postcode. It’s the latest design in postcode systems, where we can identify every property in this country. We’re hoping to launch that on the 1st of October,” he said.
Tijani explained that the new system would assign a unique address to every property nationwide, enhancing logistics, accelerating e-commerce, improving emergency response and strengthening public service delivery.
“Inability to locate places comes at a cost. You can imagine what this will do for e-commerce. It means goods can now be delivered in record time,” he said.
He added that integrating the postcode system with existing government identity databases would improve security and make public services more efficient.
“Our alphanumeric postcode is unique because it allows us to assign a unique address to every property. In many countries, such as the UK, postcodes cover clusters of buildings. What we are introducing will uniquely identify every building, and that will be a game changer for Nigeria in terms of security, commerce and public service delivery,” the minister stated.
In a bold move to strengthen Nigeria’s digital sovereignty and the digital economy, the National Information Technology Development Agency (NITDA) has formally unveiled the National Sovereignty Cloud Initiative (NSCI) Regulatory Instruments, thereby setting a new benchmark for the country’s digital future.
NITDA
The NSCI is a strategic programme of the federal government coordinated by NITDA. It is designed to bolster Nigeria’s digital sovereignty and accelerate the country’s adoption of reliable cloud infrastructure. The initiative consists of the National Computing Guideline, the National Cloud Technical Guideline, the National Digital Infrastructure Assurance Framework, and the National Cloud Investment Strategy.
Speaking during the ceremony in Abuja, the Director General, Kashifu Inuwa Abdullahi CCIE, described the NSCI as a strategic move to safeguard Nigeria’s digital future. He noted that the instruments will stimulate innovation, encourage investment in local cloud services, and enhance digital resilience.
“These instruments provide the regulatory certainty, technical standards, and assurance framework required to build a trusted cloud ecosystem that safeguards Nigeria’s digital sovereignty while creating new opportunities for investment, innovation, and sustainable economic growth.
“We should position ourselves not to serve Nigeria alone, but to serve West and Central Africa. Nigeria is already the digital gateway to West Africa and can extend to every part of Africa. But we can only realise that goal when we build our infrastructure. So, today’s event is the first step in that direction,” he stated.
Abdullahi appreciated the support of relevant stakeholders and the efforts of the NSCI Technical Working Group, which culminated in the successful development of the regulatory instruments. He emphasised that collective action of regulatory agencies is necessary for a seamless implementation of the initiative.
Speaking earlier, the Permanent Secretary of the Ministry of Communications, Innovation, and Digital Economy, Engr. Nadungu Gagare, declared that the launch of the NSCI underscores the federal government’s commitment to safeguarding Nigeria’s data borders and digital economy.
“By ensuring that government data remains strictly within national jurisdiction and under local operational control, we are guaranteeing data sovereignty and regulatory compliance. It will catalyse local cloud capacity, foster local job creation, and empower indigenous investors and innovators to build solutions on a secure, locally hosted foundation,” Gagare said.
The Permanent Secretary commended the management team of NITDA, the NSCI Technical Working Group, and other stakeholders for their collaborative spirit in driving the initiative. He promised that the Ministry would ensure that the strategic objectives of the NSCI are fully realised across all ministries, departments, and agencies.
In a message, the Governor of the Central Bank of Nigeria (CBN), Dr Olayemi Cardoso, congratulated NITDA for promoting a collaborative approach, adding that modern digital regulation succeeds through coordinated regulatory actions for common national objectives.
Cardoso, who was represented by Dr. Rakiya Opemi Yusuf, the Director of the Payment System Supervision Department, acknowledged that the launch testifies to the robust collaboration existing between the apex bank and other government institutions.
“CBN regulates the financial ecosystem. NITDA provides the national framework for digital infrastructure, cloud governance and assurance. These responsibilities are complementary, not competing. Together, they create a coherent national architecture.
“Together with NITDA, and with the continued cooperation of industry, we will continue to build an ecosystem that protects Nigeria’s financial system today and positions our nation as Africa’s trusted hub for digital finance and cloud innovation.
One of the most encouraging aspects of today’s event is the strong institutional collaboration between NITDA, the CBN, and other relevant government institutions. This collaboration demonstrates an important principle.”
Cardoso reiterated that as a responsive regulator, the CBN remains committed to providing clear expectations, firm principles, proportionate implementation, and constructive engagement with all stakeholders to position Nigeria as Africa’s trusted hub for digital finance and cloud innovation.
Also, the Managing Director/CEO of Galaxy Backbone Limited, Prof. Ibrahim Adeyanju, noted that the NSCI couldn’t have come at a better time than now, especially considering CBN’s recent directive mandating banks and financial institutions to localise their data.
Adeyanju expressed confidence that the initiative would push the ecosystem to greater heights by encouraging investment, developing indigenous talent, and creating employment opportunities akin to the gains brought by the deregulation of the telecoms sector.
NITDA will constitute the Sovereign Cloud Governance Committee (SovGov) within the next two weeks to oversee the implementation of the NSCI. The committee would comprise representatives from relevant Government institutions, sector regulators, industry, and the private sector, with NITDA serving as the Secretariat
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