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Business News of Monday, 25 July 2022

Source: thenationonlineng.net

‘Over 90% of telecom operators risk extinction’ - Expert

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Over 90 per cent of telecom operators in the country may go bust within the next five years if urgent steps are not taken, a telecom expert warned at the weekend.

The ICT legal and regulatory expert, Ayoola Oke, who spoke on the issues affecting operators, in Lagos, said the bigger operators are suffocating the smaller ones.

Oke, a Special Assistant to the former Executive Vice Chairman/CEO, Nigerian Communications Commission (NCC), Ernest Ndukwe, said the industry is subdivided into three tiers – Tier 1 (for the big Mobile Network Operators (GSM); Tier 2 comprised the largely moribund operators such as Starcomms, MTS 1st Wireless, Intercellular, Startech; while Tier 3 are the smaller operators such as the struggling Internet Service Providers (ISPs), PNLs, International Data Access Service Providers, and Swift Telephone networks, Rainbownet.

He said almost all the operators that were active and vibrant 14 years ago are dead or struggling, leaving the tier 2 space almost empty, noting that the Tier 1 operators face no competition, therefore, lack incentive to improve.

He said none of the local operators in Tier 3 have been able move to the Tier 2 because they are dying, adding that the country would be left with Tier 1 oligopoly if indigenous operators eventually die.

Oke cited the Tier 1 operators asking smaller operators to pay for termination rate in dollars rather than the country’s legal tender, which is the naira and consequently leading to their disconnection.

“It is not a prophecy; if certain regulatory steps are not taken and things not done the way it should, more than 90 per cent of local telecoms operators will probably all die out in the next five years like what happened to Tier 3 operators in the past 14 years and that will be terrible for the country and consumers. From the way the industry is structured now, the bigger operators are suffocating the industry.

“The industry is divided into three- Big Network operators (Tier 1), Tier 2 ( Operators like Starcomms, Multilinks and the likes) and Tier 3 (small operators such as Internet service providers, Data access service providers, Swift telephone networks, rainbow net.

“None of the ones in Tier 3 have been able to grow to become Tier 2 because they are dying.

Once they all die out, we will be left with oligopoly, where the few big operators, mostly originally foreign owned and controlled companies will dominate the market to the detriment of the country.

“For instance, there was a determination of the International Termination Rate made by NCC last December. All of a sudden, the bigger operators are interpreting the Determination to mean that the smaller operators must pay them in dollars for even the downstream portion of the international traffic.’’

“Meanwhile, such is an illegality and a contravention of the provisions Section 15 and 20 of the Central Bank of Nigeria Act. Section 20 of the CBN Act expressly criminalising demand

“Due to this, small operators are being disconnected by big operators for flimsy reasons without the notice of the NCC,” he said.

The Former Special Assistant to Mobolaji Johnson, the former Minister of Communications and Technology, therefore, urged the Ministry of Communications and the NCC to come up with policy restrictions and regulatory steps respectively.

Oke proposed asymmetric regulations whereby the Commission controls the big operators more so that their weights won’t crush smaller operators.


Ayoola, who hailed the Commission’s dominance and significant market power, asked that they should be more proactive in conducting timely investigations on big operators whenever they disconnect smaller operators.

He said: “Federal Government should come up with policy restrictions and regulatory steps. NCC did well when it had dominance and significant market power whose purpose was to subject those companies to asymmetric regulations.

“NCC has to be proactive, by encouraging smaller operators by conducting timely investigations on big operators for disconnecting smaller operators.

“NCC must monitor more and in fact should have automatic technical monitoring because it is the consumers that would suffer. They should penalize bigger operators if found wanting.

“NCC should do more asymmetric regulations whereby they would impose more regulatory controls and obligations on the big operators so that their weights won’t crush small operators.”