90% of local telecom operators face shutdown in next 5 years – Expert

Ayoola Oke, former Special Assistant to Ernest Ndukwe, the former Chief Executive Officer, Nigerian Communications Commission (NCC) has stated that over 90 percent of homegrown telecom operators may fold up within the next five years.

The ICT Legal and Regulatory Expert, who spoke to newsmen on the issues affecting the local operators yesterday in Lagos, said the bigger telecom operators are suffocating the local ones.

“It is not a prophecy. If certain regulatory steps are not taken and things are not done the way they should, more than 90 percent of homegrown local telecom operators will probably all die out in the next 5 years like what happened to tier 1 operators in the past 14 years and that will be terrible for the country and consumers. From the way the industry is structured now, the bigger operators are suffocating the industry,” Oke said.

He described the industry as subdivided into three tiers, with tier one for big network operators Mobile Network Operators (GSM), Starcomms, MTS 1st Wireless, Intercellular, and Startech, among others belonging to tier two and smaller operators such as Internet service providers, PNLs, International Data Access Service Providers, Swift Telephone networks, Rainbownet, for tier three.

“Almost all the operators that were active and vibrant 14 years ago are now dead or struggling, leaving the tier two space almost empty, and tier one operators face no competition or incentive to improve.

“None of the local operators in tier three have been able to grow to become tier two operators because they are dying, and the country would be left with a tier one oligopoly if the homegrown operators eventually die out,” Oke said.

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He further cited the instance of bigger operators asking smaller operators to pay for termination rate in dollars rather than the country’s legal tender which is the naira and consequently leading to their disconnection.

“There was a determination of the International Termination Rate made by NCC last December. All of a sudden, the bigger operators are interpreting the determination to mean that the smaller operators must pay them in dollars for even the downstream portion of the international traffic.

“Meanwhile, such as illegality and a contravention of the provisions Section 15 and 20 of the Central Bank of Nigeria Act. Section 20 of the CBN Act expressly criminalising demand. Due to this, small operators are being disconnected by big operators for flimsy reasons without the notice of the NCC,” he said.

The former Special Assistant to Mobolaji Johnson, the former Minister of Communications and Technology, therefore, urged the Ministry of Communications and the NCC to come up with policy restrictions and regulatory steps respectively.

Oke proposed asymmetric regulations whereby the Commission controls the big operators more so that their weights won’t crush smaller operators.

“The Federal Government should come up with policy restrictions and regulatory steps. NCC did well when it had dominance and significant market power whose purpose was to subject those companies to asymmetric regulations. NCC has to be proactive, by encouraging smaller operators by conducting timely investigations on big operators for disconnecting smaller operators.

“NCC must monitor more and in fact should have automatic technical monitoring because it is the consumers that would suffer. They should penalize bigger operators if found wanting. NCC should do more asymmetric regulations whereby they would impose more regulatory controls and obligations on the big operators so that their weights won’t crush small operators,” he said.

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