Concerns as Tier 2 and 3 telecom operator ranks dwindle in five years – Technology – The Guardian Nigeria News – Nigeria and World News
ADEYEMI ADEPETUN in this article examines the dwindling fortunes of Tier 2 and Tier 3 operators in the country and the possible collapse of struggling service providers.
While Mobile Network Operators (MNOs), also known as Tier 1 Service Providers in Nigeria’s telecommunications industry, have continued to grow rapidly, it is not the same story with other players. , Tier 2 and Tier 3 operators, which are largely native.
The ranks of Tier 2 and Tier 3 operators have been steadily dropping, even at scale. This dying trajectory has been going on for five years.
In the Nigerian telecom sector, with investments estimated at more than 75 billion dollars, the tier 1 operators are GSM players, made up of MTN, Globacom, Airtel and 9mobile. Tier 2 and Tier 3 carriers include Internet Service Providers (ISPs) and players such as Spectranet, Smile Communications, ipNX, Swift Networks, Tizeti, 21st Century, nTel, and Broad-based Communications, among others.
Interestingly, in the first half of the year, MNOs, which were hit hard by the federal government’s SIM ban directive and NIN-SIM link failures, are recovering rapidly. The operators attracted 8.9 million new subscribers in the first half of the year, gradually catching up with the approximately 15 million subscribers lost due to the directive.
Statistics from the Nigerian Communications Commission (NCC) put the total number of active phone users at 206 million, pushing the country’s teledensity to 108% and broadband penetration to 44.3%.
Dominant status of MNOs
In an upward trajectory, internet penetration rose from 143.5 million in January 2022 to 151 million at the end of June, and service provider MTN increased its data subscribers by 4.2 million, from 59, 6 million users at the start of 2022 to 63.4 million at the start of 2022. end of the first half. Globacom added 332,083 users to its data service listings as its total rose to 39.9 million in June.
Airtel also benefited from an increase in data usage, adding 3.4 million new data subscribers over the period and ending the half with 41.7 million in June. However, 9mobile lost 502,144 data service subscribers in six months to end the first half of the year with 5.23 million.
MTN retained its coveted position of number one in the global connectivity table with 79 million subscribers and a market share of 38.36%, while Airtel came in second place with 58.1 million users and a share of 28.21%. Globacom follows with 56.2 million customers and a share of 27.28%, while 9mobile remains in fourth place with only 6.14% of the market and 12.6 million customers.
Slow growth of other players
While the big players maintained an upward profile, Tier 2 and Tier 3 service players moved at a snail’s pace in the first half. For example, Smile Communications added 20,938, totaling 338,871 Internet users since the start of operations. Ntel however lost 2,302 users from 27,296 to 24,994 in the first half of 2022.
In terms of wired/fixed wireless service, NCC statistics showed that while ipNX added 903 new users to 11,788 in June, 21st Century lost 27 customers, from 2,580 in January to 2,553 in June .
Challenges and fear of extinction of indigenous operators
Analyzing the current trend in the telecommunications sector, former Special Assistant to former Nigerian Communications Commission (NCC) Chief Executive Officer Ernest Ndukwe, Barr. Ayoola Oke said the situation remains very dangerous. He pointed out that more than 90% of local telecom operators could go bankrupt in the next five years.
The ICT legal and regulatory expert said that big telecom operators are stifling local operators.
He explained that the industry is subdivided into three tiers, with tier 1 for large network operators, GSM players; Starcomms, MTS 1st Wireless, Intercellular, Startech and others owned by Tier 2 and smaller carriers such as Internet Service Providers, PNLs, International Data Service Providers, Swift Phone Networks, Rainbownet and others for level 3.
Oke further stated that almost all of the operators that were active and vibrant 14 years ago are now either dead or struggling, leaving the Tier 2 space almost empty, noting that Tier 1 operators face no competition nor incentive to improve.
He said that none of the local tier 3 operators have been able to become tier 2 operators because they are dying, adding that the country would end up with a tier 1 oligopoly if the operators premises were to disappear.
A matter of illegality
The former special assistant cited the case of large operators asking smaller operators to pay the termination tariff in dollars rather than the legal currency of the country, which is the naira, which led to their disconnection.
“This is not a prophecy. If certain regulatory measures are not taken and if things are not done as they should be, more than 90% of local telecommunications operators will probably all disappear within the next five years, like what happened to the Tier 1 operator for the past 14 years and it will be terrible for the country and the consumers.
“The way the industry is structured now, the bigger operators are suffocating the industry.
“None of those in level 3 could become level 2 because they are dying. Once they are all gone, we will be left with an oligopoly, where the few large operators, mostly companies originally owned and controlled by foreigners, will dominate the market to the detriment of the country.
“For example, there was an international termination rate determination made by NCC last December. All of a sudden, the bigger carriers are interpreting the Resolve to mean that the smaller carriers have to pay them in dollars even for the downstream portion of the international traffic.
“Meanwhile, such is illegality and a violation of the provisions of sections 15 and 20 of the Central Bank of Nigeria Act, with section 20 of the CBN Act expressly criminalizing the demand.
“For this reason, small operators are disconnected by large operators for less than serious reasons without the notice of the NCC,” he said.
568 ISPs now inactive
Admitting there are challenges, the NCC revealed that 568 ISPs have become inactive to date.
NCC Executive Vice President, Prof. Umar Danbatta, informed that a total of 756 companies had been licensed as ISPs in Nigeria as of March 2022, but only 188 of them are currently active.
At a Telecom Sector Sustainability Forum organized by Business Remarks, Lagos on the topic: “Examining the Viability of Nigerian Internet Service Providers (ISPs) in a Digitalized Environment,” Danbatta said several issues , including inadequate spectrum, high price of bandwidth, right-of-way cost and lack of good corporate governance practices in some companies have contributed to the inactivity of some licensed operators.
Oke, who was also a former special assistant to Mobolaji Johnson, the former communications and technology minister, urged the communications ministry and the NCC to come up with policy restrictions and regulatory measures respectively.
Oke proposed an asymmetrical regulation in which the Commission controls the big operators more so that their weight does not crush the small operators.
Ayoola, who hailed the Commission’s dominance and significant market power, called for it to be more proactive in conducting timely investigations of large operators whenever they disconnect smaller operators.
“The federal government should come up with policy restrictions and regulatory measures. NCC performed well when it had a dominant position and significant market power intended to subject these companies to asymmetrical regulations.
“NCC must be proactive, encouraging small operators by conducting timely surveys of large operators to disconnect small operators.
“NCC needs to monitor more and in fact should have automatic technical control because it is the consumers who would suffer. They should penalize larger operators if they are deemed insufficient.
“NCC should do more asymmetrical regulations whereby they would impose more controls and regulatory obligations on large operators so that their weight does not crush small operators,” he said.