NCC snubs one-stop permit proposal for telecoms infrastructure

Ben Uzor Jr

The Nigerian Communications Commission (NCC) has rejected the proposal by telecommunications operators in Nigeria for a one-stop permit centre for getting approval for building infrastructure across the country. This, according to operators would eliminate the bottlenecks inherent in getting requisite approvals from relevant government agencies for infrastructure build. Speaking during an Information and Communication Technology session during a conference organised by the Nigerian Bar Association in Lagos last week, Eugene Juwah, executive vice chairman of the NCC, said since telecoms focuses more on physical infrastructure, it could encroach on the statutory mandates of other agencies and government at all levels, the idea may be difficult to create.

The NCC boss was represented by Yetunde Akinloye, assistant director, legal and regulatory department of the commission, who made the commission’s position known after a proposal by the Association of Licensed Telecoms Operators of Nigeria (ALTON) for a single-place approach for getting all the necessary permits for installation of telecoms towers and other infrastructures. This, according to ALTON is in an attempt to avoid duplication of charges coming from government agencies as well as address the regulatory issues for telecoms infrastructures. ALTON had earlier condemned the role played by the National Environmental Standards Regulatory Enforcement Agency (NESREA) in the telecoms sector in recent times, where the agency had shut down telecoms base stations.

This move had caused a face-off between it and the commission while denying telecoms subscribers access to good services due to network disruption often caused by NESREA’s action. Ijeoma Abazie, representative of ALTON said, “We have many instances where a government agency like NESREA, in a bid to enforce its regulation will go and seal off a telecoms site. We understand NESREA has it own rights and powers under the statute. We would have liked to see a situation where it focuses on Environmental Impact Assessment (EIA). We want one that enables the industry to do a one off EIA process that we can conclude in a maximum of three months comparable to the timelines that you see in Ghana where EIA takes 100 days, Uganda 120 days, for full and abridged EIA. That’s what we need to see in the Nigerian market.

“We had recommended as an industry that apart from abridging the time for site specific EIA, we also need to get to a situation where the minute an operators’ consultant submits audit for site, the operator should be given a conditional approval so that they can go ahead and begin to roll out. We are at a stage where we have too much quality of service challenges. We have seen the recent fines. Four GSM operators were fined a cumulative N1.17bn by the NCC. It is a commercial imperative for all operators to step up on the QoS that we offer the subscribers. Unlike a country like United Kingdom (UK) that has about 50, 000 Base Transceiver Stations (BTS), Nigeria is nowhere near that figure. “Going forward, we will need to roll out as much as 15, 000 base stations across operators. We need all these bottlenecks to be removed”.

To address the issue of multiple agencies controlling telecoms equipment, according to her, ALTON has proposed that the telecoms regulator should be made to be a one-stop centre for getting all the permits for telecoms infrastructures. Explaining why the operators’ proposal for a one-stop permit centre is not feasible, Juwah said, “Although we acknowledge the challenges, operators are facing, we cannot however have a one-stop permit centre.” According to him, “Telecommunications infrastructures are often physical equipments whose impact, especially as physical structures, permeates as aspects of our life and there are agencies that regulate activities in those other sectors.

Section 135 of the Nigerian Communications Act 2003 also stipulates that licensees are mandated that necessary approvals are taken from different levels of government as may be required.” He, however, promised that the Commission would continue to collaborate with necessary agencies to ensure that other agencies’ activities do not affect telecoms expansion. “We cannot do away with collaboration because telecoms permeates every section of the society and by virtue of that, chances are that NCC will be dealing with many agencies and we are already doing that,” he said. Juwah added that on efforts are being made at ministerial levels to address areas of disagreement and inconsistencies between the technical environmental regulations for base stations by the NCC and the NESREA.

He said, “Between the NCC and NESREA, we have areas where we are now working on, especially as regards setback requirement for telecoms base stations. Hitherto, NCC recommends 5 miters setback for operators while in NESREA’s regulation, 10 metres are specified. “But in the ongoing discussions between the two agencies, we have agreed that for existing base stations the 5 metre setback will remain, while for new base station to be built 10 metres setback would application. Where operators find it difficult to achieve the 10 metre setback, operators must seek express permission of the government.”

