Telecoms @20: Nigerian Telecommunications Sector has Developed into a Commonwealth that Tie All Sectors of Economy – ALTON BOSS

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In this interview, the Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), ENGR GBENGA ADEBAYO speaks with Business Remarks Editor, BUKOLA OLANREWAJU on the evolution of telecommunications in Nigeria over the last 20 years, its impacts, future goals and prospects

(Interview Excerpt)

GSM at 20. GSM was rolled out in Nigeria in 2001, since then, mobile communications have changed. What are your perspective about how far have we come and the impact on the economy? What do you have to say about this journey that started in 2001?

Thank you very much for having us. I think I’d like to start by thanking you – our friends in the media, not just for telling the story, but for telling the good story the way it is. Because the industry has become what it is because of the right narration that all of you in the media has given to the performance of the industry both for the good and the bad. And so I want to start by thanking all of you and in particular, those of you who are here this afternoon, for your consistency in reporting the state of affairs of the industry.

GSM at 20, mobile communication at 20… I think it will be more appropriate today to talk about mobile communication because technology has transformed over the years. We’ve done very well. The industry has done in all modesty, excellently well. And I think the country has done extremely well. Not just, by the way, we accepted the use of GSM but by the way, we have taken joint ownership of mobile services.

Today, it has become what I would call our Commonwealth. The other day, there was a joke around if you’re leaving the home in the morning, and you have to decide what to leave behind – your wallet or your mobile phone. Without thinking too much, you’ll vote to leave behind your wallet and take a mobile phone. That’s just how dependent we have been on mobile communications services. And I don’t see how the world will be today without mobile services, I do not see how the country will run today without mobile services.

Therefore, in a nutshell, to answer your question, the industry has done very well. The country has done very well. All stakeholders are doing very well. And we are glad to say today that we are in the leading committee of nations in terms of development. Today, the story of GSM evolution is not complete anywhere in the world without reference to the rapid development of communications in Africa, particularly telecommunications in Nigeria.

You may recall before 2001, GSM licenses were granted, mobile phone service licenses were granted, but it was only in 2000/2001 that the government had a political will to make it happen. And ever since then, I can say the wheel has been turning at the right speed and place. We are thankful for the significant and positive impact that mobile services have had on our lives.

As of 2010, we were already counting our gains with the population of connected mobile subscribers that were impacting the economy to the tune of about $70billion in 2015. What do you think the impact would have been by now?

Certainly, and without taking it too far, I would say we should be quadruple of that by now. The reason is that by 2010, the world hasn’t become fully digitalised. But today, not only is the world digitalised but Nigeria also. Everything we look at today, you look at it from the perspective of mobile communications, both in terms of commerce, in terms of import, export and the rest of them.

While I would not like to guess because I don’t have the data (I think it is best to confirm the number from NCC or the Federal Bureau of Statistics).

However, from where I sit, I’ll say the impact we have had has gone into several multiples since 2015, in terms of job creation, Foreign Direct Investment (FDI), contribution to the GDP, safety, security, and commerce. Looking at it from all sides, mobile services have had a tremendous impact, both in income and in earnings on the entire economy.

Just two days ago in the neighbourhood where I live, they came to replace the electricity meters to bring 1000s of meters to this neighbourhood. The days of coming to read electric meters have gone, the days of buying recharge cards for electric meters are now going because of the new technology that they brought, you will recharge your power using a mobile app. That’s a significant transformation. So not only is it more transparent, is it cleaner, it’s also easier for everybody. And that’s the power of technology.

So other than that we do want to do as a sector, other sectors are now dependent on telecommunications. Today, the power sector, maritime, transportation, airlines depend on telecommunications. So basically, I think the only significant driver of all our sector economy today is telecommunication services. And by that not only are we saying what we have brought in in terms of foreign direct investment, GDP contributions, we also need to see the impact of telecom services on the earnings of those other sectors.

So E-Power now has a cleaner, more transparent billing of electricity for everybody. When the power sector is recording its impact on the economy, the significant contribution made by telecommunications too should also be seen as a part contributor to that progress as far as that sector is concerned.

When we had issues of safe integration and NIN, part of the sectors that came to complain are the security sector. Those once have trackers/SIM Cards in them. You can then imagine the number of tributaries that we have in telecommunication services. And imagine if the service is inactive today, what kind of negative impact it will have on our economy. We just had an offline chat now about the banking sector, the success recorded by the banks today is traceable to telecommunication services on our site.

