27 January 2014

Nigeria: Juwah - We Are Going to Be Transparent in the Entire Process of the 2.3GHz Auction


Executive Vice Chairman of the Nigerian Communications Commission, Dr. Eugene Juwah, spoke with Emma Okonji on Mobile Number Portability (MNP), service quality, and the auctioning of 2.3GHz frequency spectrum, among other pertinent industry issues. Excerpts: The Nigerian Communications Commission (NCC), last year, threatened that it would sanction telecoms operators if they do not improve on their service quality after 31 December 2013.

Is NCC still going ahead with the sanction threat?

We have not changed our decision to sanction telecoms operators over poor service quality. Let me explain that sanctions are carried out over a period of one month, during which key parameters on the data are collated and rated. That is why our fines are based on statistics gathered within a period of one month.

On January 15 we started collating data on the level of network performance, and by January 31, we must have collated all the data for the month of January and commence our rating. If after rating we discover they do not meet up with our key parameters, then we will fine them. It will take at least two week to analyse data collated in one month. What this means is that we will sanction them by mid February or end of February this year. > The computer does the analysis and it takes a minimum of two weeks to complete. After the analysis, we will send the report to the board of NCC, where my Chairman and other board members including myself, will take decision on whether to fine them or not. There is a process in all of these. I am the Chief Executive of NCC but I do not take decision on sanctions because we have a board that decides that. We have written to all the operators and indicated our intention to sanction them, should they not improve services by December 31, 2013, and nothing will stop us from carrying our threat on any of the operators that may be found guilty.

So what are the likely reasons for poor service quality in the industry?

Several factors lead to poor service quality, including environmental factors as currently being peddled by telecoms operators. As a regulator, I do not think environmental factors are the major causes of poor service quality on our networks. They complain of erratic power supply, but they all use generators to power their cell sites. For me I think the issue of poor service quality largely depends on the effectiveness of the networks of big operators, because they carry 60 to 70 per cent of industry traffic. So when the bigger operators have issues with their networks, it affects the smaller operators, even when the services of the smaller operators are relatively good. The reason being that the big operators carry most of the call traffic and terminates them on their own networks or on the networks of the smaller operators. So if the services of the big operators are poor, it affects the service quality of the smaller operators as well and the entire networks become bad.

It is not that the big operators are not investing. They are investing quite well, but the challenge is that as they are investing, they are loading up their networks, such that the investment achieved is lost through over-loading of the networks with additional subscribers and applications. What they should do is to make the capacity of their investments commensurate with the loading up of their networks. This is the reason why NCC decided to impose fine on them. We want to maintain a stable network, because the pride of Nigeria today is that we are the fastest growing telecommunications networks in the world. Operators are saying that the option of fine adopted by the NCC is not in the best interest of the industry and that the option of fine rather aggravates the issue.

What is your take on this?

Let me make this clear that NCC as a regulator, acts within the given law. The regulation that we enforce in the NCC Act 2003 are mostly quasi laws, which is the more reason why the operators have to obey the rules. In our service quality regulation, the only penalty provided there is the use of fine. We have just introduced a new rule and regulation that will stop erring operators from selling their SIM cards and registering more subscribers to their networks. Even the subscribers are saying that NCC should release the fine money to them, but this is not possible because the law that we operate does not permit that. Again the law of appropriation of budgeting does not permit that. Immediately we collect the fine money, we remit it to government. So for us to give fine money to affected subscribers as the Association of Telecoms Subscribers (NATCOMS) claims, then the National Assembly has to sit to amend the law and give approval to that. So there are technical issues that people do not seem to see. It is only the Consumer Protection Council (CPC) that has the legal right to ask government for the fine money and that is why the Federal Government has brought the Director-General of CPC to work with NCC so that consumers rights are maintained.

To what extent has NCC gone with its campaign for broadband penetration?

