Private sector shows interest in FG’s $15 million IT innovation fund

Ben Uzor Jr

There are burly indications that the private sector is showing keen interest in federal government’s $15 million Information Technology (IT) innovation fund primarily focused on strengthening local content development in Nigeria’s burgeoning Information Communications Technology (ICT) landscape. The IT innovation fund is one in a series of government interventions aimed strategically at developing IT entrepreneurs to build successful companies that would support critical sectors of the Nigerian economy. Besides, the Ministry has already secured $3.5 million Seed Capital secured from National Information Technology Development Fund (NITDEF) but still requires contributions from private sector to assist incubates become commercially successful. A source at the ministry of communications technology told Benuzorreports, “We have seen a lot of interest in government’s IT fund.

“Few weeks ago, the ministry placed an advert for fund managers that would manage the IT innovation fund. The ministry has received positive responses from the private sector and is working assiduously to finalise and put all the modalities in place for the IT innovation fund to take-off. The fund will be managed by the private sector.” The source told Benuzorreport that the innovation fund would help deepen innovation in the ICT industry, further adding that the fund presents viable opportunities to financially empower young Nigerians. “I think the fund is a good starting point. The private sector would be really interested in such an initiative”, Sola Bickersteth, managing director, OneNetwork, an agent manager for mobile payment told Benuzorreport. “I have no doubt that the IT fund will definitely spur innovation and creativity if people with integrity manage the funds well” he said.

A number of initiatives by government have emerged to harness local talent and develop a vibrant software and application development ecosystem. The ministry launched a Technology launch pad initiative in December geared towards developing the capacities of indigenous software developers in Nigeria. The initiative will enhance local content growth and deepen technology skills in the IT industry. The programme will provide mentorship and finance to incubates and will create 10 successful software businesses before the end of 2013 that will focus on providing industry solutions for Banks and Oil and Gas in the first instance. This will increase to 30 successful software businesses by 2015 that will create solutions for other sectors of the Nigerian economy. Mobile apps, a money-spinner for many developed economies is a critical area of expected growth in Nigeria over the next few years, analysts have said.

Nigeria's over 101 million SIM cards, and a global app market expected to reach $25 billion by 2015 according to research firm, Markets and Markets, provides a mouth-watering opportunity for local app developers to make large scale profits. In view of this, the CommTech Ministry has concluded the development of ICT incubation centres to facilitate software applications development in Nigeria. It was gathered that two centres will be up and running before end of January 2013 in Lagos and Cross River state. The goal is for the incubation centres to create 25 successful ICT businesses by 2015. A new report said that with app developers earning 50 percent to 70 percent of the retail price via the app-store platform of Apple, Google, Nokia, Research in Motion (RIM) and Windows, incubating young developer’s innovation could have significant multiplier effect domestically. 

“Nigeria has a thriving and growing mobile software start-up”, Teemu Kiijari, head of ecosystem and developer experience at Nokia West Africa, said. The Institute of Software Practitioners of Nigeria (ISPON) sees the potential of software production worth some $100 billion over the long run, adding that app development will be critical to attaining the goal given that mobile devices are the primary means by which Nigeria access the internet. So far, ICT incubation centre have been developed by the private sector. Two examples are the Co-Creation Hub and the Institute of Venture Design (IVD). The former, a not-for-profit centre in Lagos was set up by two entrepreneurs, Femi Longe and Bosun Tijani and has partnerships agreement with Nokia, Google, RIM, MainOne Cable Company to mention a few.    

Service quality worsens despite N347bn network upgrade

Ben Uzor Jr

Despite over $2.24 billion (N347 billion) investment ploughed into network expansion projects by telecommunications operators in the preceding year, Nigerians are yet to feel the impact in terms of improvements in network quality. The most obvious quality issues are drop calls and incoherent voice transmission which are still very prevalent in the industry.The current situation, according to analysts, has huge negative cost implication on individuals and businesses that depend on telecoms services.

