Indigenous IT operators fault government target for broadband rollout

Indigenous Information Technology (IT) operators have said that government should stop setting impossible targets for broadband rollout by winning spectrum bidders in Nigeria’s harsh operating environment.

This they say the foreign exchange scarcity makes it almost impossible for local operators to reach the one-year set target, as procurement of necessary infrastructure need to be sourced with forex.

Biodun Omoniyi, CEO, Bitflux Communications Limited, told BusinessDay in an interview that the investment climate for companies that make their money in naira was tough and there wasn’t any adequate support from the government.

“We local operators don’t earn dollars and you all know that the needed equipments are brought in from foreign countries. So, where are we supposed to get money to procure those equipments? Scarcity and restriction of foreign exchange contributed to some of the delays that we experienced initially,” Omoniyi said.

Bitflux Communications emerged winner of a previously auctioned 2.3GHz spectrum with a bid of $23.25 million in February 2014, and where given the same condition of rolling out in one year. However, two years after, the company is still planning to rollout 4G LTE services.

“It is true that it has taken us quite some time but essentially, what is worth doing is worth doing well. And looking at how far we have come, it is actually an indigenous company and you know that the environment is very harsh.

“We have made necessary applications to the right quarters about what caused our delay, we have signed contracts a while ago but we needed to fund it using foreign exchange, which was unavailable,” Omoniyi said.

This was said on the back of an announcement made by the Nigerian Communications Commission (NCC) over the weekend to seriously deal with and withdraw spectrum licences from winning bidders of the 2.6GHz spectrum to be auctioned on May 17 – 19 2016, if spectrum was not used for broadband rollout after one year of licence issuance.

Speaking at an interactive session with journalists, Austine Nwaulune, director, spectrum administration, NCC, said the commission would make sure that the one-year deadline for broadband service was strictly adhered to by winners of this spectrum frequency.

“The industry is so much in need of this service that we cannot afford and we will not accommodate any such delays, and we have stated it very clearly that it will be strictly enforced,” Nwaulune said.

When asked about previous spectrum licence winners who were yet to rollout facilities several years after the one year deadline had expired, Nwaulune said: “If we have been having cases where operators ignored the one-year deadline, this would be the last time it would happen because we have strict rules now and failure to adhere would result in the licences being withdrawn from the winners.

“This is because we intend for the whole nation, that is the six geo-political zones of the country, to be covered in eight years.”

But some indigenous IT operators have however claimed that this is an unfair term, seeing that the Nigerian operating environment is not unfavourable.

The rollout, coverage and service obligations for the latest 2.6GHz spectrum frequency up for auctioning state that the winning licensee is required after the operational licence award to rollout services at least as follows:

“Phase 1 between the second and third year, at least two state capitals in each of the six geo- political zones of the nation. In phase 2 between year four and year five, an additional two state capitals in each of the six geo-political zones and in phase 3 between year six and year seven, the remaining thirteen state capitals in the six geo- political zones should be covered.

“Within six months from the award of license, the licensee shall convey to the commission the schedule of states that will be covered. In the event of the winning licensee’s inability to deploy services as specified herein, the commission reserves the right to sanction the licensee based on relevant sections of existing regulations except for areas where force majeure is established,” the commission said.

Lanre Ajayi, national president, Association of Telecommunications Companies of Nigeria (ATCON), said “the association is disturbed that NCC has not been able to assign spectrum to operators for a long while and past attempts to assign the 2.6GHz have failed.

“We would like to see a better management regime of the Nigeria frequency spectrum. We expect the National Frequency Management Board (NFMB) to proactively discharge its responsibility.”

About the non-use of spectrum by winning bidders, Ajayi said:

“ATCON is of the opinion that the Nigerian market is matured enough to have a secondary spectrum market. Presently, there is a large number of idle spectrums in the custody of some operators while numerous investors are yearning for spectrum to roll out services.

“Since it takes a lot of hurdles to retrieve such spectrum from present owners, it makes sense to allow such owners sell to new buyers who may have need for the spectrum,” he said.