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Existing 26 taxes killing telecoms industry, no to CST—-Teniola, ATCON boss
When this battle started late last year, stakeholders kicked against it even as the federal government seemed to have connived with the lawmakers to drag on imposition of 9% Communications Service Tax (CST) at the National Assembly. In this interview with Business Hilights, the president of Association of Telecoms Companies of Nigeria (ATCON), Engineer Olusola Teniola recalls that his group had given a credible alternative to the proposed tax. He spoke on other issues of industry importance. Excerpts:
Looking at the economy from last year, how would you rate the performance of the telecoms sector in the area of contribution to the economy?
The ICT sector at large witnessed a very mixed set of circumstances in Nigeria in 2016. The impact of devaluation of naira to the USD$, changes in National Information Technology Development Agency (NITDA) leadership, rise in inflation, delay in implementation of 2016 budget and loss of jobs characterised 2016 and also created some opportunities – the realisation by the Federal Government that ICT is a sector that is critical to the diversification of the economy and the ongoing contribution of ICT to the growth of our economy. ICT recorded almost 9.9 per cent to gross domestic product (GDP) in 2016 despite all the headwinds and against a slow-down in the overall economy.
ATCON has vehemently moved against the Communications Service Tax (CST), being sponsored both by the federal government and lawmakers. What is still the official stand of ATCON on the bill currently at the NASS?
I believe The Communication Services Tax (CST) bill is due for public hearing and we as an industry and consumer interest groups under: ATCON, Association of Licensed Telecoms Operators of Nigeria (ALTON), Alliance for Affordable Internet (A4AI) and National Association of Telecoms Subscribers (NATCOMS), strenuously stand against any attempt by government to destroy the growth of this industry by creating an additional tax on top of the already 26 taxes/levies that are imposed on the ICT industry.
ATCON has provided alternatives for the government to consider, such as increase in value added tax (VAT) across the board (not just applied to this sector) at no more than one per cent alongside incentives that will encourage further much needed investments in addressing quality of service (QoS), broadband roll-out and sustaining job creation. Any excessive tax will stall and/or stifle further growth in the ICT sector.
Apart from the contentious CST bill, what is the current state of the proposed Telecoms National Security Infrastructure Bill currently at the National Assembly?
Well, I have not seen this bill that you refer to, so cannot make any meaningful comment to it. What we advocate is for the cybercrime bill to be fully implemented and executed to the law. In particular, we want the Police, National Security Advisers to the President and other security agents to assist the industry in the protection of Critical National Infrastructure (CNI) that ICT infrastructure is now under. This will help improve QoS and reduce the costs of repairs in the industry to a nominal level. The infrastructure that is rolled out for support broadband services needs to be fully protected from vandalism, theft and destruction and therefore the enforcement of the CNI under the Cybercrime bill needs to be enacted without any further delay.
Despite having reached $68 billion sector, there appeared to be a lull in telecoms investment and general infrastructure expansion among telecoms operators last year. What is your reaction to this?
The reason is simple: The USD$ to Naira uncertainty has led to anxiety within the investment community and this has also meant that foreign direct investment (FDI) needed to fund network expansion and capacity upgrades under our members capital expenditure (CAPEX) programs have had to be put on ‘hold’. We need government to see that an enabling environment with clarity in policy formulation and execution that leads to transparency will encourage investors both domestic and foreign to bring funds to drive this expansion. Government needs to remove the fear, uncertainty and doubt that is prevailing in the economy in 2017 or there will be further contraction in the economy irrespective of crude oil prices on the global market.
How is the forex policy affecting telecoms sector?
There are no legal ways of working around the foreign exchange (FOREX) issue and as previously stated, until government allows telecommunication equipment to be on the preferred list of items that can access cheaper USD$ to the Naira, it is hard to see where the further growth will come from in 2017. Without expansion of networks or increase in capacity upgrades, the networks will not be able to sustain QoS or even improve on it and revenue will stagnate or decline. Again, government needs to show strong leadership on this critical issue.
Do you think 30 per cent broadband penetration is still achievable in Nigeria next year?