Expanding mobile advertising through telco participation

Mobile advertising makes up just a small portion of the online advertising market. Yet its potential is high due to its ability to narrowly target consumers with interactive marketing and advertising offers, writes EN UZOR JR.

The effectiveness of mobile advertising and marketing appears to have become more efficient than traditional methods. A global company like Coca-Cola is turning to mobile advertising to encourage brand adoption and loyalty.  Writing in a blog for the Jerusalem Post, Levi Shapiro, Professor in the Media Innovation Lab at IDC, gave lucid insight into how soft drinks giant – Coca-Cola, plans to double its revenues to $200 million by 2020. Naturally, mobile marketing is going to be a core part of that strategy because the drinks company has realised, of course, that if it wants to achieve its goal, then significant growth has to come from emerging markets like Nigeria and mobile is the ideal media for reaching such potential customers.

Over the years, the cost of traditional advertising strategies has continued to rise. In spite of this, the efficacy of these methods appears to be on the decline. Industry analyst have said that smart entrepreneurs and organisations who place business growth as key priority are certainly aware of this trend and paying keen attention on developing innovative mobile ads strategies that are cost-efficient and effective at the same time. That said, Nigeria is gradually beginning to witness a shift from traditional to digital advertising and marketing. Kim Macllwaine, chief executive officer, Africa and Middle East, TNS confirmed this, saying that digital marketing especially on the mobile will grow exponentially in Nigeria going forward. He noted that TNS, a marketing research firm, once a year carries out a study known as ‘Mobile Life Study’ across 43 countries Nigeria inclusive, with a specific focus on how people use their phones.

Drawing inference from the findings of this study, Macllwaine revealed that many companies in the country are commissioning studies with the intention of ascertaining what Nigerians do on the Internet via their mobile phones and consequently how they can better leverage that for marketing development. Currently, mobile advertising makes up just a small portion of the online advertising market. Yet, its potential is high fundamentally because of its ability to narrowly target consumers with interactive marketing offers any time. Industry analysts expressed confidence that the potentials inherent in the sub-sector appear high especially when it is considered in the context of the expected development of mobile applications.

Nigerian market

The mobile advertising market in Nigeria has recorded some levels of development in recent times due to the explosive growth in mobile technology. In the last decade, telecommunications operators’ subsequent to the sector’s successful deregulation and liberalisation raised the subscriber base from 400, 000 active lines in 2001 to the current 99.14 million as at the end of March, 2012. A research conducted by InMobi, a leading independent mobile advertising network in the world, reveals that mobile media consumption continues to grow exponentially in Nigeria and, indeed, across much of the Africa. The report, which was made available to journalist recently, reveals that 37 per cent growth was recorded in mobile advertising impressions in Nigeria for the first three months of 2012. With more than eight billion advertising impressions in the first quarter, Isis Nyong’o, vice managing director, InMobi Africa, revealed that Nigeria has become Africa’s largest mobile advertising market.

According to her, the consistent month-on-month growth in mobile advertising impressions is evidence of the rising importance of mobile technology as a marketing medium. She said: “The stellar increase in impressions from 5.8 billion in the last quarter of 2011 to over eight billion in the first three months of 2012 is a clear proof of the rising popularity of the medium among Nigerian consumers and shows that marketing professionals and brand managers across the country are increasingly embracing mobile media as viable and effective advertising channels.” The figures, Nyong’o said is coming on the heels of an unprecedented 376 percent growth in Nigerian mobile advertising impressions from 2010 to 2011. This, according to her, demonstrates that growth in popularity of mobile ads as a consumer medium in the country.

In the same vein, Macllwaine observed that businesses and organisations in the country are increasingly spending significant parts of the marketing and advertising budget on digital marketing. “I know five big clients of ours in Nigeria who have asked us to do specific research and studies into digital marketing. These companies however want to know specifically what the consumers are doing on their mobile phones. “There is a huge explosion for digital marketing research and what that leads to is that companies are spending more and more of their marketing budget on digital marketing. There is a very large client of ours that is planning to spend 25 per cent of its marketing budget for 2012 on digital marketing”, he stated.

