Following the rollout of GSM services across the nation, the socio-economic landscape of Nigeria has been positively altered, with the ICT sector taking the driving seat as the premier change agent across all spheres of society. Enhanced communication capacity riding on the back of massive investments in Network build and rollout in the last seven years, has fuelled the emergence of an increasing array of opportunities for investors in the country. These opportunities are not restricted to the ICT sector alone but have also emerged in Financial services (Banking and Capital Markets), Construction, Social Services, Security, Education and Health Care.Foreign Direct Investment in ICT is estimated to have exceeded 15billion dollars by November 2008. In light of this, we have dedicated this edition to an examination of the major developments in the sector since the beginning of 2008. 

The principal development at the beginning of the year was the aggressive refocus of the Nigerian Communications Commission on the concerns raised by mobile subscribers regarding poor services offered by service providers, as typified by the abysmal quality of service rendered by GSM operators. 
In the face of an increasing torrent of complaints, the Commission boldly issued a directive to the GSM networks to pay compensation, in the form of airtime worth N150 (One Hundred and fifty naira) to each subscriber for poor services. A majority of consumers, who had almost become resigned to accepting that poor quality of service would become the norm, lauded this move. It also raised confidence in the capacity of the commission to decisively intervene on the side of the consuming public when necessary.

The negative consumer experiences of 2007 were linked by industry observers to network congestion arising from the promotional activities of the mobile operators. These activities are perceived to have fuelled an explosion in the number of new subscribers on the mobile networks. Coupled with the further directive to cease promotional activities consumers’ experienced significant relief shortly afterwards, as the quality of service on virtually all networks returned to fairly acceptable levels, seemingly confirming the postulations of the industry commentators.

Although, the operators initially resisted the directives of the NCC, contending that the rampant failures on networks did not necessarily arise from promotional activities, faulty projections for network rollout nor weak network support infrastructure but in the main from the incapacity of the government to develop the public power grid, resulting in their having to divert considerable resources to power generation instead of focusing on developing enhanced network quality, the continuing public condemnation and the uncompromising stance of the Commission forced them to adopt alternative approaches.

Key among measures adopted by the networks to deliver high quality service was the dedication of additional resources to strengthening the networks. Networks commenced the building of additional transmission capacity utilising several media, including wireless, fibre optic cabling, micro-wave links etc supported by robust independent power supply, on one hand, and refocusing marketing activity toward the unserved and underserved semi-urban and rural areas of the country, on the other. The implementation of these steps resulted in a perceptible reduction in the overall cost of access to telephony nationwide, by mid year.

A number of operators are also building next generation networks (NGN) - digitalised Internet Protocol (IP) networks that provide television, internet, data services and video call/conferencing converged on a single platform. It is hoped that with the completion of some of these networks Nigeria will take a critically significant step in promoting the convergence of entertainment, information sharing and communication on a single platform.

Mobile telephony remains the most eventful area in telecommunications in 2008. This segment welcomed a new entrant in September with the launch of services by Etisalat bringing the number of operators in this segment to five (5). There were significant increases in subscriber numbers on virtually all mobile phone networks, with the total subscriber base for all the networks hitting 52million active lines.

The fixed telephony subscription also grew, with the subscriber base appreciating significantly. Starcomms emerged a market leader in this segment with an increase of over 1million active subscribers within the year. The operator also recorded a significant milestone in the year, becoming the first operator to have its shares listed on the Nigerian Stock Exchange. 

In April, Visafone rolled out services in 13 states of the federation increasing the number of operators to 13.  These operators have continued to expand their coverage footprint across Nigeria especially with the adoption of SIM enabled services.

Telecom operators have also taken some steps further to enable them deliver on their promise of good quality network and coverage to mobile subscribers. In this respect, Celtel a telecommunication giant rebranded to Zain; this also came with free roaming services for subscribers to the network, which has in turn spurred other GSM operators to follow suit.  The rebranding of Celtel in Nigeria will be the fifth time the brand will change. As part of its ongoing strategic expansion of services, Reltel also change its brand name to Zoom. 

