While it may seem like states’ buy-in is off to a good start, reducing Right of Way for fibre cables to N145 or lower would not be the last jigsaw to resolving internet penetration in rural Nigeria.
Nigeria’s fixed broadband technologies, which are required to drive the 4th Industrial Revolution applications including smart city, IoT, artificial intelligence, autonomous vehicles and other advanced technologies, are currently available only in high net-worth urban areas.
Access to fibre networks within 5 kilometres of the population currently stands at an average of approximately 39 percent reach, with a high of 85 percent in Lagos State and a low of 12 percent in Jigawa State.
Nigeria’s unique mobile internet penetration which stands at 32 percent or 65 million individual users, against a total mobile internet subscription base of 125 million, lags behind Ghana, Egypt and South Africa within the region.
As of May, six states have complied with the agreement reached with the minister of communication and digital economy to adopt the NEC-approved N145 Right of Way fee for one linear metre of fibre cables laid.
Ekiti State was the first to announce in May it was reverting to N145 from N5,000. Imo, Plateau and Katsina States soon followed. Kaduna and Kwara States took a different turn, announcing a record zero and N1 fees, respectively.
With more states expected to join the N145 or below N145 team, the stage seems set for massive deployment of fibre optic cables across the country. But it is merely the first leg in what could be a very expensive journey, one that only rich operators can navigate profitably.
In the new Nigerian National Broadband Plan 2020-2025, the Federal Government set out an ambitious strategy aimed at delivering data download speeds across Nigeria of a minimum 25Mbps in urban areas, and 10Mbps in rural areas with effective coverage available to at least 90 percent of Nigerians by 2025 at a price not more than N390 per 1GB of data (i.e., 2 percent of medium income or 1 percent of minimum wage).
The ambitious plan also comes with a hefty price tag of around $3.5 billion-$5 billion ((N1.3 trillion-N1.9 trillion at current exchange rates). The government acknowledges that successful execution would only be possible if the public and private sectors align and harmonise activities including contributing the needed money.
Several factors influence the cost of deploying fibre cables in a city. According to Atlantech Online, these factors may include the distance needed to cover a target location. The farther away a city or street is from a primary provider, the more cost that will attract. If it is a mile or more away, the more substantial the rates.
The price of installation can also rise depending on the type of physical obstacles such as rivers, highways or preserved sites like graveyards, historical monuments and nature preserves.
Other factors include availability of telco closets at targeted buildings, layers of bureaucracy, sufficient electricity, among others.
To mitigate the cost burden on operators, the Nigeria Communications Commission (NCC) had said it is committed to the counterpart funding arrangement. The plan ensures that the NCC supports the infrastructure companies responsible for deploying broadband with a subsidy of N65 billion counterpart funding. It is also part of a larger plan to raise N265 billion which falls under the State Accelerated Broadband Initiative designed to address the infrastructural deficits in the telecommunications sector. The infrastructural companies would raise the balance of the N200 billion.
The Federal Government is expected to release this fund by the third quarter of 2020 to InfraCos depending on their physical broadband rollout plan.
With the COVID-19 exerting a big toll from the Nigerian economy, stakeholders are starting to worry. Recently, Deolu Ogunbanjo, president, Association of Telecom Subscribers, told the government not to wait until the third quarter before releasing the funds.
“The government must find ways to release the funding without delay, to enable faster rollout of broadband services, since most sectors of the economy will be relying on broadband access to organise distant learning, virtual meetings through video conferencing, virtual work space, among others,” he said.
With the government struggling to fund its 2020 budget, the possibility of complying with the request to release the N65 billion seems a very distant possibility. States’ financial contribution may likely not be feasible too.
Gbenga Sesan, executive director of Paradigm Shift, a pan-African social enterprise working on digital inclusion and rights, told BusinessDay that states’ poor revenue is a barrier.
“This is why they are charging. This directive has been given since 2013 when the first plan was put together. It was only just this year – seven years later – that the governors’ forum agreed to implement it,” Sesan said. “This shows that states are not even willing to lose revenue because as far as they are concerned, they think if they get N4,500 per linear metre that is some income for them, forgetting that is what makes it expensive.”
Another challenge is that the condition for releasing the counterpart funding is incumbent on the InfraCos’ attainment of milestones. Given the total investment made so far by InfraCos is largely responsible for fixed broadband remaining at 0.2 percent, it is difficult to see where the supposed milestone would come from. The pandemic has seen many companies hold back on capital projects.
Experts have told BuisnessDay that the cash crunch that has hampered the progress of local operators could play directly into the hands of big tech organisations like Facebook and Google already making in-roads into the internet scene in Africa. These foreign players with seemingly limitless capital would probably wipe out the entire N1.4 trillion the NCC is looking for without breaking a sweat.
The only challenge is they becoming monopolies in a sector whose success was built on competition. Also, their dominance would mean the total redundancy of the six subsea cables and their 40tbps capacity.
But Sesan said having new competition would only make local players to seriously consider coming together to form a stronger alliance. Also important to note is that big tech companies like Facebook and Google would not be able to build infrastructure efficiently without local partners. They have to run their services to the last mile through cables and those cables would not be laid by Facebook or Google but by local partners.
Another way out for the local InfraCos would be for forward-looking states like Lagos, Kaduna, Ekiti, Imo, Kwara, Plateau, etc to consider tax rebates for InfraCos.
Sesan also recommended for states to provide incentive in the form of guaranteeing customers for investors willing to deploy fibre infrastructure. This is based on the premise that the government is one of the largest employers of labour in Nigeria.
“You can agree to a predetermined price, to say instead of charging $3 per month or N3,000, charge N1,000 and we can guarantee you that all civil servants from level 14 upwards can get it,” Sesan said.
“Don’t forget the government is the largest employer of labour in many of the states. It is also a work-from-home period meaning that a lot of their staff will be required to do a lot more work remotely,” he said.