“Throughout the holidays, service quality on all networks was very poor. I could not make a call without experiencing a drop call. If however I got connected, I could barely hear the person I was communicating with,” said Rasheed Shonubi, a subscriber to one of the big networks. Shonubi’s reflects the frustrations of numerous businesses, particularly those that deal on heavy data throughout 2012 and in the festive period. “That despite all that, subscribers are constantly inundated with adverts of how much operators’ are spending on network upgrades and expansion,“ Shonubi added.

Reports shows that MTN invested $1.4 billion on network upgrades in 2012 with Etisalat investing $194 million in network expansion through the building of about 1,000 base stations by the end December 2012 in addition to the 3,000 Base Transceiver Stations (BTS) it already has. On the other hand, Airtel Nigeria invested $600 million on its network since taking over the GSM license originally held by Zain. Globacom also signed a $6 million contract with Ceragon in March 2012. In the CDMA segment of the industry, Visafone signed a $20 million agreement with Huawei in 2012 to expand its network across 26 states and build up its broadband infrastructure in Lagos.

There are some industry watchers who say that perhaps mobile network operators are not investing sufficiently in network capacity, in view of the ever-growing demand for communications services.The country’s over 100 million phone subscribers entered into the New Year with serious complaints about the deteriorating service quality by mobile networks. Jude Kalu, a subscriber to one of the networks based in Lagos told Benuzorreports, : “I have been unable to maintain a call for three minutes without it dropping. I have three lines because I need to be in touch with my businesses in the East. The telecoms regulator needs to do more, bearing in mind the telecoms sector is critical to the growth of the economy.”

On the other hand, Gbenga Adebayo, chairman, Association of Licenced Telecommunications Operators of Nigeria (ALTON) confirmed that appreciable sums of money has gone into network expansion in 2012, adding that the problem the industry faces is in two dimensions, man-made and natural causes. “The spate of bomb attacks on installation infrastructure and the recent floods which destroyed equipments comprehensively slowed down expansion projects which contributed to poor quality of service,” he postulated. Furthermore, he said that most operators were not prepared for these developments, as they never anticipated them when drawing up the budget for network upgrades.

“We also have issue of governments and their agencies shutting down base stations for one levy or the other. All these have contributed to poor quality of service,” he pointed out. The Nigerian Communications Commission had said it would impose fresh sanctions on telecoms operators in December, if poor quality of service persists. In July, MTN, Airtel, Etisalat and Globacom fell under the hammer of the regulator who slammed a collective N1.17 billion fine for poor services. Giving vivid insight into some of the factors that impede improved service delivery, Osondu Nwokoro, director, regulatory affairs, Airtel Nigeria, said no fewer than 53 telecoms hubs belonging to the company were directly affected during the bomb attacks in the northern east part of Nigeria.“But 193 sites were impacted in all, as huge outages were sustained. The way the network architecture is designed, we have some telecoms masts that are hubs and control other base stations. So, if a hub is destroyed, then other masts that depend on the hub will be affected,” he said. 

However, the Indian-owned mobile network operator has managed to resuscitate 112 out of the 193 telecoms sites. The rising spate of bomb attacks, according to Nwokoro has stalled network restoration and rollout, as field operations personnel refuse to work in areas prone to violence. The Airtel director bemoaned the fact that the loss of capacity occasioned by these threats in most cases, affected quality of service delivery and customer experience, leading to a drop in Key Performance Indicators (KPIs). Silas Daniel, a businessman, described the services of some of the service providers during the yuletide season as ‘’terrible’’. Daniel said some of the operators had inundated the subscribers with unsolicited text messages during the yuletide period at different rates. “They will bombard you with series of text messages and a lot of promos that sometimes get you confused.

