The Real Problem with GSM in Nigeria
By Charles Njoku
In the past four months or so, there has been a massive public outcry over the deteriorating Quality of Service in the operations of GSM companies. Even the National Assembly which, to me, is still settling down has jumped into the fray, unfortunately without conducting adequate due diligence, but based literally on a sentimental assessment of the situation. More consequentially, the Nigeria Communications Commission (NCC), which regulates the industry, recently expressed its intention to slam huge fines (on a monthly basis) on the operators for poor Quality of Service (QoS).
However, according to media reports, Celtel and MTN have secured an injunction to stop the NCC from carrying out the "intention". Their argument is that not only will it cripple their finances but it will also further destroy the integrity of the networks, which the operators and regulators are supposedly trying to protect and improve. Because it is sub judice, I am unable to comment on the matter, but suffice it to say that the operators may have a point here just as the NCC may.
As for the parlous state of the network, so many reasons have been advanced by so many people-ranging from the mundane and comical to the critical and sagacious including the perceived dubiousness of the operators as well as their inability to develop simple business plans, sadly a euphemism for inability to plan for the failure of public infrastructure. Some people are so uncharitable that they ask whether the operators did not "hear the name of peppersoup before they ordered it, meaning whether they did not know the situation in Nigeria before they paid for the license. Perhaps, this is the post preposterous of all the comments and all I wish to say here is that people should stop playing to the gallery and face the facts. www.
Come to think of it, very few components of GSM or telecommunications are made in Nigeria , strictly speaking. As a matter of fact, it is even becoming increasingly difficult to recruit expatriates or foreign trained Nigerians in the Diaspora to come and work in Nigeria due largely to the twin problems of infrastructure decay (particularly epileptic power generation) and poor security. The few that have been trained over the years are seeking safer havens elsewhere outside of the country for the same reasons.
Let me acknowledge that I am going to be accused of being sponsored by GSM operators, but I know the truth, and so I will stand the truth no matter. Of course, I am also a consumer, so I kind of know where this shoe pinches. But as an informed stakeholder in the telecommunications industry, I therefore have the responsibility to not only lament the flagging quality of services offered by the operators, but to also highlight the real problems the industry is facing. And intend to start from the beginning.
Emeka Oparah, the spokesman of Celtel Nigeria very aptly captured the historical antecedents of the telecommunications industry in Nigeria recently when he attempted, as usual, to sell his company in his essay entitled "Celtel Nigeria 's spirit of innovation". If you permit a rehash, he noted that Nigeria was languishing in the doldrums between the period 1901, when the first phone call was made in Calabar, Southern Nigeria, and 2001 (a whole 100 years later), when GSM was launched in the country. At an annual average growth rate of 4.5 lines, Nigeria could only boast of a paltry 450,000 active telephones six years ago. The sorry situation was definitely due to a combination of pig-headedness by the authorities and the Nigerian factor, which I shall revisit presently. It is indeed an amazing story to say that barely six years after the launch of GSM, Nigeria now boasts of over 40 million telephone lines (95% of which are mobile/GSM).
Enough of history, but perhaps, it is important to mention the role of government and the NCC, at this point, to underscore the import of an enabling environment for the growth and consolidation of any industry. The government, under former President Olusegun Obasanjo, established the NCC and gave it free hand (?) to conduct what has been described as one of the most transparent license auctions in this part of the world. Forget the brouhaha, which broke out following the initial refusal of the authorities to grant a license to Globacom, and you can safely say the process was neither acrimonious nor rancorous, but professional and world class in standard.
Indeed, the government takes the cake for having the political will to let the process take a businesslike course, with the whole world watching. And I think it had to-because the previous licensing by the rapacious regime of the late Gen. Sani Abacha, was the laughing stock of the highly sensitive global telecommunications market. I also make bold to say that the NCC has been rated very high in the continent by those who should know for their astute management of the business of regulating the industry in Nigeria , in spite of the fabled Nigerian factor (again!).
