NCC plans financial incentive for infrastructure providers

…. Stakeholders urge Jonathan to approve broadband policy

Ben Uzor Jr

The Nigerian Communications Commission (NCC) is planning to provide financial incentives to infrastructure providers in its new broadband regime still awaiting approval of the federal government. Eugene Juwah, Executive Vice Chairman of the Nigerian Communications Commission (NCC) made this revelation on Thursday at the Nigerian Broadband Forum organized by the commission in Lagos . Stakeholders at the forum urged Goodluck Jonathan to speed up the approval process of NCC’s broadband strategy which is based on an open access model and expected to provide a framework for sophisticated infrastructure sharing. According to them, the delay was already causing the nation significant economic losses in terms of lost revenue generation and foreign direct investment opportunities estimated at over N600 billion.

This financial intervention, according to Juwah is indeed necessary to stimulate investment in distribution and last mile networks needed to move available bandwidth capacity emanating from the growing number of submarine cable systems on the country’s coastline. “The financial incentive is to enable service delivery at affordable prices for the end-user. “In cases where NCC finds that from reasonable adequate operational estimations that the infrastructure providers cannot meet the price caps of the regulator, we will provide incentives to enable them operate profitably as well as hasten the distribution of services inland. According to the EVC, less than 5 percent of bandwidth capacity from the cables (MainOne, Glo-1, SAT-3 and WACS) is utilized.

Juwah hinted that plans were already in motion to introduce a cap on fibre transmission costs, further adding that the price cap would be implemented after a survey conducted specifically to determine real cost of deploying fibre is completed. He assured the telecoms industry that the high cost of distributing internet bandwidth across the length and breadth of the country, will soon become a thing of the past. In her opening address, Omobola Johnson, minister of communications technology told the forum which attracted stakeholders from both the public and private sector that the federal government was fully committed to meeting it strategic target of a five-fold increase in broadband penetration by the end of 2017 over the 2012 penetration rates. Nigeria is estimated to have 45 million internet users, the largest online population in Africa.

“We will employ the following strategy to deliver on those objectives. The government will provide periodic review of the broadband penetration targets in order to determine further action for broadband expansion. We will promote both supply and demand side policies that create incentives for broadband backbone and access network deployment. We will also provide special incentives to operators to encourage them to increase their investment in broadband rollout. In addition, government will promote e-Government and other e-services that would foster broadband usages”, she explained. Sherad Somani, partner and head infrastructure, KPMG Asia told the form that the success of NCC’s broadband strategy was largely dependent on the selection of the right industry structure, provisioning of the right level of government funding and appropriate risk allocation.

“The government has to provide incentives like subsidized loans to compel infrastructure providers and operators to participate and address risk allocation. Close government regulatory intervention is often required to ensure sufficient supply and promote demand. There is need to ensure liberalized market structure for successful rollout and affordable take-up. Regulatory monitoring of market development and rollout is important. Some network operators at the forum expressed reservations as regards NCC’s resolve to compel operators to participate actively in its open access model. Linda St. Nwafor, chief technical officer, MTN Nigeria said operators were keenly considering infrastructure sharing because of  its cost effectiveness but should not be made compulsory by the regulator. “Changing our business strategies would have an effect on investments.

We need to stimulate demand for broadband to ensure telecoms operators are profitable. Before, we implement the open access model, we must ask other countries that have gone the way open access at what point of infrastructure development did they implement the strategy. We must ask them what sort of incentives their respective governments put in place. Are the current players in the broadband ecosystem really profitable”, she explained. “In Nigeria , there is already clear evidence of demand for broadband in many facets of our economic and social livers. Broadband for education, health, business, entertainment and leisure – there are very few aspects of our lives that are not impacted or affected by the internet”, Omobola Johnson concluded.