March 17, 2015
Since the turn of the 21st century, Africa’s has become more aware of the potentials of ICT. From finance, through communication and education, to agriculture and commerce, Africans are reaping the rewards of ICT, which is gradually reshaping its socio-economic landscape. This, Stanley Jegede, the CEO of Phase 3 Telecom, an emerging Nigerian fibre-optic service provider, believes is no where near its climax as Africa is just waking up to the potentials inherent in ICT.
In an interview with Ventures Africa, Stanley tracks the rapid growth of the ICT sector over the last 10 years, and its underestimated impact in improving African living. “ICT has always been critical to African growth. It is a prerequisite for the economic success of any developing country and our ability to thrive in a global economy depends on our ICT infrastructure and policies as well as how well we implement these policies,” he asserts.
Why has ICT suddenly become critical to Africa’s economic progress?
On the contrary, Information and Communication Technology hasn’t suddenly become critical to Africa’s economic growth. According to the World Bank, a 10% growth in broadband access results in 1.4% growth in GDP. We may just be waking up to the correlation between ICT development and its growth, but it has been integral for a few decades. The problem is that historically, we have lacked the infrastructure to enable it, something that has changed in the last few years. With numerous undersea cables delivering significant IP to Africa’s shores, and our own efforts ensuring the distribution of that IP nationally and regionally the true effect of IT on development can now be felt.
Enabled by ICT infrastructure, we are starting to see a very high level of convergence between different industries. The rise of e-commerce and mobile payments solutions emerged because of the increase in the availability, and speed of the internet, both fixed and mobile. ICT is making things quicker, easier and more broadly available, opening up new channels for traditional businesses to grow their businesses.
ICT has always been critical to African growth. It is a pre-requisite for the economic success of any developing country and our ability to thrive in a global economy depends on our ICT infrastructure and policies as well as how well we implement these policies.
Did this inform Nigeria’s decision to lay emphasis on ICT development?
Most certainly! ICT is a fundamental catalyst for economic development and sustainable growth. Issues of connectivity and networking are some of the fundamental stumbling blocks that we face. We were lagging behind the level of technological development of many of our peers due to the lack of infrastructure in place and the lack of well defined ICT policies to guide ICT development plans. But I’m happy to say that under decisive and strategic leadership, the tide is turning and that’s why you’re seeing the level of growth we’re now experiencing.
How much of this emphasis has been placed on growing internet connectivity?
A considerable amount of emphasis has been placed on growing internet connectivity, particularly in the last few years. In 2013, President Goodluck Jonathan inaugurated a 15-man strong broadband committee, of which I am a part, to develop a comprehensive broadband strategy and roadmap for Nigeria, based on a keen understanding that ICT is a key enabler of sustainable socio-economic growth.
The current Minister of Communication Technology, Omobola Johnson, was responsible for the launch of the NigComSat-IR Satellite which has helped to complement Nigeria’s efforts at increasing fibre connectivity and providing greater bandwidth.
Other great government initiatives, which Phase 3 is proud to be a part of, are the Wire Nigeria and Backbone Transmission Infrastructure(Btrain) projects, which were conceived by NCC and USPF to provide broadband communications access to rural and un-served communities. Phase 3 is committed to expanding its network to aid the provision of connectivity to all.
Do you think Nigeria has made significant progress in internet penetration?
We have made some commendable progress in internet penetration, in 2005, Nigeria had 5 million users only, about 3.5% penetration. Fast forward to 2010 and that figure had increased to 38 million, about 24% penetration. Today we have over 70 million users, about 38% penetration and this figure is growing still. As I said previously, one of the key challenges for the advancement of internet connectivity remains the widespread lack of infrastructure and technical capacity, and we are taking strides in this area. But there is still room for improvement.
Because of the potential of the internet to impact our economy even more so than it already is in the future, Phase 3 is committed to ensuring that the digital divide diminishes. We see it as a responsibility to ensure that we, as a continent are heading in the right direction. We are proud to be playing a small part in bringing internet connectivity and access to people in both urban and rural areas
Through the internet, Africa as a continent has started to move beyond our dependence on natural resources, and into the service economies- having a truly tangible and sustainable effect on our economy. Internet connectivity is absolutely crucial for this transition.
Why does mobile remain the single most adopted source of internet connectivity?