Nigeria plans to achieve 30 per cent broadband penetration by 2018. Well, with the right policies in place and an enabling environment anything is possible. In 2016, some statistics from Nigerian Communications Commission (NCC) suggested a 20.9 per cent) broadband penetration, though this is yet to be verified, it is evident that penetration is skewed in the trendy areas of Lagos, Abuja and piecemeal in Port Harcourt. Any further increase will need to be on the back of infrastructure companies (INFRACO) and other network roll-outs outside these geographical regions to prevent a ‘have against have-not’ landscape occurring. This is the year 2017 when we need to have implementable programs in place to ensure we are on track to achieve the 2013 National Broadband Plan (NBP) of 30 per cent broadband penetration by end of 2018. The industry needs all government agencies in charge of and responsible for infrastructure at state level to work with and support the roll-out of much needed fibre optic metro infrastructure that supports the whole eco-system to deliver on the promises made in the NBP. Furthermore, the industry needs government policies in place that will attract much needed investments to support the capital expenditure programs that needs to be undertaken to realise the country’s vision of a digital transformation (smart cities, e-Government and Internet of Things).
What specific policies areas does ATCON think the regulator should focus on this year in order to further strengthen the telecoms industry?
The focus for 2017 should be in unlocking ‘local content’ in the industry and ensuring a level-playing field exists to bring about increased employment for the growth in the skills set required to generate a digitally transformed industry. The ecosystem will bring about new players from the over the top (OTT) space and regulation that balances the interests of these players versus the investments already made by the telecoms players will need to addressed. The investments required to fund the mobile broadband revolution must be addressed, so all incentives and an enabling environment is put in place by the Federal Government, so that investors’ confidence is not eroded any further.
Last year, NCC moved to re-state data price floor but there were reservations. Do we need such a policy anymore in a capitalist market such as ours?
Yes, it is the regulator’s rightful intervention and role to ensure a level- playing field exists in the industry and to curtail any monopolistic and unfair behavior creeping into the industry irrespective of the noises being made by the masses. The law does not dictate for ‘anything must go’ approach to destroy market values and more importantly, investments made to create the market in the first place. We at ATCON represent both the large and smaller players interests and also support fair competition that benefits the consumers and encourage the NCC to continue to do its work on the determination of whole pricing, seek wide stakeholder input and then, place mechanisms and instruments to safeguard the reputation of the Nigeria in the eyes of the international community.
Currently, NCC only has QoS measurement metrics for voice service delivery for service providers? Don’t you think the time has come for NCC to develop similar QoS metrics for data service delivery, considering the current accent by the operators towards data services?
The KPI set for voice should be maintained and with the advent of data services becoming prevalent, NCC has the right under its enabling laws to also introduce relevant KPIs to address cost of service and quality of service data service parameters.
How do we, as an industry, bridge this infrastructure deficit, considering the complaints still coming from subscribers on the intermittent service they still, sometimes, get?
Without the tall buildings that exist in other climes in USA, Tokyo, Hong Kong and London (for instance); it is only through more towers housing more BTS that will cover the many black spots present in the network coverage across the diverse terrain that makes up Nigeria that we can reasonably expect to fully resolve ‘drop calls’ for examples and other environmental issues that are an inhibitor to the improvement of QoS. In addition to the 60,000 BTS(s), we also need the infrastructure to be protected from closures, destructions and sabotage.
The NCC is planning to introduce national mobile roaming initiative. Of what significant is this going to be for the industry?
National roaming is a fundamental part of the idea behind sharing active infrastructure and though a new concept in Nigeria, is widely practiced in the UK and other climes where ‘calls are handed over to another network’s cell’ where the signal level doesn’t meet a certain criteria or thresholds. This should aid in ensuring that calls previously dropped are now given a higher percentage of probability of not being dropped if the call is allowed to roam onto another network. We await the final report from NCC to establish the modus of operandi before we can be certain that a level of improvement can be assured by the networks to the consumers in areas where a high level of intermittent issues have been reported.
What do you see happening in 2017 in the areas of Internet of Things (IoT), cloud computing and big data…How will telcos drive these emerging areas of ICT?
Narrowband IoT will be experimented with in 2017 by one or two of the incumbent mobile network operators (MNOs). Cloud computing will experience a growth in hybrid cloud computing on the back of more trust being placed in locally built data hosting centers certified to Tier-3 level. Telcos are challenged with Big Data in Nigeria, due to the veracity, validity and verifiable data issues that exist – further partnerships with OTT players may seek to address this.