Smartphones drives growth

According to the research, smartphone technology is showing clear signs of growing popularity with approximately 10 percent of all mobile advertising impressions recorded on the Nigerian InMobi network from these devices. This represents quarter-on-quarter growth of 42 per cent in smartphone use, pointing to the rapid adoption of this technology by growing numbers of Nigerians. From a usage perspective, the research confirms that Nigeria, like many other emerging markets, remains highly mobile-centric, with the average mobile web user surveyed spending up to 5.5 hours engaged with media every day – up to two hours of which involves their mobile phones. Nyong’o says, “Interestingly, mobile usage appears to be competing directly with traditional media or a share of the attention of consumers.

With 15 per cent of those surveyed saying that they multi-task on their mobile devices while watching television.” The research also revealed that, for many consumers, mobile devices are the vastly preferred channel for the purposes of communication, entertainment, obtaining information and, even, online shopping. In fact, 67 per cent of those surveyed cited their mobile phone as their primary or exclusive means of online access. 63 per cent of those surveyed also pointed to mobile technology as the primary influencer of their purchasing behaviour. Ease of use (47 per cent) and privacy (31per cent) are the two primary reasons mentioned for this preference for mobile online technology. But interestingly, industry analysts believe active participation of telecommunications operators (telcos) in the emerging ecosystem will further expand the scope of the sub-sector. Some telcos have seen the potential in mobile advertising and beginning to take advantage of the opportunity there-in.

Telco participation

Mobile Network operator, MTN Nigeria in strategic partnership with Brand Edge Communications has opened up its network to advertisers in Nigeria. This move, according to MTN would enable advertisers and businesses leverage its over 40 million subscribers in order to get their advertisement to targeted consumers. Tagged MTN Mobile Ads, the new solution offers cost effective means for brands to directly target advertising to mobile phones of prospective customers in a more assessable manner than other channels provide. Speaking at the unveiling of the MTN Mobile Ads, a new platform for mobile advertising, Babatunde Osho, chief enterprise solutions officer, MTN Nigeria, pointed out that the telecoms company’s decision to open up its platform ahead of all other countries where the MTN Group operates is essentially to drive enterprise growth and development in the country via technology. 

With a subscriber base of over 40 million already profiled individuals whom brands can target advertising in a cost-effective and measurable manner, Osho pointed out that MTN Mobile Ads offers “a cost effective means for brands to directly target advertising at the mobile phones of prospects and customers, who need their products and services in a more measureable manner than many other channels currently provide.” Explaining the various mobile advertisement features the MTN Mobile Ads, he explained that the SMS, which are text-based mobile advertisement that request information from the customer; SMS Flash Messages, which are text-based messages that pop up on the screen of a user’s mobile devices; and Rich Media, which allows the full complements of video, sound , picture, animation and  text.

Other forms include Location Based mobile advertisement, which are used by organisations to target customers who are in close proximity; USSD Flash Message mobile advertisements pop up on the phone of the recipient making them impossible to ignore; IVR advertisements, which are jingles played to customers calling the MTN Call centre as they wait to be attended to and Caller Tunes, which are jingles played to callers and organizations who sub-scribe to the services. Speaking in the same vein, Femi Akinwunmi, creative director, Brand Edge Communications told Business Day that mobile advertising has been in existence for quite some time now, adding that there had never been a technology to drive it like the way MTN has done. He said that advertising and marketing have currently gone beyond traditional media.

“There is need to engage target market directly. We have been working assiduously to convince the mobile networks operators to come onboard. MTN has taken a bold step in the right direction. “Driving mobile advertising will make more sense if telecoms companies participate actively and invest in requisite technologies and platform development. “What my company does in this ecosystem is to create and develop the right materials which brands can use to reach out to their target market. If the networks are driving the technology themselves, it makes more sense. When we got the go-ahead, it was shocking that a network can take up the challenge to want to open up its network and invest in the right technologies to drive mobile advertising. “New media is the edge because it is more strategic and guaranteed.”

