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Broadband and the economy
Nigeria's Broadband Strategy: The open access model
Dr Eugene Juwah
photo credit: ITU/V.Martin
Dr Eugene Juwah
Executive Vice-Chairman,
Nigerian Communications Commission
image
Photo credit: Alamy

Nigerian Communications Commission
Delivering broadband for development in Nigeria

To realize its Vision 20:2020 goal of becoming one of the 20 largest economies in the world by 2020, Nigeria needs to take advantage of broadband and become an e-economy. This requires progress in two areas: moving from slow low-capacity copper wire to fibre-optic networks; and making sure that rural communities are not left out of the access to the information society that most urban inhabitants enjoy.

Extending the coverage of broadband beyond cities and major towns, providing access to information and communication technologies (ICT) in unserved and underserved areas, and encouraging the use of ICT in primary, secondary and tertiary institutions will create value in enhancing universal access, learning, knowledge transfer, and employability of the workforce, thereby supporting diversification of the economy. This could potentially contribute about USD 1.1 billion (GDP growth of about 1.2 per cent) by 2015, according to a recent study*.

The liberalization of the telecommunications sector in 2000 resulted in significant improvement in the lives of Nigerians and changed the nature of everyday business. Teledensity in Nigeria increased from 8.5 per cent in 2004 to 64.7 per cent in April 2011, representing more than 90 million active telephone lines. This progress attracted foreign direct investment (more than USD 18 billion since 2001), and increased employment (direct employment of more than 12 500 people, and indirect employment of about 150 000 others), as well as bringing other economic benefits.

Notwithstanding these developments, there is a notable gap in terms of ICT infrastructure between major urban centres and rural communities. A recent survey conducted by the Nigerian Communications Commission (NCC) showed that only 17 per cent of rural communities had Internet facilities, as compared with 79 per cent of urban communities. In addition, only 11 per cent of the respondents in the rural communities with Internet facilities had access to such facilities. NCC via the Universal Service Provision Fund has therefore been actively engaged in various activities to extend broadband and ICT development in rural areas.

Deployment of fibre-optic broadband networks

The open access model

Despite the advantages of fibre-optic networks, the pace of investment in this area has been slow globally because of: high investment costs resulting from the high cost of civil engineering work to construct ducts; regulatory difficulties involved in obtaining right of way permits for access to streets, roads, and other public land; repeated requests by different telecommunication operators for excavation of the same streets or roads; and lack of sharing of fibre-optic infrastructure by providers.

Fibre deployment in Nigeria has also been plagued by inconsistency in administrative procedures regarding right of way permits, and poor urban and regional planning. In areas where fibre-optic networks exist, regulatory deficiencies and an absence of coordination in fibre deployment have resulted in the degradation of roads and public infrastructure.

Because of the infrastructural and operational problems currently faced in Nigeria, such as congestion and the unwillingness of operators to share backbone infrastructure, NCC decided to explore an open access model for the deployment of a fibre-optic network. The aim was to ensure effective deployment and a level playing field to achieve the national goals of an e-economy and universal access.

Sharing infrastructure is one strategy that NCC as the telecommunications regulator in Nigeria is proposing for achieving a national broadband infrastructure more quickly than through simply letting the market take its course.

The open access model is a framework enabling fibre-optic cable carriers to share the infrastructure used in the deployment of their cables. The model separates the roles of the service provider and the network operator, and provides services to operators on a fair and non-discriminatory basis. The aim is to bridge the gaps in broadband availability through the central deployment of fibre by an independent infrastructure provider (Infraco) to operators and other major users, at a subsidized price.

The open access network will be rented out on equal terms to service providers, companies and public operations, providing a competition-neutral environment to drive the development of the broadband market. Customers may be granted exclusive rights to use a line or an entire network structure. Features of the proposed model include an ownership option, a pricing strategy and a deployment strategy, as described below.

Ownership option

The most viable ownership option for open access deployment in Nigeria is an independent infrastructure provider (Infraco) licensed by NCC, who provides ducts and fibre in parallel to existing fibre deployments. The mandate of Infraco will be to supply an open and competition-neutral fibre network nationwide. The core tasks of Infraco will be to build, operate and maintain the fibre-optic communication network, and to lease fibre-optic connections to operators and companies as well as the public.

Pricing strategy

In order to make this model financially attractive to operators and service providers, pricing will be affordable. This is expected to be achieved through a cost-based pricing strategy, where operators pay the cost price for the provision of the service, plus maintenance costs. The strategy should be operator-neutral, providing a network that is open to all players on equal terms.

Deployment strategy

The network will be developed in stages, beginning with consultations with stakeholders and service providers. A detailed design will then be developed, and the network will be built. The core network will initially be deployed in central business districts and commercial centres in urban areas, where the demand for broadband is highest. The network will then be extended to commercial centres in peri-urban and rural areas. After deployment in commercial areas, the network will be expanded to key public institutions and residential areas, with priority being given to multiple-household apartments over detached villas.

As illustrated in the chart, NCC will license the independent infrastructure provider, regulate the rates that Infraco charges operators to lease infrastructure, and regulate the rates that consumers pay for broadband access. In addition, NCC will collaborate with other stakeholders in funding Infraco, facilitate agreements between various tiers of government and Infraco, and engage in dispute resolution among the various stakeholders.

Overview of the proposed open access model for a fibre-optic network in Nigeria, showing key stakeholders, their responsibilities and the relationships between them
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Establishment of community communication centres

Another NCC activity, which has already been successful in significantly increasing rural penetration and universal access, is the introduction of community communication centres. These centres are designed to extend voice, Internet, ICT training and other services to unserved rural communities. Each centre provides a public calling facility, a cybercafé with wireless broadband Internet connectivity, and ICT training courses. It also serves as a platform for extending wireless Internet access to neighbouring communities within a 5 to 15 kilometre radius. The community communication centre has enabled access to the Internet for individuals, business, government offices, schools, hospitals, police, rescue service providers and other community-based organizations. The centres are managed by private operators and also provide remittance services (money transfers) in the target communities.

The key economic and social benefits of the community communication centres include:

  • stimulation of social and economic development of unserved and underserved rural areas;

  • promotion of the communication rights of Nigerians;

  • access to good quality services at fair and affordable rates;

  • promotion of educational empowerment;

  • enhancement of government programmes, such as the distance-learning programme of the National Open University, the National Information, Communication and Education Programme, and Wire Nigeria (WIN);

  • reduction of rural to urban population drift by bridging the urban-rural access gap;

  • generation of employment in unserved, underserved and rural areas;

  • reduction in the cost of business, social communications and transactions in unserved, underserved and rural areas.

This project is rapidly changing the lives of the members of the host communities and their approach to business, increasing efficiency and attracting investment. The centres have empowered rural folk by providing ICT infrastructure to schools, hospitals, police, and rescue services. There are currently more than 150 operational community communication centres across the country, and an additional 109 centres are being constructed.

The success of the community communication centres confirms the capacity of ICT — in particular, broadband — to spur economic development, especially in rural communities, as the country moves to attain its Vision 20:2020 objectives.

 

* Assessment of Economic Impact of Wireless Broadband in Nigeria, Analysys Mason, February 2011.

 

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