As Harsh Operating Environment Cripples Telecommunications

The first quarter of 2016 was very tough for telecoms operators in Nigeria, as they struggled to provide quality services amid the challenges of multiple taxation, poor infrastructure and erratic power supply, writes Emma Okonji

Telecoms operators had it rough in the first quarter of this year as they contended with various regulatory challenges and harsh operating environment.

The tough situation experienced by the telecoms operating companies did not only affect their revenue stream, but also the quality of services offered to subscribers.

Telecoms operators have, however, identified some factors responsible for the poor service quality, especially in the last quarter, and have insisted that until government does something about them, Nigerians would not enjoy better services as expected.

They listed some of the factors to include multiple taxes, exorbitant charges for Right of Ways, barriers to broadband penetration, arbitrary closure of telecoms sites and harsh regulatory environment.

Telecoms operators, who blamed the poor state of telecoms service offerings across networks, are worried that the Nigerian Communications Commission (NCC), the telecoms industry regulator, slam huge fines on them without first addressing the causes of poor service quality.

In a bid to address some of the challenges faced by telecoms operators, the Association of Licenced Telecoms Operators of Nigeria (ALTON), has called on the members of National Assembly to pass into law, the National Critical Infrastructure Bill, which they said, would protect the telecoms infrastructure and address most of the challenges.

Taxes and levies

Assessing the state of telecoms industry in the first quarter of the year, Chairman of ALTON, Mr. Gbenga Adebayo told THISDAY that multiple taxes and indiscriminate levies imposed by government agencies, affected telecoms activities.

“We consider tax payment as a matter of patriotic duty being one of the elements of good corporate governance. We appreciate the fiscal pressure on Ministries, Departments and Agencies of the respective Federal, State and Local Government Areas, particularly in the face of dwindling federal allocation,” he said.

“However, we believe that taxes and levies should be broad-based and fairly distributed across all sectors of the economy. There is therefore no justification for targeted and sometime very high taxes on telecom operations. We are calling for a cross-sector/multi-stakeholder approach to reduce growing burden of taxation on our industry,” he added.

He noted that telecom, being in the exclusive list of federal taxes, there is a need to streamline all such taxes and levies, and they should not be aimed mainly at telecoms infrastructure.

Adebayo explained that such taxes were affecting the smooth operations of telecoms activities in the country and wants government to put a stop to it.

Closure of telecoms sites
On the issue of arbitrary closure of telecoms sites, Adebayo said the association became concerned about the recurring cases of telecom sites closure by government agents due to its negative impact on telecoms operations.

“We continue to record cases of arbitrary site closure in many states of the federation, as well as delays in the approval of Right of Ways, in an attempt to force service providers to pay local taxes and levies some of which are multiple in nature and most of which are only aimed toward telecom operators,” Adebayo said.

He listed some of the levies that have led to closure of sites to include: Eco Tax for gaseous emission; Sewage, Sanitation and public convenience levy, Sanitation and refuse effluent tax; Business premises tenement rate; Base station levy in the urban areas, including Base stations on residential and commercial buildings among others.

He said telecoms operators have resolved that arbitrary sealing of telecoms sites by government agencies without following the guidelines clearly provided by the NCC and in line with best practices will no longer be tolerated.

“Any state or local government authority that closes our sites, our members will not reopen such sites. We will serve the necessary warnings and if such practices continue, we will then be faced with two options: first to pay the charges by such state government, and to increase the tariff chargeable for calls originating and terminating from networks in such states,” he said.

Adebayo said where such actions on the part of government continue, ALTON shall then advise all its members, after due consultation with relevant authorities, because of the security and economic implications, to shut down the entire network in such state for one full day as a final warning to such state or local government area.

According to Adebayo, some of the states that are treating the telecoms industry as an extractive industry and imposing myriads of taxes on operators and closing down telecoms sites arbitrarily, are Ogun, Ondo, Akwa Ibom, Ebonyi, Osun and Kaduna states.

“Many sites in the listed states have been shut down or about to be shut down by agents of government not minding the security and economic implications on their states,” Adebayo said, adding that such closures would continue to affect service quality across networks.

Protection of telecoms infrastructure
ALTON has called on the federal government to see telecoms services and infrastructure as critical national infrastructure that must be protected.

“The telecom industry supports many other economic sectors whose operations and trade depend on our services. We are also in the first layer, when it comes to critical technology service for enhanced safety and security. Unless we have first level of protection by government, it will be difficult to continue to provide uninterrupted services with the type of vulnerability of our members and their infrastructure.

We hereby appeal to the President Muhammadu Buhari for a presidential declaration of telecoms infrastructure as critical national security and economic infrastructure, as provided by the cybercrime law of 2015,” Adebayo said.

Broadband Penetration
Another area that affected telecoms development during the first quarter of the year, was the issue of low broadband penetration. Telecoms operators are worried that government was slow in the implementation of country’s broadband policy, which projected 30 per cent broadband penetration by 2018.

Worried by the present broadband penetration level, which is put at 10 per cent, the President of the Association of Telecoms Companies of Nigeria (ATCON), Mr. Lanre Ajayi, blamed the situation on weak implementation by government. He therefore, called on the federal and state governments to expedite action in the implementation of the broadband policy in the second quarter of the year, in order to speed up development.

According to him, broadband drives development and every Nigerian must have access to broadband, in order to take advantage of e-commerce and other online businesses that are driven by broadband access.

Regulatory environment
Telecoms operators also said the fines imposed on telecoms operators by the NCC also contributed to make the regulatory environment unfriendly. Some operators particularly referred to the N1.04 trillion fine imposed on MTN as a result of the failure of the company to deactivate 5.2 million unregistered and improperly registered SIM cards on its network.

Operators, who spoke against the fine, were of the view that the weight of the fine was too much and could ground the operations of MTN.

However, Director of Public Affairs at NCC, Mr. Tony Ojobo, explained why the fine was that high. According to him, there was an infraction on the part of MTN and the company was part of the agreement signed by NCC and other telecoms operators in 2011, that each infraction on SIM card would attract N200,000 fine. He said based on the agreement, MTN had as much as 5.2 million improperly registered SIM cards on its network, amounting to N1.04 trillion. He insisted that NCC was not particular about the money, but about the due process and rule of law. Although MTN has paid N50 billion, the balance of the fine is yet to be paid and negotiations on the final resolution of the matter are ongoing.

Regulating OTT services

Another thing that brought so much worries for telecoms industry players during the first quarter of the year, was the regulation of ‘Over The Top’ (OTT) services that are provided through the Internet Protocol (IP) telephony. OTT is a general term for technologies that use IP packet-switched connections to exchange voice, fax and other forms of information that have traditionally been carried over the dedicated circuit-switched connections of the public switched telephone network (PSIN).

An OTT application is any app or service that provides a product over the internet and by passes traditional distribution. Services that are offered from OTT technology are most typically related to media and communication and are generally, if not always, lower in cost than the traditional method of delivery.

Feeling strongly that OTT services delivered by value added service providers are affecting the revenue of traditional telecoms operators, they have called on NCC to move quickly to regulate the service.

But the NCC, while noting that an efficient social media platform is critical to functional information and communications technology (ICT) ecosystem in Nigeria, has allayed fears being expressed that it would regulate OTT services in the country. The commission said there were no plans now or in the immediate future to regulate the OTT technology services. But the telecoms operators are not happy about the development.

Following the many challenges faced by telecoms operators in the first quarter of the year, it is expected that NCC and the government must come together to address the identified issues in the second quarter of the year and beyond.