INTERNET SERVICES

The pace of Internet growth in Nigeria between 2007 and 2008 has been relatively fast when compared to the trend since year 2000. The Internet has evolved from e-mail and file transfer to VoIP, entertainment-based graphics and media-rich websites. The demand for internet usage for various activities has further fuelled the need for large deployment of Internet bandwidths and broader coverage footprint. 
Internet subscribers are increasingly dissatisfied with the slow speed of traditional modem access via the Public Switched Telephone Networks (PSTN), which limit the speed to 56Kbps. For the delivery of high-speed Internet services and increased coverage, Very Small Aperture Terminal (VSAT) solutions have a unique advantage over cables and other terrestrial networks, as the deployment of this “instant infrastructure” is highly flexible and scalable. Consequently, VSAT has evolved as probably the most effective means of providing Internet services for many areas in Nigeria. 
While VSAT enjoys high popularity, the PTOs have contributed substantially in developing Internet service provision, with many of them rendering broadband services while GSM operators offer 3.5G data services.

With continuing liberalisation in the telecom industry, fresh licensing and the expansion of commercial service offerings by the Fixed Wireless Access (FWA) operators and PTOs, the operating environment has increasingly become difficult for many traditional ISPs in the country.  In this segment, Linkserve, Direct-on PC, iPNX, Skannet, Netcom Africa, Accelon, 21st Century Technologies Limited and Junisat are the top service providers while PTOs like Starcomms, Zoom and Multilinks-Telkom provide Internet access as a bundled service.

Internet Service Providers Estimated Subscriber Base
   
Internet Operators              Subscriber Base
Linkserve                                   4500
Netcom                                      1200
Swift Networks                            2500
Skannet                                     2000
IPNX                                          2100
Direct on PC                                1500
Accelon                                      1400
Source: eShekels Database

In spite of the progress recorded, internet utilization is still in its infancy, with a current internet user population of 10million as against a national population of 140,000,000 and a penetration level of 7.2%. Critical factors that appear to inhibit usage include availability and proximity of access points for users.  Recent studies carried out by eShekels revealed that people use the internet more often when they have internet access in their homes and places of work.  The chart below illustrates this further;

HARDWARE

Recently, there has been a substantial appreciation in computer usage in Nigeria, traceable primarily to increased awareness levels and application of the Internet in daily transactions. Although affordability remains a challenge, efforts continue on several fronts to enable more Nigerians to acquire their own computers, exploring options like lease purchase and other financing options. Other initiatives like the Computerize Nigeria Programme (CNP) driven by Leo Stan Ekeh have also contributed progressively by making computers available to students in tertiary institutions.  The objective of these efforts is to make Nigeria a digitally compliant economy in the near future. 

INFRASTRUCTURE

There have been several key developments regarding the deployment of infrastructure. A notable one is the launch of the Nigerian Communications Satellite (NigComSat), which lately has become controversial. An initiative of the Federal Government through the ministry of science and technology, it was designed to provide signals beyond national and regional boundaries, thereby overcoming the geographical challenges usually encountered in the deployment of terrestrial technology.  The Satellite until very recently was one of several means of accessing national and international communications links, which are available to telecommunications operators in Nigeria. NIGCOMSAT had positioned itself to be the leading communication satellite operator and service provider in Africa offering C, Ku, Ka and L band transmission capability. Unfortunately, this initiative has run aground with the satellite reported to have malfunctioned resulting in its shutdown.

Developments have not however remained in negative territory, as Globacom has commenced construction of a transatlantic submarine cable linking Africa to North America, via Europe, with landing points across the West African coastline, in Portugal, the United Kingdom and the United States. This project has reached an advanced stage with the cable having landed in Mauritius. The Globacom cable will strengthen telecommunications linkages and compliment the SAT-3 cable, the recent breakdown of which wreaked havoc on communications between Nigeria and the rest of the world.

CONCLUSION

Despite the push made by stakeholders to expand coverage and stimulate growth across the board, urban areas still account for 70% of growth. Industry observers are of the opinion that given continued pressure on the network operators in the urban areas where the pool of potential subscribers continues to shrink, the next major leap in growth figures will come from rural communities, as they embrace the services offered by the networks. There is some evidence for this as almost all operators have begun to make in roads toward previously unserved semi-urban and rural communities.