Nigerian Communications Commission (NCC) has severally re-instated its desire to continue to encourage competition in the sector. It does this through licensing of several operators in different space of telecommunications sector against the wishes of many operators that were licensed earlier.
They argued that in voice space, there are 12 operators while India with higher population than Nigeria has six operators. In the traditional internet service providers, there are about 300 licensed ISPs with 60 functional operators.
One of the reasons NCC opened up the space for many to participate is for the benefit of the consumer who has a lot of operators to choose from depending on what he or she needs from the operator. It is also geared towards driving down tariff as operators in a bid to lure subscribers to their network introduce mouth-watering packages to increase their subscriber base as the business of telecom is volume driven.
How the journey started
The process of ensuring a competitive telecom sector started shortly after the sector was liberalized in 2000. The commission granted license to three Global System for Mobile communications (GSM) operators, namely: Econet now Zain, MTN and Mtel mobile arm of Nitel. More so, there were about seven Code Division Multiple Access (CDMA) operators providing fixed wireless access as well as limited mobility, most of whom restricted their service in Lagos with three operators operating outside Lagos.
As the market begins to expand with many people seeking to have touch of telephone which then was easy to get in most cities, the need to encourage more operators to complete for the benefit of Nigerians arose. This led to the commission removing limited mobility license for CDMA operators as well as service portfolio obstacle with unified licensing regime.
A unified license is an authorization that allows the licensee to provide a basket of services under a single license. For instance, under the regime, the licensee may be able to provide mobile, fixed telephony services, national long distance communications services, and international gateway services, among others, under one license.
It is often times referred to as convergence. The concept of ‘convergence’ is frequently used to describe the development of global information society. The process of convergence starts when previous separate technologies now come together as a result of direct consequence of the advances made in ICT.
Presently, we have different types of networks for telephony and broadcasting and they are regulated differently and usually by separate authorities, National Broadcasting Commission (NBC) which regulates radio and television, while NCC regulates telecommunications.
Explaining NCC’s  proactive stance in moving the industry forward by introducing convergence, Ernest Ndukwe, immediate past executive vice chairman, NCC said that the state of maturity of the telecommunications market in the country, vis-à-vis global trends in service and technological development, convinced the commission that a sure way to promote universal access to telecommunications services at this stage of the industry’s development is to evolve a policy framework that recognizes the issues relating to Voice over Internet Protocol (VoIP) as an engine for the development of telephony in the country.
“The unified license regime is helping to extend the frontier for service providers to move service delivery to the next level. One thing that has begun to happen is an increased converged environment for the delivery of services in the ICT sector. The four factors identified to enable convergence are already here, ready and hot for the market. They are the increased digitization of content, the rise in connectivity, technological improvements and a new generation of technology users,” he said.
Changes in Service Delivery
Convergence is a revolution rooted in technology and like all revolution so rooted, the convergence revolution poses two types of challenges: technological and societal. Vendors, content owners, software/application providers, telecoms operators, and the broadcast industry practitioners must rethink their business processes or cave in under the convergence challenges. Nigeria’s unified license regime ushered in by the NCC has already set the tone for the convergence challenge.
For regulators, the challenge is on how best to respond to new technologies redefining traditional services orientation. What should regulation look like in a converged services market? And for operators, it is driving the market with competition?
Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (Alton) corroborated Ndukwe on the gains of convergence when he said that gone are the days when system, services, facilities and networks are built for one type of application, “today the available system and services allow for an all encompassing services-voice, data, video and internet”.
All these have started manifesting as men are beginning to be separated from the boys in terms of service delivery. Before now, internet service were provided by Internet Service Providers (ISPs) using dial-up technology that requires a telephony line which delivers about 56 kpbs, radio technology as well as very small aperture terminal (Vsat) for those who can afford the cost.
In all of these, subscribers are faced with very slow speed of internet basically, as a result of sharp practices of sharing a lot of people on available bandwidth and the technological capacity.
Four years after the introduction of convergence, things have started changing especially in internet service delivery; we are now witnessing an improved service delivery as well as reduction in cost of access. This is made possible by telecommunications operators upgrading their technology to accommodate data and video services, since they are no longer restricted by license. Code Division Multiple Access (CDMA) operators upgraded from 2000 1x technology to Rev A EV-DO that offers robust service in voice and data. It enables operators in this space deliver wireless broadband internet service at affordable cost compared to what traditional ISPs are offering.
On the other hand, GSM operators upgraded from 2.5G to 3G technology which enables network operators to offer users a wider range of more advanced services while achieving greater network capacity through improved spectral efficiency. Services include wide-area wireless voice telephony, video calls and wireless broadband internet, all in a mobile environment. Additional features also include HSPA data transmission capabilities able to deliver speed up to 14.4 Mbit/s on the downlink and 5.8 Mbit/s on the uplink.
These developments are taking toll on traditional ISPs whose subscriber base have reduced by 60 percent, thereby pushing some out of business as they cannot compete with telecom operators whose tariff are cheaper.
Competition hots up
As a result of growing competition in different service delivery options in the space, operators are beginning to create for themselves niche services and are concentrating more in those areas. This does not mean that they are leaving other service area they also provide. For instance, CDMA operators whose network are better suited for internet service as well as voice have started refocusing their business model by investing more in the provision of quality wireless broadband service.
Nigeria CommunicationsWeek investigations revealed that the four active CDMA operators are now focusing more in provision of internet services as against competing with GSM operators in provision of voice and expanding network to all nooks and crane of the country. Rather, they are rolling out in selected cities where the demand for internet services is high.
Mr. Bashir Gwandu, executive commissioner at NCC, said that telecom market in the country is gradually attending the level where content will determine subscribers’ choice of network. This is beginning to happen as some operators such as Starcomms and MTN are rolling out several value added services.
For the ISPs, they need not fold their hands while telecom operators snatch subscribers from them. To this end, they are upgrading their network especially those with Wimax license to provide fast internet service which is the toast of subscribers.
Recently, Swift Network announced the upgrade of its network to 4G seen as providing faster internet service. It has begun the process of changing its subscribers modem to be able to deliver with the technology.
Mr. Lanre Ajayi, president, Nigeria Internet Group, attributed the stiff competition in the sector as fallout of convergence and level playing ground created by NCC. He lamented the inability of traditional ISPs to rise up to the situation by providing voice service on their network. He noted that they may be constrained by the huge capital required to provide such service which they are unable to get in view of uninterested attitude of the country’s banks to grant loan to long term investors.
He stressed the need for ISPs to start providing different services to be able to remain in business as competition hots up. According to him, with their vast experience in internet service provision, they could go into content development. He added that while telcos provide pipes which are access they are technologically positioned to provide, ISPs should concentrate in the provision of content they are well positioned to provide that is also profitable.
He cited Yahoo and Google as examples of internet content providers in the world today that are far richer than access providers. Ajayi said that Nigeria requires content developers especially as government and organizations are putting their services online.
“ISPs have to be more creative and innovative. This is the time to leverage on their experience to remain in business,” he said.

Advertisement