Targeted & Cost effective

Industry analysts believe there is need for other telecoms networks such as Airtel, Etisalat and Globacom to emulate MTN and participate enthusiastically in the ecosystem to further drive growth. But, what are the benefits of mobile advertising in contrast with traditional media? We might have touched on that earlier in our discussion. But for the purpose of emphasis, I would do a recap. The fundamental benefits of mobile advertising is that it can be much more targeted to your potential customers, instead of providing advertisements to a wide variety of people, most of which are not interested in what you have to offer. As such, the effectiveness of mobile advertising is much easier to measure. For instance, changes that occur as a result of traditional advertisements are difficult to track. If sales go up one day, you can’t be sure that it had anything to do with traditional advertising. In contrast, with mobile advertising, you can track every time an individual opens an advertisement on his or her mobile phone.

This would invariably assist in providing a clear understanding of how efficient your marketing campaign really is. Besides, mobile marketing campaigns are quite a bit less costly than more traditional methods. Part of its cost-effectiveness lies in the nature of the medium. Firstly, it is easier to make copies of digital information than to print a bunch of advertisements in the phone book. But more importantly, the cost effectiveness of mobile advertising is primarily because it is targeted. Mobile advertisement can be between five and forty times as effective as traditional advertisements. Lastly, the ease of tracking results makes it easier to stop wasting financial and human resources on marketing strategies that are not working.

Ladipo Nylander, general manager, enterprise marketing for MTN Nigeria told Business Day in an interview  that advertising today is very expensive, further adding that most corporate organisation are earnestly looking for new ways to reduce advertising cost whilst making it more targeted and strategic. “It is cost effective and widespread. People nationwide can receive it. More importantly, you get reports from mobile advertising. If I do a radio ad for instance, it is difficult to get a report that can give me actual figures on who received it, where they received and how they received it. It is difficult to know the performance of campaigns. I have done campaigns and I struggle to find out how successful it was. With mobile advertising, you get real-time reports of every campaign. So, it is engaging and much more interactive”.   

But, what does mobile advertising mean to media agencies? According to Nylander, “MTN Mobile Ads offers a broader range of channels to advertising agencies to deliver their clients messages to their target market; deliver richer, more effective integrated marketing communications media plans developed for clients while offering an additional revenue stream. “This is another channel corporates can use to advertise their product and make it specific and targeted. They can also go further and profile. For instance, I am selling a soft drink and I want to get it to the youth segment. I want to go to the youth market in this particular location that has this particular interest. MTN can provide that data of subscribers that meet that particular need so that they can target those specific customers only. “Unlike having a billboard, radio ad or TVC that is hit and miss. It is not targeted to a profile audience you want to reach.” 

Conclusion

At present, mobile advertising makes up a small piece of the overall digital advertising pie. Analysts expect, however, that by the end of 2012 it could make up 10 percent of all digital advertising, a pie that is itself growing rapidly. Advertising networks, Internet players, specialists in mobile ad technology, and systems integrators, too, are looking to build a strong position in the mobile advertising value chain in hopes of capturing a significant portion of this new revenue stream. At that level, mobile advertising will become a natural complement to traditional media channels, with the potential to boost revenues enough to help fund other projects—if telecom operators are prepared to reap the benefits.

According to industry watchers, if telecom operators hope to win in mobile advertising, they must take advantage of their large networks, in-depth customer data, and strong relationships with subscribers to defend their position within the mobile advertising value chain. Doing so will involve both competing against and partnering with the many other players looking to build their own positions. And they must overcome challenges surrounding privacy concerns, overly intrusive ads, and legal restraints on sending ads to subscribers who haven’t agreed to receive them. If telecom operators can do so, they will have access to a new source of high-margin revenues that will allow them to build additional digital services businesses.

Telecoms investment threatened by poor corporate governance

Ben Uzor Jr

If strict corporate governance practices are not adhered to, Nigeria's highly competitive telecommunications industry risks losing significant foreign and local investment needed to sustain the growth recorded in the industry, analysts have warned. Over the years, the telecoms industry has witnessed the steady decline in the performances of the Code Division Multiple Access (CDMA) players. Issues revolving around funding, corporate governance, subscriber preference for GSM technology have seen these small operators lose 1.3 million subscribers within a year.