Broadband penetration is a priority issue to us at NCC. Nigeria has done very well in voice telephony, but we have not done very well in data, which is widely driven by broadband. The truth is that broadband enhances the growth of national development, and it enhances the Gross Domestic Product (GDP) of the economy. What we have done is to critically look at the broadband structure of Nigeria and we observed some gaps that needed to be closed. We are closing the gaps in two ways, firstly by rolling out what we called Infrastructure Companies also known as Infracos. The Infracos, when licensed, will build broadband infrastructure from the existing ones that are currently being under utilised. Secondly we are auctioning spectrum frequencies so that we can have more of broadband services in homes and offices, as well as in public places. Building fibre to the home is very expensive and not immediately profitable. The new plan is that the Infracos will take care of the metropolitan areas of the country, while we deploy wireless broadband services to homes, and that is why we are auctioning the 2.3GHz frequency.

If the Infracos will cover metropolitan areas, what happens to broadband penetration in rural communities?

Broadband in rural communities will be taken care of by the Universal Service Provision Fund (USPF) of the NCC. The USPF has been in operation, and operators like MTN and Phase 3 Telecoms have benefited in the area of subsidised operations in rural communities. What the NCC does is to through the USPF, provide funds to operators to subsidise their operations in the rural communities, especially those areas that is highly unprofitable to invest in.

In technical parlance, rural,communities are the underserved and unserved areas of the country. So to reach out to people leaving in such communities, we are using the USPF to support operators in rolling out telecommunications services, by subsidising cost of the rollout. So for the development of urban areas, the NCC is taking care of that through the Infracos, while USPF is taking care of rural areas. So what is the difference between NCC and the USPF? The USPF is an arm of NCC that helps to grow rollout of telecoms services in underserved and unserved areas of the country, which is generally referred to as rural communities. Although it is an arm of NCC, but it is independent of NCC, because it has its own board of directors different from that of NCC that it oversees its operations. For example I am a member of the board of USPF, and the chairman of NCC is also a member of the board of USPF, but he is not the chairman of the board of USPF. The chairman of the board of NCC is different from the chairman of USPF. The chairman of USPF is the Minister of Communications Technology, Mrs. Omobola Johnson and she is not the chairman of the board of NCC. That is how it is done in most developed countries of the world. How will the National Broadband Plan help to drive broadband penetration in the country?

The plan stipulated very high targets and one them is that by 2017, certain percentage of broadband penetration will be achieved. What NCC is doing is developing the framework and strategies to meet the targets of the broadband plan, and our broadband initiative is a component of the plan. In few weeks time Nigerians will see our advertisements for expression of interests for Infracos, and everything we are doing about licensing the Infracos is geared towards the National Broadband Plan implementation. Operators are worried over the continuous destruction of telecoms facilities in the country and have asked the federal government to declare telecoms facilities as critical national infrastructure that must be protected.

What is the position of NCC on this?

Telecoms infrastructure serve the generality of the people and should therefore be seen as critical national infrastructure and be treated as such. It is a campaign that the NCC is part of and the National Security Adviser is coordinating it in conjunction of all stakeholders, including the NCC. A Bill has been developed on that effect, which is receiving attention of the National Assembly. So it is left for National Assembly to expedite action on it and pass it. The Bill stipulates stiff penalty for those that carryout willful destruction on telecoms facilities. In China and most advanced countries of the world where Bill on telecoms critical national infrastructure has been passed into law, it is a very serious offense to destroy such facilities. To what extent is the destruction affecting Nigeria's economy? Definitely it is affecting Nigeria's economy, and also contributing to the poor service quality that we are experiencing in the country today. If there is a cut in any of the fibre optic cables, it will disrupt free flow of transmission of data and voice services because there will be either skeletal services or no service at all. In fact the National Security Adviser has assigned the Civil Defence Corps to be protecting telecoms infrastructure, pending when the Bill is passed into law.