I can’t remember when last I visited the banking hall but I do transactions every day and so most of you around this table. So you can imagine without telecommunication services how that will be. So in recording the impact and the earnings from our sector, we also need to take into account what is the earnings from those sub-sectors that are dependent on the use of telecommunication services for which telcos have had a significant impact on their contribution to the economy.

So let’s look at the transmission. GSM started in 2001 with SIM cards costing over N20,000. Today, SIM cards as good-as-free with the production of normal SIM Card size to macro SIM cards, to nano-SIM Cards. Now there are embedded SIM (eSIM) cards. So how have these transformations helped telecoms operations, subscribers and the economy in Nigeria?

Thank you. It is a function of what we call rapid changes in technology. And you know, the services run on speed, capacity and technologies that we could say are enabled in different ways. And so, please recall that before GSM, we had the CDMA and those devices are tied to networks. And you know, there was debate around whether GSMA technology is better than CDMA technology. What we have seen today is the total neutrality of technology because all these definitions still go on in the back end. The fact remains that availability is easier, quality of service is better, access to service is more available than ever before. So the transformation that we have had in the technology world has had a significant impact.

Please recall that in the days of the CDMA, you had limited community. The ones in Lagos were available in VI, Ikeja, but today GSM has become fully terrestrial –anywhere you go, it is available and ready to carry some form of coverage. That coverage has some segmentation – 2G, which is voice – we still have some sites provided to only this technology. We have 3G and not more than 40% coverage on 3G and in some parts of the country, there is access to some limited data. You have availability of 4G services, which by the last count, I think the country’s significantly covered about 35-40% or so. And now we’re talking about the fifth generation.

So this transformation that you have seen is a function of technology, but the beauty of it is that Nigeria, as a country, we have moved at the right speed of the community. But if we hadn’t done that, we would not have the kind of rapid growth that we have had. So when I look at the transition of how we started from 090mobile to CDMA, and the first generation of GSM, second, third and now looking at 4G. We’d not have been able to move at the same pace if we are not adopting new technologies as they come. So when I get the debate about 5G and reluctance to accept 5G, it raises concern, because the progress that we have had in the last 20 years is a function of our acceptability of the technologies as being developed.

So it will be a shame now that we are moving to the next milestone of technology, we are beginning to say for social reasons, for cultural reasons, we do embrace technology, it will slow down the speed of things. And if we don’t accept it as a country, others will adopt it or our neighbours will adopt it and begin to push us backstage in terms of development.

Because today, there is no kind of service you’ll find in any network around the world that’s not present on our network. For this, we must also give credit to the operators. You don’t have technology that you can say is Chinese, American, or English. It is one common technology.

So whatever technology you find in any part of the world is what you find here. And so, part of the progress we have made is the impact or acceptance of the rapid changes in technology, particularly at various stages of evolution.

This has also helped in volume to grow, and when you have a higher volume, the entry cost becomes lower. So in the beginning, you bought a SIM card for N17,000, and there are only a few people that afford this. As the volume grew, the numbers increased, unit costs went down. And today, you can buy a loaf of bread and receive a free SIM card provided you have your NIN.

So that’s just to say that we are almost there. The Nigeria population today by the last count is said to have been over 200 million, I think if you count all at SIM Cards that we have, both voice, data, there are about 200million subscribers. That’s quite a number for a country in about less than 20 years in service.

So looking at it, I think one is that we embrace technology as due, we develop the right human capital. That’s also important because when you look at the major networks today, they are mostly managed by Nigerians. I mean, if you look at the tier one operators, all the leaders of those companies are Nigerians.

The expert in those companies are Nigerians that’s because we are have accepted the technology, we also developed the right human capital to support them, and this has led to the rapid growth and development that we have had. So we are not dependent on foreigners for services, while we depend on them for technology, which is something that we should look into, we don’t depend on them for support services, they always do we call us when this system malfunctions. I believe a day will come when this system will be manufactured here and then we are good to go.

On SIM Cards evolution from macro, to micro, and then nano and more…

Those are due to changes in technology, you know also as we progressed in the evolution, devices become smarter. They became smarter not just in physical size but also in terms of intelligence. So whereas in times past you need a device with a big antenna with a very big battery, technology has changed in that area. So today, in a phone that is smaller than this, the battery life is 48 hours, 72 hours. In times past, devices that are twice this can only have a battery life of 4/5hours. You have to turn your phone at every point where you make a stop.