They will tell you there is a free call to this call at “so-so’’ time and you might bump into the wrong hours. You will think that you are making a free call but before you know it, your credit will go. NCC should be able to put up strict and stringent measures to be able to punish offenders because they are taking Nigerians for a ride; these things are not done elsewhere, even in South Africa and other parts of the world. These are not done, they are not acceptable.’’ Daniel said that the destruction of some of the GSM masts in some part of the country should not be used as an excuse for poor services. He urged the operators to partner with local communities and private security outfits to ensure security of their installations nationwide.

Rosemary Onyemenan, a youth corps member, called for a downward review of tariff and appealed to the industry regulator to prevail on the operators to expand their network to rural areas.  Michael Vershima, a civil servant, complained about the frequent “error in call connection’’ from his service provider, adding that such interruptions could have safety and security implications. He also appealed to operators to stop charging for voice notifications made to subscribers during active calls.

Rise in Cyber attacks on government website threatens E-governance

Ben Uzor Jr

Efforts by federal government to promote the adoption of the internet for delivering government information and services to its citizenry is been threatened by the recent spike in incidences of cyber attacks on websites of ministries, departments and agencies (MDAs) of government, experts have said. E-Governance, according to industry experts strengthens the very fabric of democracy by ensuring greater citizen participation at all levels of governance.

In the preceding year, cyber criminals attacked prominent government websites including the Economic and Financial Crimes Commission (EFCC), the Central Bank of Nigeria (CBN) and the Ministry of Science and Technology (MST). This trend, according to industry analysts is expected to continue in the new year. It is also particularly worrying because Nigeria still does not have requisite legislation to protect data, Information Technology (IT) infrastructure and prosecute perpetrators of cyber crimes.

Ernst & Young has estimated that the Nigerian economy loses $200 million annually to cyber crime. Omobola Johnson, minister of communication technology has at various stakeholder fora expressed federal government’s desire to strengthen e-governance in the country, further predicting that by 2015 all MDAs will have effective websites. Though, there has been some level of progress in that regard, government's efforts, according to industry analysts could be negated by the growing incidences of online attacks on government websites.

The number of MDAs with effective websites increased from 370 in 2011 to 420 in 2012, according to statistics from the ministry of communications technology. Besides, the number of cases involved with the defacement of government websites in Nigeria has continued to rise from 10 percent back in 2010 to 60 percent as at 2012, reports Centrex Ethical Lab, a cyber-security and intelligence company based in Abuja. But interestingly, the data shows that there has been an increase in cyber-violations of official websites of government agencies over the last three years.

A total of 23 official government websites (.gov.ng) were reported defaced in 2012 alone, out of a total of 60 website defacements during the year, including 15 cases of violation of .org government websites. "e-government is endangered without a National Cybercrime Act", Chris Uwaje, president, Institute of Software Practitioners of Nigeria (ISPON) told Benuzorreports in an interview. But there is hope. He disclosed that the Chairman Committee on Science and Technology was in Malaysia, november last year with the director-general of the National Information Technology Development Agency (NITDA), Cleopas Angaye to explore the modalities for a national Framework for Cybercrime Bill.

"The bill should be passed this year", he said. David Mbah, an industry analyst told Benuzorreports, that the increase in the number of cyber attacks in recent months poses multiple threats to government's e-governance initiatives. "Data security is a key concern in e-governance as the system of manually maintaining records has been gradually replaced with digitisation of data"."Maintaining high-level security is imperative in e-governance. If the system is not secured and hacked, the government will not be able to function smoothly,” Mbah further added.

When BusinessDay reached out to government officials in CBN, EFCC and ministry of science and technology for comments, they all declined, claiming that they were not authorised to speak on such matters. Experts pointed out that lack of knowledge was a critical reason for the vulnerability of government websites. Nsikak Nelson, a cyber-security expert said the lack of understanding of ethical hacking among many government officials is the main reason for the growing attack. Speaking in the same vein, Tim Unwin, chief executive officer of Commonwealth Telecommunication Organisation (CTO), has urged government to formulate legal and regulatory frameworks to minimise cybercrimes.

