Ernest Ndukwe, executive vice-chairman, EVC, of the Nigerian Communications Commission, NCC, has built a solid reputation for himself. Under his deft management and regulation of the telecoms sector in the last 10 years, the country now boasts of a stunning 70.3 million fixed and mobile telephone lines from less than 400, 000 lines in 2001. The opening of the sector via deregulation also grew the country’s investment portfolio in excess of $18 billion, N2.7 trillion. Today, Nigeria enjoys an enviable global ranking as the largest and fastest growing telecoms market in Africa.

Expectedly, the growth has greatly affected the economy. For instance, it has impacted employment positively as the sector suddenly became a major contributor to the war against unemployment in the country. Apart from those directly employed by the telecoms companies, there are those who are doing businesses and supporting the industry by selling recharge cards, mobile phones, repairing mobile phones, supporting the operating companies, building sites, selling land, becoming agents for all kinds of activities and being community liaison officers. But as heartwarming as the growth of the sector under Ndukwe’s watch are, a major sore point in his 10-year tenure is perhaps, the high number of dormant telecoms licences.

Investigations by the magazine show that a number of these licences are yet to be activated, a situation that is now a cause for litigation and widespread anxiety among stakeholders and consumers in the telecoms sector. Already, there are fears that the continued dormancy of the licences may stunt the growth of the sector and deny consumers the benefit of additional

range of services. Some experts and stakeholders who spoke with the magazine argued that had most of the dormant licences been activated, the growth of the sector in terms of investments, competition and more choices for consumers would have been better served beyond where Ndukwe leaves off next month after serving out his maximum 10-year tenure of five years each.

For instance, the much anticipated benefits of transmitting and receiving voice, data, and picture signals simultaneously on portable mobile phones while in motion, which 3G enables have so far eluded consumers with the continued dormancy of the 3G licence issued to Alheri Engineering, a subsidiary of Dangote Industries Limited, DIL. Three years after the $150 million licence was issued, the company is yet to activate it. Three other operators awarded the 3G licence alongside Alheri in March 2007, namely, Celtel (now Zain), MTN, and Globacom, have since launched commercial services.

The closest the company came to staring operations in reaction was the purported launch, in January 2009, of its much-hyped novel service over high voltage power lines of Transmission Company of Nigeria, TCN. Using pylons of TCN, a subsidiary of Power Holding Company of Nigeria, PHCN,  Alheri announced that within six months it would complete the building of a ‘One Network’ of over 14,000 kilometres of aerially deployed fibre optics cables in Nigeria. “Our infrastructure has infinite backbone capacity with high redundancy that gives telecoms operators, financial institutions, industry, government ministries and parastatals and corporate bodies unique opportunity to build and offer reliable service

services on the most reliable electronic bridge,” Aliko Dangote, president, DIL, boasted at the launch of the network in Benin City, the Edo State capital.

The project, expected to help strengthen the delivery of e-governance, telemedicine, and also impart literacy and information security, among other facilities, would have marked the beginning of alternative transmission link in the country. Unfortunately, not much has been heard about the innovation since it was unveiled. Instead, there are speculations that Alheri has sold the frequency spectrum to Etisalat Nigeria, the last entrant into the GSM market. Although, both companies have so far kept sealed lips over speculations that they have struck a deal to sell the licence for a princely $225million, reliable sources disclosed that the transaction has received regulatory clearance by the NCC. This is despite the NCC’s earlier stance that an operator cannot transfer a licence issued to it to another party.

A reliable source close to the company, informed the magazine that the decision to dispose of the licence was because it is finding it increasingly difficult to fund the roll-out of the network since unlike other licensees, it needed to build its network from the scratch. The source, who declined to be mentioned, said that other 3G licensees were able to roll out services on their 3G platforms by simply upgrading their existing 2G/2.5G networks using underground fibre optics transmission.

The 2.5G is an extension of 2G systems, adding features such as packet-switched connection and enhanced data rates. Since 3G networks do not use the same radio frequencies as 2G, it means that Alh

Alheri would have to build entirely new networks and licence entirely new frequencies. Besides, Alheri, the source said, realised that rolling out a commercial 3G network required substantial investments and that returns on investments may not be as fast as a GSM network, which terminates calls.

Insufficient bandwidth to drive its 3G operations also posed a serious challenge. The acquisition of 3G licence by operators allows for a one-stop shop for mobile, Internet and broadcast services and Alheri is said to be seriously handicapped by insufficient bandwidth for the kind of quality required for 3G operations. Although, the challenge of insufficient bandwidth and content are not peculiar to Alheri, it is more pronounced with the company, being a new entrant hence it is afraid that its clients may not enjoy the full benefits of its services.

Also, with the huge initial investment in licence fees, Alheri is said to be treading the path of caution to see how it could ensure a return on investments as quickly as possible hence the continued dormancy of the licence. As if to make matters worse, the current credit squeeze in the financial sector induced by the ongoing reforms of the Lamido Sanusi-led Central bank of Nigeria, CBN, made it difficult for the company and in fact, other dormant licensees to access credit to finance their service roll out.

