$20bn undersea cable investment failing to deliver

Four years after the landing of broadband fibre-optic submarine cables, which are supposed to ease the long standing constraints of internet penetration and bandwidth, the expected upgrading of Nigeria’s e-governance, education and healthcare,and others, continue to suffer on account of poor access, especially in the hinterland.

Four cable systems that landed the country have been virtually stranded on the coastline, unable to deliver service to the hinterland, due to the under-developed distribution networks, including national long distance fibre, metro fibre and lastmile connectivity, required to push internet services in-land.

The federal government had set the target of a five-fold increase in broadband penetration, in consonance with the National Broadband Plan (NBP).

The purpose of this is to

facilitate e-governance, e-health, e-education, and to enable Nigerians employ themselves on the back of the myriad of opportunities availed by the internet.

It would also enable retirees contribute to the economy by working from home through the internet, and allow skilled diaspora Nigerians contribute to national development. Beyond that, industry watchers say broadband will lower the cost of real estate as people will be able to work from anywhere, without necessarily converging in urban areas and needing to commute.

Nigeria’s submarine cable capacity utlisation rate is less than 10 percent. Market observers have expressed concerns about the current situation, considering recent international studies which show a clear correlation between broadband penetration and economic growth.

“Broadband service would also facilitate the provision of good health, education, agricultural services. It will stimulate economic growth by facilitating cross-industry linkages and improving efficiency”, said Lanre Ajayi, president of Association of Telecommunications Companies of Nigeria (ATCON).

According to Ajayi, Nigeria has yet to benefit from accessible broadband services provided by sub-sea cables due to infrastructural constraints. The continent’s submarine cable market is valued at an estimated $20 billion, with cable operators including the South Atlantic 3; MainOne; Glo1; West African Cable System

(WACS); African Coast to Europe (ACE); Lower Indian Ocean Network (Lion); Seacom; EASSy; TEAMS; among others, dominating the market.

The first four of the above listed cable systems have landed Nigeria and are virtually stranded on the coastline.

With nearly 10 terabits per second of international bandwidth capacity sitting on the shores, the nation’s internet market is characterised by the slow and exasperating access to the cyberspace. MainOne however says Nigeria’s submarine cable capacity utilisation rate is less than 10 percent.

Little wonder, the country’s broadband penetration rate is still at an abysmal 6.8 percent, according to the ministry of communications technology.

“Bringing the cable to the shores of Nigeria is one thing, but how do you get the services out to the other states? One of the things that we need to look at is cheap national long distance services”, said Paul Jaikaran, chief technical officer, MainOne.

“The second issue is what I call the Access network. Imagine I have taken the pipe all the way to Gombe, one of the big problems when you think about those locations is how much money you are going to invest to roll out a broadband fibre network versus how much revenue you will get back”, he said in an interview with BusinessDay.

Inview of this, MainOne is bidding for the license to become the Infrastructure Company (InfraCo) for Lagos, in a calculated move to strengthen Nigeria’s terrestrial fibre network. The Nigerian Communications Commission (NCC), is expected to establish seven regionally-based Infrastructure Companies (InfraCos) as part of its market restructuring exercise.

These InfraCos, according to the NCC, would further accelerate the rollout of a nationwide metropolitan and backbone fibre network on an open access, non-discriminatory, price-regulated basis.

There are a number of initiatives embarked upon by MainOne even before the regulator came up with the InfraCo model, which makes the company an ideal candidate for the license.

“We have about 300 kilometres of fibre already laid, so it makes sense for us to say what else can we do to become an InfraCo”, said Jaikaran. “Also of note is the Yaba i-HQ pilot project because we worked with the Lagos state government to connect institutions, schools, businesses, in and around the Yaba area”, he added.

Strengthening lastmile connectivity is considered to be one of the most pressing issues currently facing the Information Communications Technology (ICT) industry.

 “We have been calling for the release of more spectrum to enable operators deliver services to the people”, said Ajayi. “We are doing well in international connectivity.

 But in the lastmile and middle-mile, we are not doing well. That’s why we need more spectrum”, he added. The NCC is already working out modalities for the auctioning of the 2.6GHz spectrum. A variety of local players operate terrestrial fibre networks, including Mobile Network Operators (MNOs) MTN and Globacom and a handful of other Internet Service Providers (ISPs) and broadband wholesalers, including 21 Century Technologies, Suburban Telecoms and Phase3 Telecoms.

According to Eugene Juwah, the executive vice chairman of the NCC, as of mid-2013 an estimated 30, 000 kilometres of fibre had been laid in Nigeria, Africa’s largest economy by GDP.

However, most of the existing terrestrial fibre is centred in Lagos and Abuja, where, as a result of a lack of infrastructure sharing across the market, multiple cables operated by different companies serve the same high-traffic areas.

Consequently, each individual network remains largely under-utilised. Additionally, many Nigerians ,particularly those in remote areas – live outside the coverge areas for high speed mobile broadband service, and must rely instead on other technologies, such as satellite and microwave.

Businessday