Since the launch of Mobile Number Portability in April 2013, it does appear that the take-off is rather slow. Could you share some of the level of development so far? Well, what the NCC did with Mobile Number Portability (MNP) is to give Nigerian subscribers the opportunity to port from one network to another, if they are not satisfied with the services of their operators, while still retaining their original number. But having giving subscribers such opportunity, we cannot force them to port. But what I can also say, based on experience from other jurisdiction, is that MNP starts slowly and increases with time. For us in Nigeria, MNP started slowly and we are still monitoring its growth and auditing it to find out if the operators are keeping to the rules governing MNP in Nigeria. We have received some reports that some of the operators are not playing by the rules and we are looking into that. Sir, most subscribers are complaining about the strings attached to MNP as conditions for porting and they are not willing to port because of what they have described as stringent strings. What is your take on that? Well, the conditions we attached to porting like the compulsory 90 days window that the subscriber must observe before he or she is free to reverse the initial porting or even port to another network, and the compulsory physical presence of the subscriber for identification purposes, among others, were burrowed from other counties where MNP is successful. The truth is that as porting develops and the system matures, some of the conditions are gradually removed. We have also tried to make porting easy for subscribers by making it a law that subscribers must port if they are willing to do so, even if they are owing the initial operator. The operator knows its customers up to their home addresses and has every details of the customer, such that the operator can always reach the customer any time any day for debt collection, if such customer is owing. Based on regular reports you get on MNP from the Clearing House, will you say the MNP scheme has been successful after nine months? Two things are involved in assessing the success rate of MNP. Firstly some people have learnt how to port because there is a lot of education involved in porting. Secondly, some people are not well informed of the technical issues with porting, and when they try to port on their own from their homes, without actually going to the operator's customer centre, it will fail and they will blame it on MNP systems. There are rules to it that subscribers must abide to. We have since discovered that most people try to port from their homes, using the porting code, without physically presenting themselves to the operator. When this happens, it is bound to fail. Anyway, we are currently analysing the reports we are receiving from the Clearing House to see the extent we have gone with MNP. It is based on the analysis that we can assess the success rate of MNP in our country. Telecoms operators have both GSM Mobile licence and the Fixed Line licence, yet they all concentrate on the mobile licence, leaving out the other.

What is NCC doing to enforce rollout of fixed land lines operations in the country?

Globacom on its own has rolled out a lot of fibre cables and it is claiming that it is rolling out its fixed line services through the fibre transmission, and so are other operators. However, the NCC has started broadband initiative with the planned licensing of Infrastructure Companies known as Infracos. But let me make it clear that today's fixed line services are different from what we used to experience in the past during the time of NITEL. Today's fixed line operations ride on broadband and the internet, which is called Voice over Internet Protocol (VoIP). That is the kind of fixed line services that is currently being offered today and we are hoping that our broadband initiative will introduce competition in the industry, and spur fixed line services offering in the country.

The Code Division Multiple Access (CDMA) operation is facing a lot of operational challenges in the country, which have forced many of its operators to go under. CAPCOM tried to revive it in 2012, when it announced the acquisition and merger of Starcomms, MultiLinks and MTS First Wireless, and till date, nothing is heard about the acquisition and merger.

What are the issues.?

Yes, the CDMA operators are facing some challenges and CAPCOM tried to save the situation through its planned acquisition and merger of some CDMA companies that were struggling to survive, but along the line, it ran into commercial hitches with Starcomms that it is yet to be resolved. As a regulator, we do not have the mandate to interfere in such dispute because it is purely commercial issue between the operators. So we are still observing them to resolve it and come back to tell us whether they will be willing to continue with the acquisition and merger plans, but we cannot be silent forever on this matter. If after some time the commercial issues are not resolved, then we can stop it and give the licence to any interested operator that would show good interest. The truth is that what we gave CAPCOM is approval in principle and not the full licence, which coult be silent forever on this matter. If after some time the commercial issues are not resolved, then we can stop it and give the licence to any interested operator that would show good interest. The truth is that what we gave CAPCOM is approval in principle and not the full licence, which could be withdrawn if the issues it is facing persist.

