NCC steps in to reduce internet service cost

Ben Uzor Jr

The high cost of distributing internet bandwidth from submarine cables on the shores across the length and breadth of the country, will soon become a thing of the past. Indications are that the Nigerian Communications Commission (NCC) plans to introduce a cap on fibre transmission costs after a survey conducted specifically to determine real cost of deploying fibre is completed. It has been established that the price of moving internet capacity from Lagos to Abuja is indeed much higher than the cost of moving capacity from Lagos to London.

This, according to analysts is due to the dearth of transmission backbone network needed to move bandwidth capacity. As a result, Nigeria has one of the highest costs of internet access in the world, at approximately N8, 000 to N10, 000 for 5Mbps (Megabits per second) of data. Eugene Juwah, Executive Vice Chairman of the Nigerian Communications Commission (NCC) said in an interview, that the commission is also conducting another study to clearly map out the country’s fibre assets. “The NCC is conducting a survey to determine the real cost of deploying fibre. We are not running away from putting a cap on fibre transmission cost but we must have cost- based information before the NCC makes its decision. We do not want to destroy businesses because we are aware that operators have made huge capital expenditure in laying fibre. The commission is committed to bringing down the cost of internet services.

“We want good distribution of capacity. This is why we have adopted as a means of our regulatory intervention, an inclusive process we call ‘Open Access Model’ for broadband deployment.”This, according to Juwah is a model that provides a framework for sophisticated infrastructure sharing. On the timeline for implementing the much talked about policy, Juwah noted that the NCC’s broadband plan was still awaiting approval from government before implementation begins. “A broadband plan takes sometime to be rolled out because there are many stakeholders involved. It has to be approved by the federal government before we implement. If left to me, it will start tomorrow but I have to obey the guidelines of the government. In terms of the number of licenses that would come up as a result of the implementation of the policy, our consultants will be in a position to determine that”, he added.

In addition, the federal government is working to ensure full interconnectivity and interoperability between National Long Distance Operators (NLDOs) in accordance with the provision of the Telecoms Act in section 96-97 that mandates interconnection between all network and facilities service providers. Moreover, some telecommunications companies in Nigeria who have extensive fibre transmission networks are unwilling to share infrastructure. In cases where they do agree to share infrastructure, they charge very high prices, often for strategic reasons. This explains why the cost of distribution is very high.

“Our inability to gain cost effective and high quality access and distribution networks required for data distribution at fair and non-discriminatory prices, places the promise of faster, better and more affordable broadband services to the end user by the advent of the submarine cables on the verge of defeat”, Funke Opeke, chief executive officer, Main One Cable Company, observed in an interview recently. Juwah however believes that the commission’s broadband plan based on an ‘Open Access Model’ would assist in unbundling the broadband infrastructure market into three layers – the passive, the active and the retail.

“This structure will ensure vibrancy in the market and prevent dominance, as no company will be allowed to play in more than two of the service layers and the equity participation in bidding consortium for the licenses will be controlled.” Giving further insight into how the open access model will play out in terms of implementation, the NCC helmsman explained that bandwidth will be provided by the active infrastructure providers to the retail service providers on a fair and non-discriminatory basis. The active infrastructure providers, he continued, will buy bulk bandwidth from the submarine cable companies, which will then be delivered via optical fibre, owned by the passive infrastructure providers. “Implementation of this model will bridge the gaps in broadband deployment, eliminate last mile issues, reduce the price of bandwidth for end users and unlock the market for massive broadband usage.

“The commission will issue licenses in the passive and active layers while price caps will be executed in these layers using cost based pricing”, he stated. In the retail segment, he stated that multiple licenses will be issued, with pricing to end users determined by market forces. This, according to Juwah would enable service delivery at affordable prices for the end-user. “Where it may not be economically viable to do so, the commission will offer financial incentives to the infrastructure providers to enable them operate reasonably profitably. The government, through the commission will facilitate agreements and engage in dispute resolution among the various stakeholders. In terms of implementation, we have already concluded preliminary studies that will enable cost effective deployment. In this process, we have developed a model for the deployment, and have engaged reputable internationally acclaimed consultants to drive strategy and design process for achieving our goals”.