Companies in IT are being charged 38 different taxes-President, ATCON

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Telecommunication

The President of the Association of Telecommunications Company of Nigeria (ATCON), Mr Olusola Teniola speaks with Olanrewaju Bukola and Oluwaseun Sonde on the challenges facing digital connectivity in Nigeria.

He disclosed that the sector is facing over 38 taxes which makes information technology services delivery difficult.

Mobile connectivity has become the main platform for innovation and a force for digital inclusion. Why is there so much concentration in the urban areas of the country, hence, no economic benefits in the rural areas?

It is true to say broadband is a critical platform for the industry revolution that is set upon us, that is, the industry 4.0 – the fourth revolution.

In fact, the Nigerian Broadband Plan (NBP) that was approved by the previous administration in 2013 attested that every 1.3 per cent  growth on Gross Domestic Product (GDP)  is obtainable by developing countries like Nigeria if they pursue a broadband plan.

The broadband plan however recognizes that the countries have a concentration of investments in the urban cities and acknowledges the fact that, to be able to make broadband ubiquitous, they should be a focus on the underserved and unserved areas which is predominantly the rural areas.

When we wrote the plans, we put measures, suggestions and Key Performance Indicators (KPIs) to give government the impetus to support the right policies, namely open access models that was adopted by the regulators to ensure that those areas are covered and included in the 30 per cent broadband penetration that we viewed to be achieve by 2018.

Unfortunately, we have witnessed a very slow pace in the implementation of this plan by the current administration. Over the last three years, the penetration has only increase by one per cent. We are now sitting in between 21 to 22 per cent in 2018, with just three months left to achieve a minimum of 30 per cent penetration.

There are issues really compounding our inability to achieve the targeted minimum penetration.

One of it is the inability of service providers to easily gain access to the Right of Ways (ROW) and its exorbitant pricing upon grants.

Another thing is for us to recognize that Nigeria have just gone through an acute  recession in 2016/2017. Although the consumer spending has been impacted considerably, the Foreign exchange  regime isstill not favourable to our investors and there doesn’t seem to be a coherent policies by government as to the incentives, encouragement and the willingness to bring in more -the much needed Foreign Direct Investment (FDI).

We are heavily dependent on equipment importations. Both the Foreign exchange  and policies around FDI have had a material impact on the ability of investors and members to see reasons they should expand beyond the ordinaries.

Are these the reasons for much concentration on the urban areas?

Economically, it makes sense to focus on the areas where the population shows a propensity to absorb the technology. We must remember that education and digital literacy is key. The digital literacy divide in those urban areas are lower than what is obtainable in the rural areas of the unserved and underserved areas of the country.

If infrastructures were built on the unserved or underserved areas, we might have supply but there are no demand.

Our NBP speaks to that. It speaks that local content should be driven by policies that encourage the Youths to build content that is relevant to Nigerian Context. And that is, demand side giving a reason for broadband structures to be deployed in those areas.

It is much more likely investors would be attracted to cities with demonstrable amount of demand.

 

Speaking of Broadband Penetration and access, it was discovered that 85 per cent of the base stations in Nigeria are not 4G enabled. Only 7,000 base stations are 4G enabled leaving out 38,000 base stations. What are the reasons behind this, if we are really talking about providing/delivering top – notch Internet services?

3G has not been universally deployed across Nigeria. We have 2G technology that is ubiquitous and there is clearly a reason to that. 2G is a voice technology widely covering the population with our penetration rate/ teledensity above 100 per cent because the teledensity amount double count the numbers of subscribers/subscriptions on the networks.

However, despite the affordability of Smartphones, not every village is covered which has resulted into having 192 market gaps needed to be covered, representing approximately 30 million Nigerians.

3G is a technology that was meant to improve the data space of 2G and that investment has then followed where data demand exist on the back of applications -data applications.

Obviously, it is assumed one has a featured Smartphone to utilise the technology to its fullest capability. These devices are widely spread in the urban areas.

Remember our NBP speaks of minimum high speed internet of 1.5megabyte per seconds download speed. 2G and 3G couldn’t achieve this, so the need for 4G.

4G technology is overlaid over 2G and 3G with about 7,000 activated base stations in Nigeria.  But this is purely based on the highest demand and consumer affordability of the services, resulting to its higher density of 4G deployment on the Island in Lagos than on the mainland.

I am aware some Nigerians are talking of 5G, but we need to exercise caution on this. 5G is the latest technology in the world which comes in place after certain infrastructure had been laid such as Fibre, National Backbone Network to ensure its full functionality. Unfortunately, we do not have that yet in Nigeria, making the availability of 5G in our space “a no go area”.

The basics have to be right first.