Though, the nation’s telecoms industry ranks among the top 10 in attracting FDI in sub-Saharan Africa, analysts told Benuzorreports that the sector in the recent years has missed out greatly as investors are already taking a second look at the industry. Analysts have also identified non adherence to the principles of corporate governance as the rot eating deep into Nigeria’s telecom sector. According to them, corporate governance issues have seen the fortunes of CDMAs – also known as Private Telephone Operators (PTOs) nose dive in recent times.

Benuzorreports further gathered that the decline in fortunes were aggravated by their major financiers like financial institutions and venture capitalists pulling out investments due to the inability of the affected companies to find the right balance between technology development and institutional management. Thus, industry analysts say there is need for operators to develop corporate governance code in order to ensure they operate with high sense of responsibility. According to the industry analysts, operators must function within the dictates of the law and observe basic principles of corporate governance to sustain the growth recorded in the industry.

In the last decade, telecoms operators’ subsequent to the sector’s successfully deregulation raised the subscriber base from 400, 000 active lines in 2001 to the current 99.14 million as at the end of March 2012. Usen Udoh, senior executive, communication and high technology, Accenture Nigeria told Benuzorreports in a phone interview that there is a direct correlation between corporate governance practices and the increasingly international character of investment. “Most of the telecoms companies that are not doing well today in the country are essentially one man businesses. A one man business typically has weak corporate governance. The owner of the business in most occasions has a strong influence over the board.

“Any serious investor would take that into cognizance before making any investment. Corporate governance is a big issue in Nigeria’s telecoms industry and must be urgently addressed if we intend to sustain the growth recorded in the industry. The reason for the poor performances of CDMAs today is not a question of the effectiveness of technology but rather a problem of ownership structure. Over the years, the technology has been proven to be effective for regional deployments, data services. The fundamental issue is that these companies are less attractive to foreign investors due to poor corporate governance structures.” 

Lending his view to the issue, Ernest Ndukwe, past executive vice chairman of the NCC explained that the degree to which regulators insist that operators within its industry observe basic principles of good corporate governance is an increasingly important factor for investment decisions. According to the former EVC, investigations into corporate governance scandals proved that lack of transparency, deliberate accounting fraud, weak board oversight and failure of internal controls are significant shortcomings inherent among some companies in the industry. “Sub-optimal corporate governance complicates the work of the regulator,” Ndukwe disclosed, stressing the need for the operators to, “openly admit to customers of shortcoming and stating measures being taken to correct same, which is critical for transparency and sustenance of corporate governance”.

Reacting to the sub-optimal growth of the CDMA operations in Nigeria, Alex Dadson, managing director, West Africa, Qualcom, a pioneer company in CDMA technology, believes the challenge before the CDMAs in the country was not due to technology failure but a number of other key factors such as inadequate capital, poor management and limited network coverage among others. "The key problem is one of business strategy. It is more of the environmental factor that affects you business and how you manage it. The CDMA while it was an early entrant was also disadvantaged. We did not start out with nationwide CDMA licensing. There were riggings. The interconnect regime weighed against CDMA. All these problems have been subsequently fixed but CDMA took a beating as a result of business strategy, as a result of environmental factors and so on", he concluded.

 

NCC seeks judicial restraint against erring Telcos

The Nigerian Communications Communication (NCC) could seek a judicial restraint on the four GSM companies to force them to pay the over N1 billion fine it imposed on them last month, but this move could result in the total collapse of telecommunications services in a large part of the country, according to critics. BusinessDay learnt that the NCC which appears to have lost its patience with MTN, GLO, AIRTEL and ETISALAT will aim to shut down the Abuja offices of the firms which got the hammer after they failed to meet a controversial set of key performance indicators, KPIs for the month of April 2012.

Telecommunications analysts say any forced shut down of the Abuja offices of the companies will definitely create a devastating ripple effect capable of bringing about a total collapse of telephone and data services in a large part of the country, given that hub sites located in Abuja also service at least 60 other locations in different parts of the country. It was thought that the NCC and the GSM firms were negotiating a way out of a full blown crisis but BusinessDay learnt last night that this was not the case, and that the regulator was willing to wield the big stick and take the confrontation to a higher level.