But today you have devices when fully charged can work for 24 – 48 hours. Those are functions of technology. So as technology changes, the intelligence of devices, as well changes, so SIM card is just an access point and an identifier. And they are the technology that is driving these changes, those are points of access that will change. In times past, antennas are physical but now antennas are no longer physical. Batteries were physical, these days, batteries, are no longer physical.

And so today, we are migrating towards what we call electronic SIM. Those are functions of technological evolutions. And we’ve been able to adapt to the transition because of the acceptability of the new technologies as they come. And that’s why at no point in time, should we ever think of taking a slow step in terms of embracing new technologies and that’s especially the discussion around 5G.

From the regulatory standpoint, when GSM was rolled out in 2001; the regulator gave five years exclusivity to make them roll out and get their ideas together, how did that impact technology innovation?

The exclusivity did three things because while operators had exclusivity for five years, they also had obligations against that exclusivity including that regulators said to us, “we don’t want briefcase operators, we wanted people with physical infrastructure”. And that’s why in the early day when you find Mast of operator A, you will find in the same neighbourhood operator B mast too in the same neighbourhood. Not because they wanted to messily duplicate the effort, but there was a regulatory requirement that you must have a  physical infrastructure.

Aside from that, part of the conditions was proof of deployment, that indeed you have a national license, and national coverage.

In the beginning, NITEL was supposed to provide transmission for the operators. They were licensed as mobile network operators. But the backbone was meant to be provided by the national carrier, NITEL. So it was also an attempt to make NITEL come into relevance. Many years after, Globacom was also given a national/carrier license.

But you see, as technology evolved and as operators show performance in their operation to the regulator, those limitations were removed, because it might be that you have an operator present in Lagos, he has good service within Lagos, because Lagos is a local area for him. When he takes that transmission from Lagos to Abuja, for example, it will be difficult to link to the network because he has to depend on a third party to carry the traffic. Like in the power generation company. Truly, the generating company will have enough power in their local establishment but if a transmission country fails them, they can’t ship that power from where it is generated to where the customers will be.

To remove the bottlenecks and as operators fulfil their obligations, those regulatory interventions that were seen as barriers were lifted. This then means that operators could then carry their traffic from one city to another is 100% throughout and the rest of them. So without the exclusivity that we had at the time, the growth that we had, may not be as rapid as it was. We must commit to regulators because they saw the barriers as regulatory frameworks were introduced, and they were being tested. They saw those regulations that would be like a clock in the wheel of progress and thanks to our always responsive regulator who removed them. In recent years, to overcome congestion, national rolling was considered so that if you have coverage in a place, and don’t have enough capacity, you can roll.

So all of these are things that were in the mix that helped the developments of the sector so rapidly over the last twenty years. So if you look at the progress we have made from nothing to over about 200 million subscribers is a function of many things – technology, regulation, policy, investment, protection, and all that. We haven’t gone without our challenges. Some of them are still there.
For example, we’ve spoken about the power problem from day one. The national energy crisis remains so. Just look at the industry we’re immune to it because technology has enabled us to develop devices, systems to overcome that. Because in some cases, we now have alternate energy, solar and other sources of energy that are now being used to support each other.

The second one is we now have colocation.

Within the first five years of exclusivity and the regulatory requirements of the physical infrastructure. When the transformation came,  deployment was adequate, the regulator saw a need for colocation and cost-sharing. So the need to have physical infrastructure was no longer important, you can now collocate and share infrastructure, which was one of the things that enabled rapid deployment.

Today we now have colocation companies. So when we look at all that has happened, the last 20 years is a mix of many things, the right regulatory environment, right policy environment, right technology, right operating environment, right human capital, and then we say the right sense of ownership.

Because today, I think we all accept without a doubt that telecom has become a critical national infrastructure.

As the voice of telecom operators in Nigeria, what are the challenges you’ve battled to make sure that telecom operators stand their ground while providing good services for subscribers – the battle of Right of Way (RoW), USSD – how did you weather the storm in all of this?

