Enabling telecom finance is missing from FG policies- Medallion Communication MD

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The Managing director, Medallion Communication, Engr. Ikechukwu Nnamani in this interview with IDRIS BAKARE said enabling telecommunication finance is missing from federal government policies on the sector that has continued to contributed to the nation’s Gross Domestic Product (GDP).

Nigeria is considered to be one of the fastest growing technology and communication market in the world. How does this market, factors into Medallion Communication?

Medallion Communication has played a strategic role in making the market what it is today. As is well known, today we have the telecom facilities with the largest number of connectivity across the country, actually the sub region. So in terms of facilitating connectivity, data center, hosting services, we have been the major provider of the facilities that make things to happen.

Medallion Communication comes in as a critical national infrastructure provider in the area of ensuring seamless connectivity, as well as ensuring that operators are able to take on and operate efficient date center services.

 What is the level of data center market development in Nigeria?

The data center market is developing very fast. When we started this space many years ago, a lot of people really didn’t understand the advantage, potential and what it’s all about but today we are seeing a lot of people coming into the space because they are seeing the need.

We’ve been pushing the need for localization of content within the country for many years, and you need data centers to do this.

We have also been pushing for the presence of global Over The Top players and International Service Providers in the country, and implementing their content locally for local access, so that we’re not going outside the country to pick up all this stuff; You need data centers to do that.

We’ve been pushing National Cyber Security, on the area of making sure that your content and your data is secured. You need in-country data centers to do that because if you host your data and content outside the country, then those that manage it for you literally have access to it. But if it’s hosted within your country, then you secure access into the content.

Nigeria is now being seen as the top market within the continent. Though we started very late in the datacenter space, we started much later than South Africa, but the understanding is that we can overtake South Africa and some of the other countries in the continent as was done in the voice service sector.

 What is the competitive advantage of Medallion Communication?

We are carrier neutral and that what very few companies have. A lot of companies have their own datacenter specific to their needs and their services. Even when they open up their extra capacity or excess capacity to third parties, it’s not the same as when you have it purely on a carrier neutral and open access basis for all operators to use.

The second major point to note is the connectivity that is present in Medallion. There is no other facility within the sub – region where you have this level of connectivity as you have in Medallion Communication.  it’s just not in terms of submarine cables, major content owners, ISPs, metro and long distance connectivity providers of all kinds both local and international, but also in terms auxiliary industry players from the education, manufacturing, government, and ICT sub sectors.

There’s no place where you have it compared to Medallion Communication, in terms of numbers and that is very key and major differentiation factor between Medallion and others.

We created the market place, where if your goal is to operate very fast and efficient, cost effective, then Medallion Communication becomes your number place.

Companies’ use the services of other datacenters mainly for redundancies but most still prefer Medallion as the place of primary connectivity because of the market space we’ve created that is not available in any other datacenters.

 What are the benefits of Collocating and Outsourcing Infrastructure?

The reality is that for efficient service delivery you need availability. So if you want your infrastructure to be available 24 hours a day, the cost to do it yourself will be too exorbitant because of the state of public power supply in the country as you can’t avoid running on generator almost 24/7. The cost of the diesel or whatever the fuel you use will be too high, the wear and tear on generators, you need to have two or three generators to ensure sufficient backup. If you go to the Data centers, you see two or three generators standing there backing up themselves.  For a private company, it will be expensive and not even profitable for them to that on their own, so the default option that is cheaper is to use a Data center where everybody is sharing the available and reliable power supply.

The second part is the market place. We can’t over emphasize the importance of a strong market place. A market place means your ability to interconnect with other operators and the ability to exchange service with other companies. If you are standing alone, then you’ve made yourself an island. In the connected world as we have today, the ability to interface with other service providers seamlessly is key to success.

It is now a key requirement for success to have your core infrastructure installed in locations where you get the right availability.  You meet the right service providers in one stop-shop kind of arrangement and at the same time, it’s cheaper for you.  So it’s a win-win thing.

Outsourcing is important with respect to management of hosting services. Most companies lack the expertise to manage the servers and the security that need to be maintained. Imagine you needing to have strong engineers to manage your server and security on it versus when you go to somewhere were the same staff that is well trained is doing it for about five companies. The unit cost per company is lower than if each company handles it with their own staff.

What are the biggest challenges to mass development of Data center in Nigeria?

The major challenge is Power supply, because Data center has to be operated 24/7; so you need to have a reliable power. If there is no reliable supply from the public utility, then you run to problem because you have to self generate and that comes at a higher cost.