The serious credit squeeze is also largely responsible for a good number of traditional Internet Services Providers, ISP, whose licences are dormant even as those that managed to roll out closed shop shortly after. Of the about 522 licensed ISPs, and 110 very small aperture terminal, VSAT, firms in the country

only 98 operators (both VSAT and ISPs) are active. Apart from the multinationals that operate in the telecoms sector, most indigenous operators, particularly those operating in the Internet segment of the market, including the fixed wireless segment, do not have the huge financial muscle to attract big finance either from local or foreign banks to fund their roll out. Telecoms is driven by equipment acquisition and the equipment are very expensive and their costs are rated in foreign currencies. 

Difficulties in attracting the right financing and foreign technical partnership are also said to be largely responsible for the failure of Integrated Wireless Technologies Nigeria Limited and Telexchange Services Limited to activate their licences, which were revoked recently by the NCC. The interconnect exchange licences issued to the two exchange providers on August 1, 2004 and are due to expire July 31, 2014,  were revoked for failure to make use of them after several years. In revoking the licences, the NCC said it relied on the powers vested on it under the Nigerian Communications Act, 2003 to “determined that two of its interconnect exchange licensees — Integrated Wireless Technologies Nigeria Limited and Telexchange Services Limited, have failed and/or refused to commence operations in contravention of the provision of the Nigerian Communications Act 2003 and conditions attached to their licences.”

Reuben Muoka, principal manager, public relations, NCC, explained that the NCC did not revoke the licences without a notice to the service providers. According to him, the commission had written the service providers on June 8, 2009, re

requesting them to submit a report to show that they have commenced operation under the licence but they did not respond. The NCC, he said, wrote to them again on September 24, 2009 intimating them of its plans to revoke the licence. It gave them 14 days to respond, but the service providers still failed to do so hence, the revocation of the licences, which took  effect from January 7, 2010.

Other providers who were also issued similar licences during the period include Exchange Telecom Limited, Medallion Communications Limited, Interconnect Clearing House Limited, Niconnx Communications Limited, and Breeze Micro Limited. With the licences, the operators are supposed to deliver interconnect services and facilities between one telecoms operator and another through the Interconnect Clearing House. They were also meant to measure traffic from one operator to another.

The continued dormancy of the licence issued Northwest Communication Limited, one of the FWA, operators also did not go down well with the NCC, which recently moved to revoke it. The NCC said that Northwest Communication Limited failed to roll-out services within six months as required by the letter of offer. But the company would have none of that. It has already gone to court seeking to stop the NCC from revoking its licence.

The company said it was issued an operating licence by the NCC after the payment of the required N151 million fee. The company was to roll-out fixed wireless services in Ogun State and is said to have completed the acquisition of facilities and properties to facilitate their operation when the NCC allegedly pulled the rug off its feet by issuing the same licence to

to other operators. This made its operation in the state unprofitable.

The operator later reapplied for another licence, which the NCC granted, allowing it to operate in Lagos State. With the new allocation, the company surrendered the Ogun State licence, which is meant to expire after a period of five years after which it becomes automatically renewable. “The renewal of the licence remains invalid for another five years unless you say, okay, I do not intend to renew the licence and you can only do that by a written notice to the NCC within 12 months of your intention not to renew the licence”, Adio Abdulakeem, counsel to Northwest Communication Limited, said.

According to Abdulakeem, “NCC is mistaking something here because we offered different varieties of services during that period. Running of services within six months is not a condition for revocation of a licence. So, you cannot bring into an enactment what is not provided for in that enactment. That is our case.” Hearing in the suit filed at the Federal High Court, Lagos, continued on February 2, 2010, where the court is expected to determine on the legality of the NCC’s move to revoke the FWA licence issued the company to operate in Lagos,

While ruling on the matter is being awaited, the continued dormancy of telecom licences has put both the licensees and the NCC under intense pressure particularly the case of Alheri.  “We have invited them (Alheri Engineering) for an explanation to find out why they have not yet started operation. It is necessary for the commission to know the steps they have taken to achieve their operation. If their explanations are n

are not good enough, the licence would be taken from them,” Muoka said.

He explained that the company had given the commission a satisfactory explanation about their delay and so the commission had to give them more time. He said the NCC monitors operators after issuing out licences and would continue to monitor Alheri even after it begins operation. The licence, which runs for a renewable period of 15 years, however, does not impose specific roll-out obligations on operators.

In the coming years, the NCC would be under intense pressure over the dormancy of some of the licences. Already, some of the licences are due to expire this year, which requires the NCC to free up new spectrum for optimal utilisation as new technologies emerge in the market that enable operators offer service on existing frequencies. Others are also due to be reallocated under the new wave of digitalisation underway in the broadcast media industry.

 

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