I am thankful to God and everyone, particularly my colleagues from the West and South, ALTON has been here from the first day. And I think for me as an individual. I’ve been in the sector from the very first day, it’s been many battles.

First was the battle of interconnectivity. Because as a local operator at this time ALTON came as a result of the peculiarities of the problems that we faced. Because the operator, earlier group before us was ATCON representing everybody’s interest. When we identify that there were particular problems we have as network operators that are peculiar to us;  and we can only solve our problems because we know what our problems are. That’s what brought about our ALTON. It’s been battles over battles.

NITEL was the all and all – the regulator, operator, transmission company, and everything. And as operators in the early days to connect with NITEL, which is an access point between us and then we have to pay for those links. Remember in the early days, a lot of reports was mentioned about the non-availability of E1. It was so bad that if you don’t have the right connection, you can have enough capacity as you exchange but if you don’t have the connectivity to the connector through NITEL, you can’t do anything.

And it was so bad that NITEL, despite government support, budget and extra budget allocation year in a year basis, we private operators had to build in private telecom operators rooms at NITEL exchange. We paid for building the structure, we bought the equipment ourselves. And now hear this, when you need access for maintenance to that site or location, you have to go to Abuja to obtain the permit to access the site we paid for. In truth, the PTO room is still there in Lagos and Abuja. Some of the early operators still have their equipment abandoned in those facilities. So the first battle was that of E1.

When NITEL did the digital transformation from analogue to digital, they had what they call MFCR2 signal, which was the protocol by which the various exchanges see one another. ITU came and introduced Signal number seven SSL7 and NITEL had all their equipment on MFCR2. So with this MFCR signalling, we cannot connect with third party equipment. You then need, because a lot of systems we bought in the early days were SSL7 compatible, so we have to invest in the signal converter to take NITEL MFCR2 to convert to SSL7 to be able to see NITEL. Guess what, we paid for the converting even though NITEL required the converters, operators had to pay for the signalling converters before we could access it. You will pay for the converter, the PTO, the E1 to connect to NITEL and then they send you a bill for E1 and God helps you not to pay before 30 days, you’ll be disconnected.

Also, NITEL will not allow us as operators to connect among ourselves. So in essence, operators A, B, C connecting from the room in NITEL through NITEL. And we said to them, link to you, we don’t have, E1, we don’t have, we have systems that are compatible as operators, allow to connect among ourselves, NITEL said No. When you send signals through NITEL from operator A to operator B, you’ll pay everything to NITEL. Now there would be a commission for the traffic. When NITEL send traffic onto your network, in essence, when somebody from the NITEL network calls into yours, you don’t receive anything.

So when you route through them, a link you have paid for, and equipment and transmission you have paid for, the transmission you have paid for when you send network to them, you pay a commission for a reason. When they send signals to you they pay nothing. Those were some of the battles we have fought. What is fair is fair and ALTON took the stand that for the industry to survive, these barriers introduced by NITEL and others must be removed.

And so we approached the regulators, all of these, I’m telling you, we have correspondence to that effect in our archives. We had a special interconnectivity committee, between the industry and NITEL to discuss. We set up a thinker committee to look at the workability of the issues and how do we overcome them. I happen to be the chairman of that committee. And the committee recommended that for these barriers of interconnectivity to be open, the private operators must then have their own interconnect points. Because think about it, you have NITEL. We are all operators, even though you are next to me, he’s next to me, before I can see any of them, I have to pass through NITEL.

So, I go from here to there and then come from metal. So if I do not encounter congestion on my way out, I will encounter it on my way in. When traffic goes through them, they take all the money they give me a commission. When they send traffic back to me, they don’t give me anything.

That committee recommended that we need to have a separate interconnectivity document exchange. And then this exchange will connect all the private operators, like local hubs. After this, all need to go to NITEL, we go through one path and distribute to wherever it is going to. It was a bit of a battle but eventually, regulators saw the sense in it but we were just a group of licensed operators and for that to happen you need to have a separate entity to manage that. Because when you start having heavy traffic among yourself, then the commercial dispute will set in – who pays for a sponsor, who pays for capacity, who manages that relationship? And that was what brought about the idea of an interconnecting clearing house. Admiral Madueke decided to set up the interconnect clearinghouse, now privately and subjected to regulatory control because they got the license for interconnect clearing house which is to now interconnect all the players. So the battle went on.

