Remember Vision 2020?
It was an ambitious plan by former President Yar’Adua’s administration to make Nigeria one of the top 20 economies in the world. Everyone welcomed this vision which also aimed to increase the average life expectancy to 70 years, boost GDP to $900 billion and increase the broadband penetration rate to 76% by 2020.
To achieve these, Nigeria had to transition to a knowledge-based economy, i.e. a greater proportion of jobs being created by thinking and manipulating information as opposed to crafting and moving objects.
How did Vision 2020 go? Well, Nigeria is the 27th largest economy today, average life expectancy is 54 years, GDP is roughly $450 billion, and our broadband penetration rate stands at 40%.
Nigeria still has work to do to be competitive in a world that is increasingly fueled by information and powered by knowledge. All that is not possible without access to a reliable broadband connection.
Nigeria’s slow connection
To start, it is important to realise that the Nigerian Communications Commission (NCC) does not measure the broadband penetration rate by the mere number of users connected to the internet.
That would be misleading as it would include those with very poor or inoperable internet connections. Broadband only includes internet speeds in excess of 25 megabits per second (Mbps) for urban areas and 10 Mbps for rural areas. Lower speeds are measured as just "connected to the internet" - not broadband connections.
Internet connectivity varies across Nigeria. Central urban areas tend to have better connectivity than suburban and rural areas.
An internet user
Source: AMISCOM via Flickr
Unsurprisingly, those in less connected areas have a harder time participating in a knowledge economy. People who work in Lagos find it easier to perform common online activities such as video calling, file sharing, and even opening web pages in under a minute.
The situation is different for those who live in many parts of poorly connected states like Bayelsa and Oyo states.
Statistics from the NCC suggest that 46% of the 138 million internet subscriptions in April 2020 were from users whose internet speeds are not high enough to be classed as broadband.
Soon, slow connections will become harder to sustain. As the population of digital natives grows, more cell phones will be connected to the network infrastructure. Also, as the Internet-of-Things becomes a greater part of our lives - the number of connected devices is expected to increase exponentially within the next five years.
This increased traffic will further reduce internet speeds if nothing is done.
Slow internet speeds have hindered even government initiatives such as the issuance of drivers licences and national identity data capture. Many Nigerians have had to wait for hours or days to complete the processing of their driver’s licenses. Similarly, the national identity data capture exercise could not also occur in some parts of Nigeria due to the poor internet speeds.
There is obviously room to improve. The Speedtest Global Index ranks Nigeria 108th out of 139 countries for average mobile speeds and 150th out of 174 for fixed broadband speeds. Kenya, Senegal and Ethiopia all average higher internet speeds. Morocco, the highest-ranked African country, ranks 59th.
So why are internet speeds low in many parts of Nigeria?
State of broadband infrastructure
For much of history, people transmitted most long-distance voice and data communication through geostationary satellites. Calls involving satellites were as expensive as $2 per minute (roughly ₦800), with broadband data costing even more.
However, with the improvements in fibre optics technology in the late 1900s, the costs of calls and data have reduced.
Much of the telecommunication today occurs via under-water fibre optic cables, instead. The use of satellites is much less, for example, they are used to connect some remote islands which are not yet connected through under-water fibre optics.
In Nigeria, we have six under-water cables connecting us to the rest of the world. These cables have a combined capacity to transmit 40 terabits of data per second.
Essentially, this means, Nigeria has the potential to enjoy widespread high-speed and high-bandwidth internet operations. The problem is we are using less than 10% of the capacity of these cables.
A major reason is that the vast majority of our telecom masts are still communicating through low-bandwidth microwave technology.
The amount of data that can be transmitted through microwaves is limited as this technology was built for lesser bandwidth operations such as voice calls. But today, with increasing video and other high-bandwidth operations, fibre optic cables are required instead.
Upgrading to fibre optics and Right of Way charges
In recent years, telecoms providers have started to upgrade these masts from microwave technology to fibre optic cables. However, as at today, less than 10% of base stations in Nigeria are connected via fibre optics. Nigeria aims to increase that proportion to 60% by 2025.
According to the NCC, Nigeria needs about 120,000 km of fibre cables to achieve its broadband goals. We are currently at 27,000 km.
The bulk of the costs for deploying fibre optic cables in Nigeria comes from the very high Right of Way (RoW) fees - amounts charged by the owners of a property for the right to bury fibre optics cables in the ground.
RoW fees account for over 70% of the cost of deployment of these cables. Some states charge as high as ₦6,000 per metre, but the Federal Government has set the RoW charges on federal-owned properties at a more reasonable ₦145 per metre of cable buried.
In 2013, state governors agreed to enact the ₦145 per metre rate used by the federal government to fast-track the spread of broadband in Nigeria. However, as revenue from crude oil sales and allocations from the federal government dwindled, state governments searched for ways of boosting their Internally Generated Revenue.
Ekiti State Governor laying down fibre optics
Source: Kayode Fayemi via Flickr
In looking for a short-term fix, many states hiked their RoW fee, charging between ₦300 and ₦500 per metre. Lagos State increased its fees to as high as ₦5,000. This has resulted in a slow rollout of fibre optic cables across the country. Providers do not find it financially attractive to deploy these cables, especially in areas with not as much voice and data usage.
The situation is not the same across the world. In Zambia, for example, the main costs of deployments are the equipment and not the RoW fees charged by the government.
Mainde Mulunda, a Zambia-based Fibre Optics expert, explains that “the road reserves are in the hands of a government agency … which does not charge for Right of Way at the moment but in cities, the wayleave [Right of Way] fees are paid to the respective councils and are not expensive,"
He adds that “For us mostly, it's the material and labour [that are most expensive]. For terrestrial cables, we mostly put them overhead (on wooden poles) which are expensive together with the accessories, but I think, in the long run, the investment is worth it.”
It's odd for RoW fees to be a major roadblock like we have in Nigeria. That said, there have been recent moves in the right direction.
Falling RoW charges
Starting from 12 May 2020, state governments have been decreasing their RoW charges. Ekiti State kicked it off by reducing their RoW charges to ₦145 per metre.
Imo, Katsina, and Plateau states quickly followed suit. Kaduna state went as far as even eliminating the charge.
However, Lagos state is yet to reduce their RoW charge. All under-water fibre optics cables that connect Nigeria with the rest of the world arrive at Lagos, making the state’s RoW fees a significant cost for fibre optic deployments.
High RoW fees are not the only impediments to widespread fibre optic cable deployment. Multiple taxation also deters investors.
“Even after paying for the Right of Way, the local governments, state boards and the Ministry of Environment often impose fibre optics charges on infrastructure providers,” says Mr Wole Abu, CEO of Pan African Towers, an Africa-focused telecommunications infrastructure company. So government fees, in general, are standing in the way of improving Nigeria’s broadband penetration rate.
The progress that these fees are hindering make the recent reductions bigger than a news headline. Decreasing the cost of RoW charges significantly cuts the price of connecting our telecom masts with fibre optic cables instead of inefficient and slow microwaves.
All of a sudden, areas that were not economical to cover with fibre optic cables can now be covered. Millions of Nigerians could have access to faster internet connection speeds.
As more states continue to drop their RoW charges, our goal of attaining a 75% broadband penetration rate by 2025 might just become a reality.
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