We need to strengthen and increase the number of 4G sites available. Also, the demand need to be fully present to ensure its economic value add to our economy.

5G will co -exist with 4G. It doesn’t replace 4G. 5G will only be available in areas where there is demand -the use for it- and infrastructures which will enable Internet of Things (IoT) and much more. This will happen in Nigeria but not within the next five years.

Can you throw more light on the National Backbone Network?

This is a homogenous network which allows any operator to gain access to very high speed capacity at an affordable price.

There are operators with their own Backbone Network but their pricing is not affordable to many service providers that don’t own those infrastructure.

Does this account for the reason for sharing Towers and not Fibre?

Towers are shared because they are owned by tower companies. As an industry, we need to create a similar structure for fibre, both the dark fibre and active fibre.

My suggestion to this will be that government and operators look for active ways to bring together these fibre that are sometimes duplicated in manner and at the same time not affordable.

What challenges is the telecommunication industry facing with foreign exchange?

The Foreign exchange  regime is very unfair because of the differences in the bank rate, Central Bank of Nigeria (CBN) rate, BDC rate and the Investors and Exporters (I&E) rate.

Our members are experiencing difficulties getting the I&E, so they are thrown into the BDC market.

Due to the unavailability of Dollars with its high rate and the differences between the BDC and the official rate, investors could easily run at loss because the telcos equipment are been imported.

So, we are advocating for a harmonized rate.

Politically, I believe CBN is not ready to harmonised the rate, possibly until after election.

To be optimistic, if harmonization finally happens, would this favour the subscribers?

To refresh our memories, the  consumers have benefitted with the advent of GSM.

*SIM card prices and call charges have dropped significantly. And I believe that our data prices are one of the lowest in the Africa.

As an industry, we urge the government to stop over taxing the telecommunications industry.

Presently, we are being charged 38 different taxes, counting the present Cyber Crime Taxwill make it 39 taxes and levies. Our industry cannot continue to absorb those levies and still remain in business. If government continues to overtax, we have no choice than to push it tothe consumers.

Why are the telecommunications companies refusing to pay for the cyber crime levy, considering they are IT companies too?

The telecommunications companies don’t make calls or data transactions. Those are carried out by the consumers.

The ITSSP has not seriously thought about how they are going implement the relevant sections under the Cybercrime Accreditation Act. They are just focusing on raising funds.

Cybercrime awareness is very important, our members already do that and the equipment to protect against cybercrime attacks are bought by member. Moreso, our member staffs are fully engaged in protecting their consumers data against cybercrime attacks.

It’s just very difficult to understand the focus on cybercrime levy fund have to do with ITSSP.

By understanding if they apply the levy it’s on a transaction and this originates from consumers. These transactions cannot be applied multiple times. Are they implying we have to pay this from our operating cost?

As it stands, that particular section of the whole ACT is not clear on implementation. If transactions originate from consumers, it’sonly right that the consumers pay that levy.

So, we are not opposing for selfish interest, but it is because it was not well thought through. It means to say that another levy will be push to the consumers, which inturn will dissuade people from getting into cashless policies. So there is a conflict. It is not a cost free environment, but cost borne.

If they enforce this ACT, we have no choice but to push it to the consumers.

ITSSP has to fully convince us why this fund, we are already doing the necessary to avoid cybercrime attacks. We don’t need a fund to do cybercrime awareness because we can.

Consumers are currently complaining over data consumption increase. What isresponsible and do you feel consumers are cheated?

This question is very popular with the consumers in almost every jurisdictions around the world. Two things are actually responsible for this.

There are consumer that use high definition (HD) services such as live streaming services, Netflix, YouTube. The heavy content consumes data very fast because the average size of a full video is in order of 4GB to 8GB.

There needs to be more consumer awareness on data usage. They really need to be knowledgeable about their Applicationsconfigurations.

Second, the assumptions that OTT application are free is false. WhatsApp calls, chats and image sharing depletes data.

Some people are privilege to be on 4G and also have access to high speed MiFi , which also consumes data. Smartphones are built to automatically align with data usage.

It is very well known that consumers are surprised and thereby thinking they have been cheated. Consumers have not been cheated, just that they need to be more sophiscated enlightened and more aware of their data usage.

You once talked about partnering with Over-the-Top (OTT) models. How do you intend to do that and why?

OTT has come to stay. The earlier we realizedthat, the better. The operators need to partner with them. We can’t regulate against innovations and technology.

The fact technology has grown to more open level, it is good to allow the continuation of innovations. And more right for the affected business models to adapt and partner.

OTT players are not going away for many reasons and that is the reality. There is no operator in Nigeria that is 10 per cent the size of these ones. This is the more reason to partner and adapt to a model to accommodate the new reality.

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