The Nigerian Communications Commission (NCC), according to him had a very critical role to play in this area. Cybercrime, especially website hacking has seen tremendous growth around the world as major banks  in the United States (US) were hit with the biggest cyber-attacks in history, as well as the Vatican website being hacked twice in one week last year. These cyber attacks are expected to increase in 2013 and beyond as cyber-criminals continue to think of clever and sneaky ways to obtain customer’s credit card data and personal data, as well as in response to unfavorable government policies and actions.   

Lack of broadband policy leaves N347bn undersea cables redundant

Ben Uzor Jr

The delay in the approval of a national broadband policy for the country is threatening N347 billion ($2.24bn) investments in underwater cable systems, industry analysts have said. The broadband policy, according to industry analysts is expected to encourage infrastructure sharing and open up the broadband infrastructure market to foreign and local investors. This, they argue would facilitate the aggressive build out of requisite distribution and lastmile infrastructure needed to move available bandwidth capacity from undersea cables across the length and breadth of the country. A new report by the Oxford Business Group (OBG) showed that there are four active undersea cable firms, including Nigerian Telecommunications (NITEL), providing a total of 7.78 terabits per second of capacity. This, according to analysts is a major boost in the capacity available to drive bandwidth dependent services.

 Despite the enormous bandwidth capacity emanating from these cables, Nigerians are yet to benefit from the investments in the area of affordable and efficient broadband services. The 7, 000 – kilometre MainOne submarine, which went live in 2010 is valued at $240 million. The 10, 000 kilometre Glo-1 cable cost $800, 000 to build. Industry analysts place the worth of NITEL’s South Atlantic 3 (SAT 3) at about $600 million. While MTN’s West African Cable System (WACS), cost about $600 million. This means that the total investments and other expenses rose to $2.24 billion. Funke Opeke, chief executive officer, MainOne cable in an interview expressed dismay at the level of utilisation of these undersea cable infrastructures. She has at various fora advocated for a national policy on broadband to accelerate rapid penetration of the internet, lower cost of distribution and to speed up economic development.

About 5 percent of the capacity from the MainOne Cable is utilised, Opeke told Benuzorreports. This low utilisation of the international cable infrastructure is across board. This, according to industry analysts has implications for the Nigerian economy as new business opportunities such mobile applications development, Value Added Services (VAS), telemedicine expected to spring up as a result of the emergence of the cables are still non-existent. Usen Udoh, senior director, management consulting at Accenture Nigeria shares Opeke’s sentiments. He was quoted in a report as saying the continued delay in developing a national broadband policy to push the bandwidth to rural areas is currently bringing people's creativity to waste. “It is that broadband policy that would then be able to expand or ensure access into the hinterlands and then bring huge bandwidth that is on our coast to the hinterlands.

“Without that last mile connection, it is like somebody who just brought a huge pot of soup and put it in front of your house and there are no plates to go there and serve the food and bring them in.” Kazeem Oladepo, a member, Board of Trustees of the Association of Licensed Telecoms Operators of Nigeria (ALTON) believes a national broadband policy would go a long way in boosting broadband infrastructure build. Oladepo however blamed the low broadband penetration in the country on weak demand for broadband capacities by Nigerians. “Government must put all its services online, such that for anybody to access government information, the person must go online. For any civil servant to fill government form, the person goes online. By doing so, government would create demand for broadband access.

Giving his advice on what government needs to attract investment in broadband infrastructure, Oladepo said, "there are two basic issues to broadband penetration and they include access and demand. While access has to do with the level of the infrastructure rollout that will enable everyone have access to broadband, demand in itself depends on the need for broadband by the citizens, which has to do with creating awareness on the part of the citizens in order to expose them to the importance of broadband.” Oladepo said the prices have actually crashed at the wholesale international connectivity level but that reduction in prices had trickled down to the end user. This, he added was because the gap between the wholesale and retail services has not been adequately bridged through infrastructure, which delays access and generally hinders end users from benefitting in corresponding proportion on the radical price reduction, combined with superior services quality. “Few years back, we bought IPLC bandwidth off NITEL at rates that were close to $1,500 per Meg. Today, you can buy the same capacity at between $300 and $500, depending on the volume and duration of service you are buying.”

