Business, Economics and Jobs

Nigeria: Telecom industry and government tangle over regulation

Nigerian fashion models Mary Jane Unueroh and Fome Emede, left, take a photo of themselves with a cell phone.
Credit: Uriel Sinai

ABUJA, Nigeria — Nigeria is in a battle to get better cell phone coverage, which is pitting government regulators against the mobile phone operators.

Last week, Nigerian telecommunications regulators fined four major companies a total of $7.38 million for providing sub-standard cell phone service.

Now the companies are pushing back, saying if the government wants top-notch service, they'll need electricity, security and consistent rules.

“Fines or penalties will not solve the problems with service,” Gbenga Adebayo, chairman of the Association of Licensed Telecommunications Operators of Nigeria, told GlobalPost. “It will not address the fundamentals. The fundamental problems are issues of power and issues of protection and the telecom infrastructure.”

Adebayo said operators have to provide electricity from generators because the electric power supply is so unreliable. He also complained that telecom equipment is often attacked or stolen, endangering workers and hampering the companies’ ability to provide service.

“The government should classify telecom infrastructure as national security infrastructure,” he said.

The Nigerian Communications Commission fined Bharti Airtel, MTN, Etisalat and Globacom after evaluating their service in March and April, according to Nigerian Communications Commission public affairs director, Tony Ojobo. Together, these companies control more than 99 percent of the cell phone market in Nigeria, Africa’s most populous nation with roughly 160 million people, according to Nigerian Communications Commission data. Altogether, these four companies serve roughly 90 million people. 

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The evaluations took place after new regulations were adopted in January, setting quality standards for telecom companies, Obojo told GlobalPost. He said the commission found high levels of dropped calls, complaints of disappearing pre-paid airtime, poor quality of calls and lack of communication with customers.

“We are just concerned with the quality of service that is being provided,” Obojo said. “Over time the regulator has been accused of allowing the service providers to fleece the consumers.”

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Obojo said the companies originally promised to comply with the new regulations but later complained that they needed new resources, like a reliable supply of electricity, to do so. Obojo said in the 11 years mobile phone companies have operated in Nigeria, there has never been an adequate power supply.

“The power challenge has always been there. We can’t keep giving that as an excuse,” he said. “Especially where the company is making a profit … Who should bear the burden of that? Is it the consumer or the service provider?”

Early this week, the cell phone companies issued a statement apologizing to consumers for poor service. They said they would invest $2.5 billion (400 billion Nigerian naira) over the course of the year to improve service, but warned they did not expect the improvements to be apparent to consumers within 12 months.

The companies also said they cannot be expected to meet the highest international standards of service when they have to generate their own electricity, provide security and operate in dangerous areas. The statement also accuses local and federal government agencies of closing down telecom sites in order to demand taxes that have either already been paid to another agency or have not been sanctioned by the courts. 

The government commission is expected to evaluate the operators again in about three months. New fines, according to the companies, could backfire and damage the current industry’s ability to provide good service and could scare off investors.

The regulators are sensitive to the potential negative impact of fining investors, but are obligated to fulfill their role as a “referee” between consumers and service providers, said Obojo. He also said, in the long term, consistent rules and quality standards are good for investment.

“We would not deliberately want to dry up any investments that are coming,” he said. “I also believe that people like playing by the rules.”

The Nigerian government is also taking concrete steps to address the companies’ concerns, he added. On Tuesday, Nigerian Petroleum Minister Diezani Alison-Madueke announced that by the end of the year, gas power would provide the country with 1,800 megawatts, in addition to its current capacity of about 4,000 megawatts.

The US has roughly twice the population of Nigeria and uses 280 times more electricity.

The large telecom companies blame nameless attackers for their security problems. But Nigerian Telecommunications Ltd., which serves less than 1 percent of the nation’s mobile phone users, charges that MTN, Africa’s largest wireless operator, deliberately sabotaged its infrastructure and used corruption to hinder the small company’s operations, according to the Nigerian Tribune.

Femi Osabinu heads a youth empowerment group and, like many young Nigerians, has multiple cell phone numbers because no one company is reliable. He said the regulators should go a step further, and suspend or ban operators who don’t provide the service they promise.

He said operators simply pass the cost of the fines onto customers by increasing charges for text services or allowing pre-purchase credit to disappear from accounts.

“If you just tell them to pay,” he told GlobalPost. “They will go back to exploiting the people.”

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