But beyond the salubrious environment and the level playing field, if you will, government has been one of the greatest enemies of the operators and indeed the quest to grow and develop the telecommunications industry. This is my personal opinion, and I will tell you why in the following paragraphs. Two incidents occurred immediately after the licenses were issued: one, the Federal Government put the operators under pressure to launch, obviously to lend some credence to its drive for Foreign Direct Investment (FDI); two, the then Minister of Power & Steel, the late Bola Ige, pledged uninterrupted power supply by the end of 2001! The third incident was the claim by government, then, that the money realised from the sale of the GSM licenses ($285m each), which was considered too exorbitant, would be invested in providing transmission infrastructure through the National Carrier, NITEL, as it were.
Sadly, Uncle Bola is not around anymore to explain what happened, but Nigerians know that the electricity power supply has deteriorated instead of improving over the past six years. What is even sadder is that so much money has been purportedly invested into the power sector, and by whatever name it has been called, NEPA or PHCN, the public utility in charge of power generation, sales and distribution, has become more or less a bottomless pit. All the grammar they are speaking at Abuja on privatization, unbundling, etc, has turned out to be mere grammar. Things have not gotten any better yet!
For the GSM operators, power generation is one hell of a nightmare. I am a bit familiar with the operations of GSM companies, and I gather from them that more that 60% of their operating cost is basically money spent (read wasted) on power generation. Today, Celtel, according to its CEO, Bayo Ligali, claims it will hit 3000 base stations by year end, all of which are powered by generators. The company is currently swapping out old generators and dualising its generating capability, which means that by end of the year, they would have 6,000 generators. Also, each base station has a 5,000 litre diesel tank. By every stretch of imagination, this is a humongous operation and will cost an arm and a leg to sustain. If the same applies to the other two serious operators, then your extrapolation is as good as mine. It is too bad for business.
In terms of transmission, the operators, contrary to their expectations, are now building transmission infrastructure to be able to render services to their customers. And for those who are talking about business planning, this was not in the business plans of the operators-based on the information provided by the government then. No one plans for deterioration! Haba! The two Operators then, MTN and Econet, incidentally both foreign owned, took government by its words regarding transmission and electricity supply. Today, they have invested significantly in the construction of transmission backbones, both microwave (the easier) and fibre optic (the more reliable). Also Globacom, which has a licence to build transmission capacity, is also building theirs. So, we are faced with a situation where the GSM network in Nigeria will be saddled with excess capacity in the not-too-distant future.
Meanwhile, the $285m times two and the $200m (curiously paid by Globacom for a bouquet of four licences) was literally misappropriated (in my opinion). Hurriedly, the three tiers of government gathered in Abuja , after the auction, and shared the proceeds. And the country has absolutely nothing to show for it, aside perhaps better life for the families of the government officials that "shared" the money as we can see from their fleet of choice cars, chain of flourishing businesses, uncountable mansions around the world and really fat bank accounts, locally and abroad.
The point here is that government reneged on its promise to the operators or abdicated a responsibility it should ordinarily carry out as part of government business. And curiously too, an agreement between NEPA (as it was then known) and ESKOM of South Africa to build telecommunications transmission capacity was aborted. So, the GSM operators, instead of focusing on their core business, are compelled by circumstance to build four networks namely GSM, Power Generation, Transmission and security. The challenge here is that resources are being spread thinly on building capacity in the four "department" instead of one. These are some of the real problems facing GSM operators.
There are quite a few other problems namely security, community issues, multiple taxations, over-legislation and paucity of trained human capital. The issue of security and community issues can be rolled into one. Here, the operators are facing serious challenges from the activities of robbers, who have relentlessly been attacking cell sites to steal generators. The GSM operators say they now lose an average of 10 generators per week to robbers, who daringly bring cranes during their violent operations to remove or cannibalise generators. At other times, small time thieves have drilled holes in fuel tanks and siphoned diesel from the reservoirs. Aside from the loss of equipment and diesel, many security staff have been injured and, in bad cases, have ben killed during these robbery attacks.
Corollary to the nefarious activities of the robbers is the equally nefarious activities of social miscreant and some fastidious communities. I gather Celtel had one of its base stations in Lagos Island overran by Area Boys a couple of years back and it took the very genial intervention of the Oba of Lagos, Rilwan Akiolu, to get the rampaging youths out of the site for the company to refuel its generator and get the base station back on stream‚Äďafter three months! At a recent NCC Consumer Parliament held in Lagos , the representative of MTN, Mr. Wale Goodluck, lamented the taking over of over 50 of the company's base stations by irate youths in the Niger Delta area, making it impossible to access the sites for refuelling or maintenance. With 50 sites down, it will be a miracle for the quality of service in that area to be anything to write home about.
