Goverment and Mobile Operators Must Collaborate to Resolve Nigeria's Deep-Seated Service Conundrum

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06 Jul 2014

While the Nigerian telecommunications sector has witnessed phenomenal growth since the turn of the millennium, the time has come for operators and government agencies alike to act in tandem to stem the unacceptable levels of service quality that continue to plague the industry. That's the opinion of global research and advisory services firm International Data Corporation (IDC) as it weighs up the Nigeria Communication Commission's latest strategy for bringing offending operators into line and assesses the deeper issues involved in achieving true quality of service (QoS).

 

From just 400,000 lines in 2001, Nigeria's mobile market has grown to total 120 million users today, with mobile phone penetration reaching 87% of the population. But poor QoS remains the bane of the Nigerian telecommunications industry, with all four mobile network operators falling foul of the regulator at various times over the years. Indeed, in February this year Airtel, Globacom, and MTN were handed month-long bans from selling SIM cards and suspended from engaging in any promotional activity until their QoS levels reached the required standards. But will such stringent measures finally have the desired effect?

 

"Banning sales of SIM cards is a new hammer for the regulatory body, and one it has introduced in an attempt to compel operators to comply with its stated QoS standards," says Oluwole Babatope a telecommunications and networking research analyst with IDC West Africa. "Fines and limitations on marketing activities were the traditional sanctions of choice for the NCC, so this latest action marks a significant shift in thinking. However, IDC believes the ban on selling SIM cards will likely be as ineffective as the previous tactics because there is much more to enabling effective QoS than mere input or effort from the operator side."

 

The acquisition of land, together with government taxes, informal levies from various 'community youth organizations', and the high cost of generating power, all demand huge capital and operational investments from telecom operators in the country. They have also consistently invested large amounts into their networks, but such efforts have often been ineffective due to the lack of infrastructure in the country, which is a key reason why the quality of the mobile services they provide has remained so poor. Another critical factor is security, with numerous reports over the last two years of widespread and persistent vandalism of fiber cables, theft of diesel generators from cell sites, and destruction of fiber cables destruction during road construction.

 

The way forward is for the government to protect rather than persecute this sector of the economy. "The telecommunications vertical in Nigeria has consistently increased its contribution to GDP over recent years, rising from about 2% in 2006 to 8% in 2013," says Babatope. "As such, it is in the government's interests to create and implement policies that provide an enabling environment for communication service providers. Indeed, laws should be established that protect telecommunications infrastructure and prosecute the vandals and individuals who sabotage telecom operations in the country."

 

None of this absolves the operators of all responsibility, however. "IDC is also of the opinion that operators must invest more in hybrid power solutions," continues Babatope. "After all, it is common knowledge that the supply of public electricity is unreliable and will likely remain a significant challenge for some time to come. Operators should therefore be proactive in seeking out cost-effective alternatives for power generation. Hybrid power solutions, which combine renewable and non-renewable energy sources, should help reduce operational expenditure on networks, thereby enabling the operators to invest more in their networks across the country and ultimately improve the customer experience."

 

For more information about IDC's telecommunications and media services research in Middle East and Africa, please contact Paul Black at pblack@idc.com or on +971 55 902 3399.

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