The Fibre Infrastructure Project by the Lagos State government which is expected to take off very soon is likely to bring additional cost burden on broadband operators as well as consumers.
This is as the government is yet to revert on the N145 Right of Way fee approved by the National Executive Council (NEC). Lagos has a minimum RoW fee of N1,050 per linear metre.
According to the state government, the multimillion-dollar fibre project would involve the deployment of unified fibre duct infrastructure for carrying telecommunications cables and other wired infrastructure to support operators of telecommunications and other relevant utilities, as well as provide infrastructure and connectivity requirements for Lagos State.
The state’s agreement with the company it appointed to execute the project, Western Telecommunication and Engineering Metro Limited, will see it run the project for an initial term of 25 years which could be extended by the parties, in writing, prior to its expiration or by effluxion of time, on mutually agreed terms and conditions. Western Telecommunications and Engineering Services Metro would also pay to the state coffers a fee of 10 percent of the revenues generated from the lease of the ducts to operators.
In granting its approval, the Lagos State House of Assembly attributed the project to the report of the State House Committee on Public-Private Partnership (PPP) presented by the chairman, Lukmon Olumoh (representing Ajeromi/Ifelodun 1), stakeholders who spoke to BusinessDay said the project is one of the suggestions made previously for a dig-once, lease to others policy.
“The intention I believe is that the company would be ensuring the dig-once only policy,” Olusola Teniola, President of the Association of Telecommunications Companies of Nigeria (ATCON), told BusinessDay.
According to the Nigerian broadband plan of 2020-2025, the policy was recommended to avoid continuous destruction of infrastructure during the laying of fibre, water, electricity or gas or any pipeline.
Installing high-speed fibre-optic infrastructure is incredibly expensive. A significant portion of that expense is tied up in the process of actually digging up highways. The dig-once practice effectively eliminates the need to dig up recently-paved roads to expand broadband infrastructure, significantly reducing the cost of building out internet access to underserved communities across the country.
The policy is basically saying there should be some harmonisation around fibre infrastructure.
The challenge however with the policy in Lagos is in who bears the cost of removing already laid fibre across the state by operators and reinstalling within the duct. The Lagos State government awarded the contract to a company named Western Telecommunications and Engineering Metro Limited.
MainOne, the company that has the infraco licence from Nigeria Communications Commission (NCC) told BusinessDay via mail that it believes that unifying fibre infrastructure is a step in the right direction because it provides for shared infrastructure and thus economies of scale.
“However, we are yet to see details of the plans of this new PPP so we do not know the extent of build, role of the PPP in operations and maintenance going forward, when the fibre will be built, commercial terms for use, etc,” the company said. “The implementation will ultimately determine if it is a good development.”
While the long term goal of dig once policy is to ultimately streamline fibre laying for effective security, it comes at a cost to the owners of the cables, a cost which they ultimately pass on to consumers. In other climes where the dig once policy has been advocated it is seen as an alternative to Right of Way. That is, in the place of granting different right of ways to cable companies, the state government can decide to build one right of way which grants access to ISPs, utility companies, etc., at a cost that is paid once.
“The concern is that you don’t want to be putting in ducts and force operators to move their fibre cables into ducts and the cost of doing that is then pushed on to the consumers,” Teniola said. “What we are trying to do is reduce Right of Way and reduction of RoW doesn’t take into consideration the cost of ducts. What the other governors have done that Lagos State hasn’t done, is that they’ve understood that it is the service providers and optic fibre companies that just need a low cost of RoW. After you do that, then you can impose that the first person put in the ducts can make sure it is available for others to use. The other people will then pay that person for putting the ducts there. It is not for the government to be charging service providers at this point.”
While Lagos accounts for a large portion of Nigeria’s internet access, fibre coverage in the state is less than 30 percent and where they exist, operators have naturally built in places where they can get value for the investment. Hence areas like Lekki, Victoria Island, Ikoyi and few other urban places in the state have seen more fibre deployment than areas like Ikorodu, Ajegunle, etc with a large density of low income earners.
Thus, apart from potentially increasing the cost of high speed internet, the suburbs in the state are likely not going to see any change in the quality of broadband as operators would largely reduce fibre deployment in these areas.
The digital divide in Nigeria is widening. This is despite telecommunication subscriptions surging to 187 million representing a 98 percent teledensity as of February 2020. In comparison to this high teledensity, broadband penetration stood at 39.58 percent in the same month.
Chief among the challenges slowing the growth of internet access is the high cost of laying fibre cables across. Lagos State during the days of Babatunde Fashola charged N500 per linear metre, but the Akinwunmi Ambode government jerked it up to N3000. The current administration under Babjide Sanwo-Olu hiked the fee to N5000.
A guideline issued by the federal government in 2012 pegged chargeable access for laying of ICTSP ducts and cables at N145 per linear metre and N20 per linear metre as annual maintenance access fees. This has since been confirmed by the National Economic Council (NEC) whose membership comprises the 36 State governors, the governor of the Central Bank of Nigeria and other co-opted government officials.
In January 2020 when Lagos and 13 other states without notice jerked up the Right of Way fee, the Minister of Communications and Digital Economy Ali Isa Pantami had used the NEC agreement as a bargaining chip to get the governors to reverse the increase and revert to the N145 fee. Ekiti was the first to comply with the NEC price of N145.
“This is a highly commendable effort by @kfayemi,” said Pantami. “It will undoubtedly facilitate broadband penetration in Ekiti State. Hope other states will emulate the action as earlier agreed during our meeting.”
Imo State has also adopted the N145 by NEC, but Kwara State a few days ago announced it would rather collect N1 per kilometre of fibre laid. While Kaduna is said to have lowest fees at zero naira per linear metre, Kwara becomes the second state with the lowest fee in the country.
Addressing the right of way fees in Lagos would go a long way to help the licenced infraco in the state achieve wider connectivity and transform the government’s push for increased revenues even as many companies continue to adapt to remote work.
“We would like to commend the Ekiti State government for reducing the RoW charges for laying telecommunications infrastructure in the state. We believe this move will enable the deployment of fast and efficient infrastructure in Ekiti State which will ultimately improve broadband penetration, strengthen the state’s technology ecosystem and drive innovation to the region. MainOne continues to engage various governments to explore potential areas of partnership and investment, but at this time, we are still assessing opportunities available to us in the state,” Opeke said.