Mobile number portability testing gets underway

Ben Uzor Jr

The Nigerian Communications Commission (NCC) is making significant progress in its quest to commence the much anticipated Mobile Number Portability (MNP) scheme in the first quarter of 2013. The MNP scheme would enable Nigeria’s over 100 million telephone users to retain their mobile phone numbers should they choose to migrate from one mobile network operator to another. Sources close to the commission told BusinessDay that testing of the system had actually begun in December, but was slowed down by the Christmas and New Year holidays. Our source said testing is to re-commence next week, to smoothen out the rough edges  in the scheme and provide ample opportunity for consultants to address any hitches that may arise in the process, before the launch.

BusinessDay gathered that from a technical perspective, MNP providers have already begun integrating with telecom providers’ Operation Support Systems (OSSs) and internal business processes, such as customer care, billing and other management systems. Osondu Nwokoro, director, regulatory and government affairs, Airtel Nigeria, told Business Day, “We are ready for the commencement of the scheme in the first quarter of 2013. We only hope that others will not frustrate the process. One of the benefits of the scheme is that it would assist the NCC in regulating the industry properly. Number portability will address quality of service issues and high tariffs. Number portability will make it easier for the regulator to manage anti-competition practices. A lot of such practices are cropping up in the industry.

“It will drive competition in the industry because if an operator fails to provide good quality of service, a telecoms subscriber has the freedom to switch to another network. It will definitely encourage all telecoms operators to provide services at an optimal level. Industry watchers are optimistic that the scheme would not only foster competition in the industry, but also throw up fresh opportunities for value added service providers, as networks with poor service quality will have difficulty retaining customers when the scheme takes off.

Wale Goodluck, corporate services executive, MTN Nigeria, told Business Day: “The scheme will drive value along customer relations, innovative product offerings and value added services. It can only be good for Nigeria’s telecoms industry. We are aware that the scheme will go live in the first quarter of 2013. In view of this, we are prepared and looking forward to the commencement of the scheme. As I speak, all systems are ready to go. I think mobile number portability will empower the subscriber”. BusinessDay gathered that telecoms operators will have to invest significant resources in network expansion and upgrades, develop innovative value added services to keep their subscribers from migrating to other mobile networks. In March 2012, a consortium of three firms had won the bid to operate the scheme. The firms that make up the consortium are Interconnect Clearing House Nigeria (ICN) Telecordia of the USA and Saab Grintek of South Africa.

Bill Best, former chief technical officer, GSMA in an interview said that “the scheme represents an opportunity for Nigeria’s telecoms industry to progress and develop by breaking down one of the biggest impediments to customer choice - number lock-in”. Best said the scheme has been proven to increase market activity and revenues, as it gives an overall boost to all service providers in the marketplace. Tony Ojobo, director, public affairs, Nigerian Communications Commission (NCC), has at several fora reiterated the commission’s commitment to commence the implementation of number portability across all networks before the end of the first quarter of the year.

He was quoted in a news report yesterday, as saying the scheme would foster healthy competition in the industry, as operators would not want to lose their customers to other networks. Number portability gives subscribers the option of migrating from one network to another at will, while in search of better service quality. “Apart from competition, which will bring healthy rivalry among operators, they will also be forced to introduce value-added services that will attract customers to their networks, and also retain existing subscribers.

“ Explaining the rationale behind the number portability regime, Ojobo said recently, “We needed to change the tactics. We needed something new and creative, we needed something tasking, which will make the operators stand on their toes and address the challenges of quality of service faced by consumers in their various networks. “The NCC needed to empower the consumers while they make the choice as to what network they wish to stay on.”