Telcos’ Incursion Stifles Internet Service Providers

Emma Okonji

The continued drop in the number of licensed internet service providers (ISPs) in the country may lead to their extinction in the once vibrant sub-sector, experts have warned.
They attributed the slide in the activities of the ISPs to the incursion of the telecommunication companies into the market.

According to findings by THISDAY, since 2011, the number of licensed ISPs has dropped significantly, following the incursion of telecommunication operators such as MTN, Globacom, Airtel, 9mobile and ntel, as they currently offer mobile internet service, which hitherto was the traditional service offering of ISPs.
Statistics obtained from the Nigerian Communications Commission’s (NCC) website showed that 205 ISPs were licensed between 2007 and 2015.

But the number has reduced to 92 as at January this year, before additional seven were licensed, bringing the total figure to 99 presently.

The seven newly licensed ISPs include: Bava Network and Technologies Limited; Netzplan Resources Limited; Sentient Networks Limited; Standard Communications Limited; Service Aggregation & Distribution Limited; Passage Telecommunications Nigeria Limited; and IP Express Limited.

Some of the ISPs that spoke to THISDAY, blamed the situation on harsh business environment occasioned by the sharp practices of GSM operators, who now compete with ISPs in retail service offering, instead of sticking to wholesale service offering.

The CEO, Swift Network, one of the ISPs, Mr. Charles Anudo, said the major challenge the operators face is the arbitrary fixing of prices by bigger operators just to stifle smaller operators and force them out of market.
He stressed the need for regulatory control and the reintroduction of Data Floor Price by the NCC.

Also, the Marketing Lead at WiFi.com.ng, Mr. Awani Jesse, noted that GSM operators who have huge broadband capacity from their submarine cables compete with traditional ISPs to chase them out of business.

Similarly, another operator who pleaded to remain anonymous said: “We buy broadband data in wholesale from Broadband Companies like Main One, Glo 1 and MTN WACS, who have berthed their submarine cables with huge broadband capacities at the shores of the country and in turn, we retail the broadband data bundle to individuals and organisations, but the same broadband company that sell to us are now competing with us and selling directly to our customers even at reduced price, thus making competition and survival extremely difficult for ISPs.”

He further explained that most of the ISPs could not cope with the competition and could not renew their licences after the five years duration.

Reacting to the development, the Executive Vice-Chairman, NCC, Prof. Umar Garba Danbatta, said: “We have seen distortions in the ISP market, especially where telecommunication operators have diversified into offering internet services to their subscribers.

“The distortion is squeezing smaller operators out of market, but one way that could better address the distortion is to divide the market into wholesale and retail trading in order to separate the bigger operators from the smaller operators.”

Danbatta, however, said he was in doubt if the current market is matured enough for such separation but said the regulator would look at the situation and sensitise the market going forward.

NCC’s statistics on internet penetration showed that Nigeria currently has 102.8 million mobile data subscriptions as at June this year, with MTN taking the lead with 38.9 million active mobile internet subscriptions, followed by Airtel with 26.7 million active internet subscribers; Globacom with 26.6 million active internet subscribers and 9mobile with 10.6 million active mobile internet subscribers.

Of the 102.8 million active mobile internet subscriptions, NCC statistics further revealed that the fixed and wired internet subscription from ISPs was still at its lowest ebb of less than two per cent penetration, a situation that has led to the continued drop in the number of licensed ISPs in the country