The broadband Internet industry is really struggling right now

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May 30, 2017 4:28 PM

Operators say network operating expenditure has increased by over 85 percent in the last 15 months while revenues have remained relatively flat.

Minister of Communication, Adebayo Shittu

Broadband internet service providers (ISPs) are not finding it easy as Nigeria’s economy continues to hurt businesses. The lead cause in this case is that the ISPs are not making enough money to expand or improve their services while their cost of operation continues to rise.

At a recent meeting with Umar Danbatta, the executive vice chairman of the Nigerian Communications Commission (NCC), executives from the various ISPs including Godfrey Efeurhobo, MD, Smile Communications; David Venn, MD, Spectranet; Osondu Nwokoro, Director Regulatory and External Affairs of nTel; and Chuma Okoye, COO, Swift Networks, said the current situation could be an obstacle to the realisation of Nigeria’s National Broadband Plan (NBP).

In 2016, the number of licensed ISPs dropped from 120 to 37 as many providers crashed and failed due to various federal government policies which made it hard to stay afloat.

The amount of broadband subscribers stands at 390,794 (last count) meaning that stiff competition from larger operators, an increase in capital expenditure as well as operational expenditure have made it impossible for smaller players in the industry to compete. A situation which negatively affects the industry as a whole.

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“This is because the domino effect of bankruptcy of any of the Tier I or Tier II Operators on the entire ecosystem particularly, banking, employment, corporate and SMEs constitutes a major threat to the Economic Recovery and Growth Plan (ERGP) of the current administration,” the ISP execs said in a statement, according to Nigeria CommunicationsWeek.

“Such bankruptcy and consequent collapse will also substantially lessen competition with its attendant deleterious impact on consumer choice and attainment of the Broadband objectives of the country.”

Operators say network operating expenditure has increased by over 85 percent in the last 15 months while revenues have remained relatively flat making it difficult to meet obligations with tower firms and loan services.

All of this contributes to make up an ailing industry struggling to innovate thanks to institutional bottlenecks. In the end, Nigeria’s ICT sector as a whole as well as the country’s technological advancements are going to be on the shorter end of the stick if the situation is not remedied as soon as possible.

What policies do you think the government should implement to avert this eventuality? How can the Minister of Communication Adebayo Shittu save the sector from collapse? How do you think broadband ISPs can innovate to get around the obstacles of government regulation? Let us know in the comments section below.

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