One source familiar with the crisis said the GSM firms were contesting the Key Performance Indicators (KPIs) which they claim were even higher than what obtains in India and appear to mirror the KPIs of global leaders like Orange of the United Kingdom. Their position has always been that they do not benefit from poor service quality and that the current KPIs are unsustainable.v“I won’t say that the Key Performance Indicators (KPIs) set by the NCC are unattainable. It would have been attainable if the operational environment was right and conducive,” says Lanre Ajayi, president of the Association of Telecommunications Companies of Nigeria (ATCON).

Ajayi says that the federal government must create the enabling environment that would enable telecoms operators expand their network infrastructure. According to another source, “these KPIs cannot be obtainable in Nigeria. The GMS companies are not pushing for a lowering of standards but KPIs must be realistic and relevant to the ecosystem in Nigeria. “Given that the matter of power supply is key, perhaps it would have been better for NCC to structure the KPIs in a way that performance levels are raised proportionately.”

Analysts say if this is not done, there is a chance that the NCC would have to impose fines on the GSM companies every month, given that the KPIs were far too high for a country like Nigeria and that this could send the wrong signals to the global investing community. Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON) told BusinessDay last night that there are very positive discussions ongoing between operators and the telecoms regulator which are expected to yield results.

MTN, Airtel, Etisalat and Globacom were fined a total of N1.17 billion for not meeting stipulated quality of service benchmarks. MTN and Etisalat were fined N360 million each. Bharti Airtel was ordered to pay N270 million, while Globacom was fined N180 million.The deadline to pay expired on May 25, 2012 with a default of N2.5 million per day, until the fines are paid. As at Monday (June 11), MTN was expected to pay a total of N400, 000, 000, while Airtel is to pay the sum of N310, 000, 000. Etisalat, which was initially billed to pay N382, 500, 000, with the addition of N17, 500, 000, the company, will be paying the total sum of N400, 000, 000. Second National Operator, Globacom on the other hand, is expected to pay a total of N220, 000, 000. The grand total the four telecoms companies are to now pay will be N1, 330, 000, 000.

The NCC had issued the directive following the decline in service quality in the networks and had intimated MTN, Airtel and Globacom of its intention to issue direction if they failed to meet KPIs on service quality, including Call Set-up Success Rate (CSSR); Call Completion Rate (CCR); Stand-alone Dedicated Controlled Channel Congestion (SDCCH); Hand-over Success Rate and Traffic Channel Congestion (TCH Cong). Call Setup Success Rate (CSSR) is a term in telecoms, for the fraction of the attempts to make a call which result in a connection to the dialed number (due to various reasons, not all call attempts end with a connection to the dialed number). This fraction is usually measured as a percentage of all call attempts made.

According to NCC’s March and April 2012 KPI summary sheet, the commission target for CSSR which operators were expected to meet was 98 percent. MTN had 97.07 and 96.42 percent, Glo had 98.33 and 98.02 percent, Airtel had 97.39 and 97.48 percent, while Etisalat had 94.38 and 96.88 percent, respectively. Call Completion Rate (CCR) Call completion rate is the ratio of successfully completed calls to the total number of attempted calls. This means that for every hundred calls made to all the GSM networks of MTN, Globacom, Airtel and Etisalat, NCC according to March and April 2012 KPI summary sheet, NCC wants 96 per cent of them to go through and be successfully completed. However, MTN had 95.78 and 95.20 percent, Globacom had 97.44 and 97.45 percent, Etisalat had 93.05 and 95.81 percent whilst Airtel had 96.56 and 96.59 percent.

Hand Over Success Rate (HOSR) refers to the successful internal and external outgoing handovers of total number of internal and external outgoing handover attempts. The telecom regulator set 98 percent as its target for March and April. MTN had 95.14 and 94.67 percent, Globacom had 97.73 and 97.67 percent, Etisalat had 89.67 and 91.28 percent while Airtel had 96.64 and 96.33 percent respectively.