More people in Africa connect to the internet through mobile devices instead of computers due to the affordability of mobile devices, unreliable electricity, and weak or nonexistent landline infrastructure. In liberalizing the telecommunications sector, people were introduced to GSM phones before the internet. Although phones and computers were initially prohibitively expensive for most of Africa’s population, unlike computers, mobile phone prices quickly crashed as a result of an influx of phones that targeted various segments of the market. Prices of handsets and data have been on the decline while transmission speeds are faster, even in remote rural areas. There are also cheaper, easier, and faster ways to charge phones than laptops.
We recently received news that phase 3 telecom rolled out fibre-optic cables within rural communities. How much will this help boost penetration (timescale- duration)
Extending fibre into rural communities will dramatically improve the level of internet and telecoms penetration. At the moment, our programme is rolling out fibre into 4 areas with the potential to cover 30 million people and this is part of the government’s ‘wire Nigeria’ project. We expect to have added 1500 km of fibre within the next 12 months.
Just how expensive is this for a company?
Laying fibre is part of a company’s capital expenditure and is the single biggest annual cost on our balance sheet, so we don’t make decisions on where to invest lightly. The reality is that these investments can’t be justified on a purely short term commercial basis. The reason many of the big telecoms companies are not in these areas is because they simply don’t believe that there enough potential customers to justify the expense of installing and maintaining infrastructure. That’s why two things are very important. First, the recognition of the government’s need to provide support and incentives in order for commercial operators to make investments, and the second, for commercial companies to take a longer term view. Take Phase 3 for example. Our vision is not just to connect Nigeria, but to connect the whole of the sub-region. We’re already working on projects to connect our network to Benin, Niger and Togo and our ambitions are much broader than that. We know that regional connectivity is vital to long term development and we’re in this for the long term.
Do you think it is a profitable move for ISPs to target rural communities (due to a lack of demand)
Some things are more about the bigger picture than they are about profit. Connecting Nigeria to the outside world, increasing access and reducing poverty in rural areas is crucial. But more than just getting more people in Africa online, the internet brings with it many more benefits. It is a necessary tool for inclusive growth, driving financial inclusion and positively impacting socioeconomic growth.
Yes, the demand is not there yet, but if we build it they will come- as they say. Demand will grow and there’s no denying that the collective benefit is exponential, both from an economic and a social perspective. We have the confidence to make these types of long term investment decisions.
What else can both the government and citizens do to further enhance penetration across the continent?
Although the cost of bandwidth in the wholesale market has reduced, bandwidth costs remain high in the retail market. This is because many ISPs are forced to build their own infrastructure backbone or leverage the backbone of others at a high cost. To reduce bandwidth costs for end-consumers thus encouraging internet penetration the Government needs to continue to prioritize the power sector and provide reliable electricity. Incidents like intermittent blackouts and power surges discourage purchase and use of electricity-powered devices. They need to continue to facilitate the expansion of broadband connectivity to non-urban/coastal cities through the building of more backbone infrastructure so as to reduce cost of internet connectivity for service providers. This will need to be complimented with the efforts to get the Right of Way charges reduced and/or harmonised to make possible a drastic but necessary reduction in the transmission cost.
As more and more e-businesses emerge, we will see more related businesses spring forth creating a more robust environment, for example the rise of online stores have given a much needed boost to the logistics sector which has taken on a life of its own. Citizens need to continue to innovate, utilizing the available connectivity to provide a real tangible impact on the economy.
How do you see Nigeria’s internet future in the next decade?
Nigeria’s internet landscape is undergoing a revolution and the next decade is only going to see the continuation of that. Technological innovation is now arriving in Nigeria at the same time as the developed world and over the coming years Nigeria may actually become a leader in terms of innovation. We have unique problems and the ability to apply ourselves to develop creative technology solutions, powered by the infrastructure that is being built.
We are going to see a technological future where convergence is at the centre of everything. Just like in the US, where your internet provider also providers voice, video and other value added services so Nigeria is moving towards a triple, or even quadruple play structure where the consumer will have access to all the content and services available around the world.
Ericsson, a multinational provider of communications technology and services predicts that voice call traffic in sub-Saharan Africa will double and there will be an explosion in mobile data, with usage growing 20 times between 2013 and 2019, twice the anticipated global expansion. That’s just one example of the level of growth we can expect to see.
The internet is expected to play a greater role in Nigerian lives, particularly in the financial sector where there is room to grow in terms of our adoption of technology-based services like e-channel payments and mobile money services.
I am hugely optimistic about the future of our country and the role ICT will play in this future.
Source: Ventures Africa