High cost of tower rental as well as unregulated data price have conspired to hobble internet service delivery, according to some telecommunications operators and internet service providers.
Tower rental is a business strategy adopted by telecommunications industry where telecommunications infrastructure companies own and maintain towers and allow operators to use at a fee which are usual per annual.
Today, there are three major players in that space: IHS with 14,000 towers; Helios with 2,000 towers; and the new entrant American Towers Company (ATC) with 7,000 towers.
David Venn, chief executive officer, Spectranet, a 4G LTE internet service provider, told Nigeria CommunicationsWeek that the two key areas of challenge to internet service providers are data price and high tower rentals.
“Since the botched data floor policy of Nigerian Communications Commission, it has become difficult for ISPs and Telcos delivery internet service to operate profitably. We are seeking the review of that policy by the authorities to enable operators deliver quality service and continue to be in business.”
“Another biggest challenge we are facing today is cost of tower rentals which has continued to increase over the year. It is funny, that international capacity cost has reduced by 50 per cent while tower rental cost is increasing unabated. Imagine a situation where cost of tower rental in three times our salary cost,” he added.
He explained that the tower rental contract is usually signed for a period of 5 to 10 years with a clause of annual cost review based on inflation.
“Today, inflation in the country has risen by over 100 per cent necessitating the astronomical increase in the cost of tower rental in the country making the cost in Nigeria the highest in the world,” he said.
He noted that the failure of Multi-Link was as a result of tower rental indebtedness to a tower company-Helios Tower which eventually took over the company.
Sunday Folayan, president, Internet Service Providers Association of Nigeria (ISPAN), said that tower rental cost in the country will not be cheap as it is determined by some factors which include number of user on the tower as well as power and security provided in the base stations.
“I’m not surprise that tower rental cost is high because the cost of powering base stations with generators is high. If we fix power problem in this country every other thing will take shape,” he added.
Corroborating Venn on data price, Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON) added that the industry regulator needs to revisit the data price floor to determine the appropriate data pricing to ensure that investors have certainty in government policies in order for them to bring capital that will be used for infrastructure deployment required for broadband.
“This is important in view of 30 percent broadband target by end of 2018 which we have just over one year to achieve. It is important that the industry sees government policies as one that creates an enabling environment for businesses to thrive so that investors can bring funds to invest for the development of the sector.”
Engr. Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON) also called on NCC to revisit the data floor price determination in order to save and encourage small operators in the sector.
“Data floor price determination is meant for small operators not for big operators who will still survive with the present situation. We are trying to avoid a situation where CDMA operators died because of price war. If data price is determined, it will encourage small operators in the sector. We need to look at it beyond public sentiment and emotions around it and revisit the issue for the growth of the industry,” he said.