NCC is in the process of licensing the remaining slots in the 2.3GHz frequency spectrum, against the wish of some operators that already had the frequency licence. They rather wished that NCC shares the remaining slot among them at an NCC determined price, instead of licensing another operator. What will you say to this? > NCC cannot be part of the business of sharing frequency among operators that were initially given operational licences, especially when they have not made significant impact with the licence they already have. We want competition and we are promoting it. Frequency is a rear commodity and a lot of operators want it, and we feel that the best way to distribute it is to auction it. We did not restrict any operator from participating in the auction process, even those that already had the licence. What we did is to fix a minimum price for the initial fixed deposit and allow the operators to bid. We have packaged the remaining slots into one slot and what we want to do with it is to use it in conjunction with our broadband policy to go to the homes and improve broadband to the home. Again it is a wholesale licence, such that the eventual winner will not be allowed to sell bandwidth to end users, thereby competing with the smaller operators that will buy bandwidth from them and still sell to the end users. The licence is such that the winner will be allowed to sell bandwidth to only wholesale buyers like Internet Service Providers (ISPS), and not to end users that the ISPs also sell to. By this, it will check unhealthy competition. We want to revive ISPs that are dying. How has NCC gone with the 2.3GHz auctioning?

We have called for memorandum of interest and we have completed that stage. Shortly after that, we gave some time for reactions and presently we are receiving the initial bid deposit of $2.3 million and the time given for this will soon end. The initial bid deposit will allow the operator to participate in the auction. We have also fixed a minimum reserved price of $23 million for the auction. This means that the bidding starts from $23 million and the highest bidder emerges the winner of the licence. It is a computer-based auction and we are going to be highly transparent in the entire process. When NCC first licensed GSM operators in 2001, it gave them exclusivity period of five years, such that no other operator was licensed within the five years period.

 Is NCC thinking in that direction with the ongoing 2.3GHz frequency auction?

What happened then was a financial incentive from government to help the GSM operators stabilise, before licensing more operators to compete with them. I do not want to be specific on financial incentives for licensed operators, because the situation determines whether to give financial incentives or not.

Currently the National Broadcasting Commission (NBC) is still holding firm to the 2.6GHz frequency spectrum.

How will NCC manage the spectrum, by the time NBC releases it after the digital switchover next year?

NCC has not decide how to distribute the frequency by the time it is freed up by 2015, after the digital switchover, which is the switchover from analogue to digital television content streaming. But most likely the process will be by auction. We have very excellent relationship with NBC and the commission is working hard to ensure that NCC recovers the 2.6GHz spectrum when it is eventually freed up by 2015.

The 2.6GHz spectrum is currently being used for television content broadcasting, but by the time they go digital, they will no longer need it, and it will become useful to NCC to further drive broadband in Nigeria. The fact is that the 2.6GHz spectrum was initially used for broadcasting, but the International Telecoms Union (ITU) later redirected the 2.6GHz spectrum to broadband, but the NBC is still holding it to itself because it is still using it for broadcast. But by the time they switchover to digital, it will no longer be useful to them, and we will then use it for broadband. Technology convergence compelled federal government to start thinking along the line of converging the regulatory activities of the NBC and the NCC. To what extent has government gone with the initiative?

I think some major decisions must have been taken by government in that regard, but NCC cannot preempt what the decisions are, and it is the duty of government to announce such decision to the public. The issue of NITEL is a sorry and pitiable situation, because the federal government, through the Bureau for Public Enterprises (BPE), is unable to address the issue of NITEL Privatisation. What is your view on this?

The truth is that the federal government has not involved the NCC in the privatisation of NITEL. Therefore the NCC has not made direct input in its long time privatisation process. But recently, the BPE asked for NCC's input in finalising the privatisation process. We discussed on NITEL issues and we made our contributions as to how best we think NITEL should be sold. Recently we heard that ITU gave NCC ultimatum to make available the subscription figures for data services in Nigeria. How far has NCC gone with the directive?

We are in the process of collating the statistics for data subscription in Nigeria. Apart from bigger operators that are involved in data services, we still have smaller operators in the category of ISPs that are also offering Internet services and they all have subscribers. We have figures of voice penetration, but the figures for Internet data are pretty much difficult to obtain than voice, because of the process involved. Once the figures for Internet data are collected, they must be published every month. We will start from internet figure and later move to broadband. So what level of impact has Nigeria made in Internet and broadband penetration? I can tell you that Nigeria is making a lot of impact in Internet penetration. Currently the country's Internet penetration is on the increase. Although broadband penetration is till low, but there has been tremendous increase in these areas.


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