I hear that in River State , armed and dangerous youths regularly ‚Äėvisit' the offices of the GSM companies threatening to put them out of business, if they did not ‚Äėdrop something'. The ability of the companies to respond ‚Äėpositively' to such threats, it is said, will determine how soon they can recommence operations. In some communities, the moment the base stations are fully installed and operational, the elders or the youths, depending on who is greedier, will storm the site to demand appeasement for their oft hungry gods, whose communication with the host community is being interrupted by the rather dangerous signals from the masts! My goodness!
This might appear funny but these regular preposterous demands are making life difficult for the operators. MTN, I gather, has invoked the Jesus Christ Model of "wherever you meet with resistance, wipe the dust off your shoes and leave the town". I am aware they have decided, to shut down a site along Eko Bridge Lagos, due to the disrupting antics of Area Boys. What is even more painful is that, unlike the oil companies that are accused of ‚Äėstealing' natural resources, the GSM operators are actually putting things into the economy. Very sad indeed!
As good corporate citizens, GSM operators, like other business organisations are bound by law to pay taxes and levies. In the telecommunications industry, the taxes and levies come in trailer loads. They pay all manner of taxes and levies to the Federal Government, State and Local governments. Granted, the quality of service offered by the GSM networks is not up to standard, but it not only the operators who are culpable-if at all. With the volume of funds they are investing ($10b, for MTN; $6b for Celtel and $4b for Glo) one can say they are doing their best. But what of the other stakeholders like government?
We must learn to face facts in Nigeria and call a spade a spade. It is so easy to compare Nigeria with the United Kingdom , France , United States and Germany , but that is only when it comes to GSM. In terms of security and infrastructure, we ( Nigeria ) can not hold a candle even to Ghana ! Let us, for whatever it is worth, attempt a comparative analysis of the environments within which the GSM operators function in Nigeria and in the UK.
The situation is made even sadder, when people who should know better, like Reuben Muoka, ex-Vanguard Newspapers, ex-MTS First Wireless, decide against all known logic (except politics, of course) to join the bandwagon of those playing to the gallery. In case you do not know, Reuben, in a well-crafted but very incredibly illogical write-up "GSM" lampooned the operators for taking NCC to court to stop it from carrying through its threat to impose huge monetary fines for perceived QoS problems.
As for the recent Senate hearing, which to me was a comedy show of sorts, I think the distinguished gentlemen and ladies of the upper chamber of the National Assembly had better find something else to do. Given the age-long public disenchantment over power supply, has anyone convened a public hearing on the matter? Has either of the chambers summoned the Inspector-General of Police to interrogate him on the disastrous state of (in) security in the country? In case they are not aware, Abuja is so bad today, in terms of GSM network quality, because the previous ‚Äėgovernment' in the Federal Capital, in its wisdom, promulgated an edict preventing the construction of telecoms cell sites in the city. For three years, the operators have been shouting themselves hoarse to no avail. May be now the honourables and their friends and families are feeling the pinch, they will do something to repeal the rather sad law.
Enough of playing the Ostrich and let us get serious for once in Nigeria so we can indeed and in truth become a great nation. GSM has brought positive changes to this country and has indeed become a standard bearer in the government's march towards economic development of the country. Let's complain as sensible consumers, but say all the other right things so that the industry can truly excel.
‚ÄĘNjoku, a social commentator, lives in Lagos
Re: The Real Problem with GSM in Nigeria
this article is a searing exposition of the law of consequences....but our refusal to learn from experience will return us to the stone age.God help our nation.
Re: The Real Problem with GSM in Nigeria
You know I am still amazed to date how these GSM folks manages within our namespace.
If there was any doubts in my mind as to the focus of the OBJ era, and its seriouness about solving the Nigerian infrastructure equation, I was cleared after I heard nothing more about the huge sums these GSM folks paid for their licenses - a piece of paper!
Now, I dont know off hand how much you'll need to build functional power gen/distribution grids, but I just couldnt stop thinking it was those kinda ready funds that a serious nation would invest wisely....But, isn't it said that NEPA's (read PHCN's ) corruption index is only next to the Okiro's force in terms of 'deepnessness' ?
Ori n fo mi...