With increased CAPEX and OPEX, coupled with other operational challenges, how does an operator survive in a highly-competitive market as Nigeria?
Adopting a business model that focuses on cost efficiency and creating opportunities for increased differentiation in the services and products that are offered to the target markets.
Last year, most of the operators lunched 4G LTE networks. What impact will this have on the economy?
The launch of 4G LTE networks in Nigeria, signifies the beginning of high speed internet with speeds over 4Mbps being typical. This opens up further opportunities for more sophisticated services and applications to be developed and utilized by consumers on the move. It also provides a platform for Internet of Things (IoT) and SMART city type devices to be adopted in areas of security, water metering, farming and many other utility applications. This will in effect create new jobs in the economy.
In the past years, many licensees have closed shops and incidentally, the affected one shave been indigenous companies. Is this not a source of worry to ATCON and how do you think we can reverse the trend?
Yes, it is, indeed, a great concern. However, we have also witnessed a trend of new age telecom and e-commerce businesses being launched into the eco-system alongside software companies focusing on knowledge-based technologies. Also, those companies that have adapted their business models to include true partnerships are the ones that are able to survive in the future.
The NCC has yet to license the remaining INFRACOS. Is ATCON worried and why?
Any further delay in awarding the remaining INFRACO licences as well as the hurdles faced by the INFRACO(s) awarded in 2015 in rolling out in 2016 and still not being addressed will seriously hamper the accessibility, affordability and availability of high-speed internet and broadband services across Nigeria. In the area of licensing of INFRACOs, therefore, I will suggest that for the realisation of a National Backbone Network (NBN) the Open Access Model needs to be fully implemented to the ‘letter’ and hence the remaining licences need to be given out within the firsQ1 of 2017. Also, issues surrounding the project execution in each geo-political region will need speedy intervention by Federal and State Government’s collaboration to avoid experiences observed in 2016 with the INFRACOs that were awarded licences to cover Lagos and North Central regions – we must avoid the mistakes already made to ensure the success of the overall intent.
Interconnectivity debt is a major issue in the industry. How do we address this issue?
Trust is an important factor when dealing with sensitive transactions such as interconnection billing. The arbitration of these outstanding debts is, in my opinion, the best way to go and applied as best practice in other climes. The major issue is that settlement of debts must be done in a timely manner to not accumulate into a dire situation where an operator is not able to pay down or net off the outstanding to another operator – in these cases, only arbitration can resolve an effective way forward as an alternative to an operator denying the debtor termination access. Without this sort of scheme in place, it becomes difficult to continue to establish trust by the debtor operator in the industry.
What advice do you have for the NCC on spectrum management in Nigeria?
The industry seeks further allocation and utilisation of spectra that will contribute to the growth of mobile broadband penetration in rural areas of the country and the options presented at the Spectrum Trading Forum hosted by NCC in 2016 should be explored and implemented in 2017, specifically in consideration of the Nigerian terrain. The migration of analogue TV to digital TV should be a major focus during 2017 and this should free up more broadband-type spectra that will allow high-speed or superfast broadband to be easily rolled out.
Finally, what other things would you like to express on the industry as 2017 begins in earnest?
Well, let me talk more on ICT policies and telecoms regulation. Local content must be a priority for 2017 for the ICT industry in general and government should further collaborate with industry, civic society and academia to find the best fit for Nigeria in ensuring that capital flight is minimised in the areas of software, digital content and data hosting. Telecoms Regulation will need to balance the OTT presence alongside the current industry setup of strong MNOs and a few internet service providers (ISPs) against the uncertainty of the Nigerian economic situation viz-a-viz infrastructure investments and capital deployed to achieve it. In 2017 the Telecoms industry needs to see an immediate clarity on data price floor and other intervention instruments that will need to be explored and maybe introduced into the industry to ensure competition (or lack of) doesn’t stifle innovation for the long term growth of industry as a whole. 2017 is the year where the NCC will be looked upon by all industry players for a level playing field to exist in the emerging broadband data era in Nigeria.