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Confronting challenges of rural telephony

By on March 28, 2011

Despite an impressive record of over 75 million mobile subscribers, the phenomenal growth of Nigeria’s telecoms sector has not been felt by over 40 million people living in rural communities. To experts, the challenge presents a core area of action before telcos, writes DAYO OKETOLA

Eight years after the introduction of the Global System of Mobile communication in Nigeria, the Nigerian telecoms/postal services sector has emerged the sixth biggest revenue earner for the economy. The sector contributed 3.6 per cent to the Gross Domestic Product in 2009 alone.

It only fell behind sectors like agriculture (which contributed 41.84 per cent to the GDP in 2009); wholesale/retail (18.16 per cent); petroleum (16.05 per cent); manufacturing (4.19 per cent); and finance/ insurance (3.71 per cent).

Pyramid Research, an international research and advisory firm, in a recent report, estimated that the nation’s telecoms market generated $8.2bn in service revenue in 2009, representing a 7.7 per cent year-on-year decline from the preceding year.

Pyramid Research’s Senior Analyst and author of the report, Mr. Badii Kechiche, said Nigeria would continue to be one of the most competitive telecoms markets in Africa, with more than double the average number of operators in any other African country.

“Operators have been investing in and upgrading their networks to meet demand, since they realise that their success will be based on a differentiated service quality, attractive services and a good value proposition,” he noted.

With a geometric increase from about 400,000 telephone lines in the country in 2001 to over 75 million subscribers in 2010, experts said the growth of the nation’s telecoms industry had been phenomenal.

In spite of the impressive growth recorded by the industry, experts have argued that many rural communities have yet to be connected to any form of telecoms services since independence in 1960.

Lending credence to this, a former Chief Executive Officer, MTN Nigeria, Mr. Ahmad Farroukh, said over 40 million Nigerians in about 850 villages across the country remained unconnected to any form of telecoms services.

According to him, this was discovered following a rigorous survey carried out by MTN.

The Federal Government, through the Nigerian Communications Act 2003, had also created the Universal Service Provision Fund to address the problem and promote rural telephony.

The project involved the deployment of fixed wireless telephony in 218 local government areas across the country. It was packaged by two Chinese companies with a $200m (about N26.6bn) concessionary loan from China.

However, the Chinese firms failed to deliver on the project and the government, in 2009, transferred the first phase of the project to five indigenous telcos, namely; Key Communications Limited, Suburban Broadband Limited, Voicewares Network Limited, Gicell Wireless Limited and Hezonic Limited.

Under the new arrangement, Key Communications won the Ibadan Zone with a $38m bid, while Suburban Broadband bid with $140.5m to manage the Federal Capital Territory and Kaduna zones. Voiceware Networks bid with $30m to manage the Enugu Zone, while Hezonic and Gicell Wireless bid with $30m and $20m to manage Enugu and Bauchi.

Ever since then, the story has been the same.

The President, Association of Telecommunications Companies of Nigeria, Mr. Titi Omo-Ettu, had told our correspondent in December 2010 that the Federal Government‘s investment in a rural telephony project was ill-advised.

He had advised the government to cancel the project to “prevent certain wastage”, stressing that the government only needed to support telephone providers that were already licensed and were actively and genuinely in operation.

Subsequently, other experts have also been calling on telecoms operators to extend their coverage to villages, thereby providing the much anticipated rural telephony.

MTN has been at the forefront of connecting the rural areas.

In October 2010, the company took a major initiative to connect the unconnected through the Rural Telephony Scheme, when it signed a Memorandum of Understanding with its technical partners, Huawei Technologies.

Farroukh had said that about 40 million Nigerians, most of who resided in the rural areas that had no access to telephony, were the target of its RTS initiative.

He said, “Our goal is to cover every village in Nigeria. The first phase will see 350 villages covered before the end of May 2011, while 500 villages will be covered in the second phase before the end of December 2011.”

The operator, in an aggressive roll-out exercise that will gulp an initial estimated cost of about $40m in its first phase, has embarked on a project to cover 850 Nigerian villages by the end of this year.

The Chief Technical Officer, MTN, Mr. Karl Toriola, under whose technical auspices the scheme was designed and finally activated, said that the solution was best suited for the scheme.

He said a consideration, such as cost, was paramount in the design of the solution, stressing that unlike the regular base stations, the rural telephony installations would require little human management.

He added, “Two other major considerations in the design of the solution are power and the logistics of moving the equipment. For instance, many of the villages that will benefit from the scheme have no infrastructure and basic facilities, like electricity and motorable roads. So far, our power options – hybrid and solar power – have been adopted as primary power sources on the project.”

Toriola said despite the massive funding that the project would gulp, MTN was unruffled about the low volume of traffic or calls that would be generated in these villages. Instead, he said the company was determined to bring telephony access to the rural areas.

This, according to him, will bring other beneficial services to the rural dwellers and open up the rural economy.

Toriola said the intervention would see 350 villages connected to the MTN network before the end of May 2011, thereby bridging the communication gap between the urban and rural Nigeria. According to him, another 500 will be connected by the end of December.

The Managing Director, SB Telecoms, Mr. Afolabi Abiodun, argued that if the other major operators in the country should rise up to the challenge of rural telephony, Nigeria’s teledensity would continue to improve considerably.

He urged other operators not only to concentrate on the urban areas, where they could make higher revenue but to initiate schemes that would bring the unconnected communities to the communications highway.

According to him, connecting the Nigerian rural communities has substantial social value, irrespective of the revenue telcos derive from it.

Therefore, when the New Generation Consortium emerged the preferred bidder for NITEL with a bid of $2.5bn, experts believed that the country’s rural telephony project had received a major boost.

This was simply because G-Cell Wireless Limited, one of the telecoms companies that won the bid to operate the rural telephony project was a strong member of the group.

Investigation by one of our correspondents had also shown that the five other companies that won the rural telephony bids in the other five geopolitical zones were also members of the New Generation Consortium. They plan to integrate the rural telephony project into the new NITEL.

However, following several failed attempts to pay for the moribund national carrier, the bid was cancelled. To industry experts, this is a major setback to connecting the unconnected in the country.

The Chief Executive Officer, Adapt Interactive, Mr. Muyiwa Aluko, has, nonetheless, suggested that telecoms operators must develop programmes that will ensure that the rural communities are connected to the telecoms industry as a matter of urgency.

According to him, the major GSM operators have a bigger role to play if the rural communities must be connected. The Federal Government should also consider helping the operators to roll out services in less commercial locations, he noted.

Source : Punch