• Thursday, June 20, 2024
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BusinessDay

Why broadband cost remains high amid international capacity glut

Nigeria plans local government broadband, misses 50% target

The majority of Nigerians still have no access to affordable broadband internet, five years after the landing of four submarine cable systems, due to the enormous cost and complexities inherent in distributing international bandwidth capacity across the length and breadth of the country, BusinessDay investigations reveal.

The dearth of the requisite internet infrastructure, including long-distance transmission fibre, metropolitan networks and last mile connectivity, necessary for bandwidth distribution means that Nigerians pay more for broadband internet services when compared with their counterparts in other developing African countries and economies. Fixed-line broadband subscriptions cost an average of 39 percent of average income, with the same figure for mobile broadband bundles hovering around 13 per- cent, according to recent report by the Alliance for Affordable Internet (A4AI).

“Broadband remains out of the reach of average Nigerians because fibre needed to move bandwidth around is limited and mainly found in some cities and capitals”, said Lanre Ajayi, president, Association of Telecommunications Companies of Nigeria (ATCON).

“In places where fibre does exist, they are mainly proprietary networks. The cost of accessing them is highly prohibitive and discriminatory”, he said in an interview with BusinessDay. Nigeria, Africa’s largest economy by GDP, needs to spend $5 billion per annum on Information Communications Technology (ICT) infrastructure over the next 10 years, mostly on fibre, according to the National Infrastructure Master Plan (NIMP).

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The purpose of this massive investment is to facilitate e-governance, e-health, e-education, and to enable Nigerians employ them- selves on the back of the myriad of opportunities availed by the internet. Broadband availability would also enable retirees contribute to the economy by working from home through the internet, and allowing skilled Diaspora Nigerians contribute to national development. Beyond that, industry watchers say broadband will lower the cost of real estate as people will be able to work from anywhere, without necessarily con- verging in urban areas and needing to commute.

There are four active cables carrying an installed capacity of over 19.2 terabytes, with a combined capacity of about 340 gigabyte, which is a massive increase in capacity available to drive bandwidth dependent services. MainOne, the 7, 000-kilometre cable, is valued at $240 million. The 10, 000-kilometre Glo- 1 submarine Cable costs $800, 000 to build.

Industry analysts place the worth of NITEL’s SAT 3 at about $600 million, while MTN’s West African Cable System (WACS) costs about $600 million. Industry analysts told BusinessDay that 95 percent of the capacity on this infrastructure was redundant due to the lack of distribution and last mile connections needed to move available bandwidth capacity across the length and breadth of the country.

Still highlighting the high cost of broadband in the nation, in 2013, Nigeria was ranked 142 out of 169 countries by the International Telecommunication Union (ITU) for the affordability of a fixed-broadband internet connection. The country was also ranked 99 out of 126 countries for a prepaid 500MB mobile broadband connection, behind Kenya, Ghana and Tanzania. With the advent of the cables, the cost of international band- width capacity dropped from between $1,500 to $200 mbps (mega bits per second).