When the GSM operators, the first point to see all of us is interconnect carriers and the GSM operators through the clearinghouse. As capacity grew, everybody sees the need for depending on the interconnectivity which as it were serve the purpose, became a bottleneck. Though it was easier to connect to each other, but really and truly because now we are many operators, connecting to each other through upon, we started having congestion problem. For you to have enough capacity, switching, you must have enough capacity to carry everybody. They need to invest in it to do this and all that.

So we said instead of keeping this again as though serve some purpose and bring another bottleneck? Why don’t you just work as operators? So we have the PTOs as the time, the likes of Starcomms, Multilinks, Intercellular, taking their own link directly to mobile operators. But the good thing about it is that the earlier investment that we have in the PTOR actually helped. Because now you are connected, we don’t have to go far away to interconnect, we all just connected among ourselves within the PTO row. And that also just sorted the moment of traffic as it were. So that passed.

Now, the barrier of E1 connection to NITEL sorted, that connects carriers established mobile operators came upon a different game. Then the GSM operators do not have the license to be a national carrier. So we put a travel to them in Lagos, if they have to go to Abuja, Port Harcourt and Calabar, they have to depend on NITEL transmission half of the time the links are down.

So they went to the regulator to seek for approval to be able to carry their own national traffic. So if I’m trying a mobile line that is across the country, I connect to them. I meet them at the connect point, and they take their link for traffic between point A to point B. And so these are the ways that we were able to remove the bottleneck.

Issue of power remains with us, energy problem remains with us. We would recall that part of the obligation of governments when the GSM license was granted was to guarantee the availability of power on the national grid. And they did promise that within the first five years, there will be 24 hours availability of power to the national grid. There is a document that speaks to that.

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So while we had licenses obligation to do certain things, which we surpassed because I recall that the first operator was mandated to build 10,000 lines in five years or so, which was achieved within one year. So while we had the obligation to develop networks within time, the government failed in its obligation, because the government promised and they committed to providing availability of power national grid for 24 hours within the first 4/5 years.

But today, we are where we are. As these developments happen, and the development becomes more open, we met with a lot of progress along the way. At some point, people in governments, a private individuals started seeing the industry as buoyant because we are everywhere, we buy airtime. And they started seeing the sector as an extractive sector, instead of a contributing sector. An extractive sector means you came there to extract resources, if you are a mine, you are there to extract resources, but we are not an extractive industry.

So they brought demand, taxes and levies and are not able to grant Right of Way problem, maintenance of infrastructure, problem. Side view problem, everybody sees the sector as now successful and want to pick something from and I think those problems that we have, with multiple taxation, and multi-regulation, have more impact in terms of slowing down our growth are the problems of technology.

It was easier to solve these issues of interconnect, linkages and all that of transmission ways because they are technology and policy dependent than it is to solve problems of multiple taxations. Because if you get to a state that the government says it can’t give you Right of Way (RoW), there is nothing you can do. If you have a problem with connectivity, you go to the regulator and agree on the way to go about it, you have the approval to proceed, the regulator approves you, you proceed.

So I think if there’s an area that has actually slowed the growth of the sector, power is one, multiple taxations are one, multiple regulations is another one because you said at least you have one regulator and you have put the regulator there. But because of the success of the industry, everybody that has to do that has anything to do either with the government, they became a pseudo regulator. State authorities became regulators, environmental authorities became regulators and so on. So, those are areas we have challenges more than we have issues

Now we have challenges much one now that we had before, issues of security of our infrastructure, vandalisation, mostly willful damage is also more.

That people just go and say out of hatred for this infrastructure and after all these guys are making money, they cut the fibre. The contractor working on the road for the government, they cut the fibre. And because there are no consequences, these stands in the way of growth.

As a private operator in the early days, part of the experience with NITEL for you to maintain your infrastructure passing through NITEL dots, you have to seek approval. I recall we were in Odunlami Estate and went to Abuja to sought approval, NITEL security team arrested our team, why? For getting into NITEL mano because NITEL has the exclusive right to those infrastructures. And we were saying that the services provided by NITEL are not different from our own, and they have all legal protection. How come private operators cannot enjoy the same.

So people can damage our infrastructure, there are no consequences, but when you damage NITEL or NEPA infrastructure, there are significant consequences. And so this was part of the problem that we had in the early days and I think some of them are still with us. But despite that, we are where we are.