In the developed countries, where there is reliable power, there is still more data centers in some cities that we have in the whole of Nigeria and the West African sub-region combined. Some cities have upward of 20 Datacenters within a city despite the fact you have reliable public power supply. That means the needs of the carrier neutral datacenter service goes beyond challenges with public power. There are other benefits that make the need to have these facilities paramount. The market place, challenges of managing the infrastructure, and other factors makes having datacenters and outsourcing the service by operators inevitable in these locations. In the case of Nigeria, the big challenge still remains the lack of reliable power.

What sort of interconnection infrastructure is Nigeria lacking?

When we talk of interconnectivity, we got to break it up into various classes. One is global connectivity; here you have to rely on the submarine cables and satellite communication systems. Those are literally the two ways a country is connected to the world. The second is metro and long distance network connectivity that covers connectivity within the cities and across the various states. The connectivity covers both data and voice services.

On the submarine cables, a lot of companies have now come into the space, from the days where it was only NITEL’s SAT3 that was available. We now have WACs, GLO1, Main One, ACEs, and SAT3. WACs is a consortium of several companies including Angola Cable, MTN, WIOCC, etc. Each of them as a standalone could also rate themselves as sub marine cables operators or providers but they are all riding in the same fiber, so that is why we just group them to one under WACs. Other cables are expected in the country over the next few years.

Just last week, the country had a challenge with international connectivity. A number of the submarine fibers went down. Thanks to Medallion facilities, operators were able to quickly cross connect to other submarine and most of them were able to bring back their customers thereby minimizing downtime. That really shows the value of Medallion’s datacenter and the market place and connectivity that exists in the facility.  I remember that we received a lot of emergency calls from submarine operators that their network was down and they have a lot of critical national services running on the fibers and we have to speed up the process for them to cross connect with other submarine operators who hitherto they consider competitors but in the time of emergencies the industry work together as one unit to ensure availability to the country.

The second point in terms of connectivity, you are now talking about long distance, metro fiber connectivity. This is where the challenge is presently, metro fiber in places like Lagos is better than some other places but long distance is a problem for everybody. On the metro side, the major challenge is the issue of high Right of Way (RoW) fees. As we are all aware, the state government recently decided to increase the prices. This has worsened a bad situation but thank God the Minister and relevant bodies are trying to address that problem to see if we can get a better arrangement in place. We hope to achieve the same type of arrangement like what has happened in the Federal level where it was harmonized at a reasonable price. Hopefully, some of the states that has increased their price, will see the fact that having a robust telecommunication infrastructure in the state, actually have more value to the economy of that state and the people than what they stand to get with charging higher RoW fees which in turn prevents operators from implementing needed infrastructure within the states.

In the Telecom industry, which of the policies do you think should be sustained and improve on by FG?

For me, the biggest policies we want to push for is enabling telecom finance. One of the biggest challenges facing the industry today is in the area of finance. There’s no government policy that encourages telecom finance. We have for the agriculture sector, manufacturing sector, and other sectors, but nothing for the telecom industry.

Telco operators are still expected to go out there and deal with finances sources on their own and that create a problem because sector is unique and sector is specialized. Telco operators cannot get the financial resources they need to roll out much needed infrastructure. So we have been clamouring that Government should come and set up or create a policies that will enable the creation of telecom banks just the same way we have Bank of Industry (BOI) and, Bank of Agriculture (BOA).

We believe that it’s about time we have Telecom bank that would understand the space and will be able to ask for the right collateral that will able to borrow a facility and be able to ensure that your business grows as long as the business makes sense. Low cost long term financing is needed for the telecom industry and that requires policies changes from the government.

What can Government do to avoid issue of Inter connectivity debt in 2020?

The solution from what we proposed last year was the creation of settlement scheme for the telecommunication industry.

This automatically will solve the problem because now settlement will be done at the banking level and not on bilateral basic where people  wait and see if somebody is going to pay them or not. This is very key at this stage. We feel creation of interconnect settlement scheme for the country is the way to solve the problem once and for all.

NCC licensed some Infracos, how do you assess Broadband Penetration in Nigeria?

Broadband Penetration is still a work in progress and to the best of my knowledge, the Infracos are still working through the process with the government in terms of service roll out. Few of them have rolled out their service but not to the extent we are expecting.

Ultimately the goal is the have a national network that covers the access segment, metro segment, long distance segment, and international segment.

How will the trending issue on Corona Virus affect the Nigeria telecom sector?

It will affect the telecom industry in a great way. A lot of the infrastructure we use comes from Asia and China in particular. Some of the biggest manufacturers are from that part of the world. We going to see challenges in terms of infrastructure delivery for projects this month and also availability of expatriates that are to come from Asia.

What should we be expecting from Medallion Communication in 2020?

We are optimistic in meeting up with expansion plan target this year.  We want to be able to put infrastructure in some cities that are going to be interconnected so that we start building the national connectivity that we envision that should be in place. This remain our focus for this year