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'Not Party Time Yet' as Nigeria grapples with telecommunications reform
Unformatted Document Text:  “Not Party Time Yet”: Nigeria grapples with Telecommunications Reform 11 national fixed telephony, and international gateway for significantly less than CIL would have paid for only a GSM license barely 12 months earlier? The message is that there are doubts about the Nigerian market despite its huge potential. Most of the doubts have come from perceptions of an unstable market. The unilateral revocation of licenses by government has not helped matters. It is clear that a license holder is at the mercy of a sitting government’s decision and such decisions are not always based on written regulation that govern the licensing of telephone providers. Furthermore, the need for a fair regulation of the market has been mentioned as a concern. The regulatory agencies are still under the government Ministry of Communications and thus are not fully insulated from politics. It is this relationship that has fueled criticism against the decision to reserve a GSM license for NITEL. Moreover, there are those who believed that the government had been instrumental in helping NITEL raise the $285 million needed to pay for the license. In addition, government was instrumental in merging M-Tel (a state-owned provider of wireless telephony) with NITEL to better position NITEL for success in a competitive market. It has not helped that the regulators have acted slowly in matters involving NITEL particularly on interconnection issues with GSM providers and connection issues involving ISPs. Moreover, the newly established National Frequency Management Council (NFMC) is directly under the control of the Ministry of Communications. The NFMC will identify bulk frequency ranges available to public communication while NBC and NCC allocate specific frequencies to licensed operators. These suspicious relationships have meant that the competitors or would-be competitors have to be wary of an appearance of market protectionism for NITEL. There would be more confidence if the regulatory agency is under the control of the legislative house that would limit the impulsive regulatory actions, which is more prevalent because the agency is under the federal administration. There are other concerns, beyond the unstable market and the appearance of unfair regulations that may have kept several foreign investors away. For instance, foreign investors have doubts about the profitability of the Nigerian market. BMI- TechKnowledge (2001) notes that the telephone market in Nigeria is restricted to “15-20 million individuals” who form Nigeria’s working class with the resources to fund telephone access. It points out that the rest of the country’s population live on about $1 a

Authors: Onwumechili, Chuka. and Okereke-Arungwa, Joy.
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“Not Party Time Yet”: Nigeria grapples with Telecommunications Reform
11
national fixed telephony, and international gateway for significantly less than CIL would
have paid for only a GSM license barely 12 months earlier? The message is that there are
doubts about the Nigerian market despite its huge potential.
Most of the doubts have come from perceptions of an unstable market. The
unilateral revocation of licenses by government has not helped matters. It is clear that a
license holder is at the mercy of a sitting government’s decision and such decisions are
not always based on written regulation that govern the licensing of telephone providers.
Furthermore, the need for a fair regulation of the market has been mentioned as a
concern. The regulatory agencies are still under the government Ministry of
Communications and thus are not fully insulated from politics. It is this relationship that
has fueled criticism against the decision to reserve a GSM license for NITEL. Moreover,
there are those who believed that the government had been instrumental in helping
NITEL raise the $285 million needed to pay for the license. In addition, government was
instrumental in merging M-Tel (a state-owned provider of wireless telephony) with
NITEL to better position NITEL for success in a competitive market. It has not helped
that the regulators have acted slowly in matters involving NITEL particularly on
interconnection issues with GSM providers and connection issues involving ISPs.
Moreover, the newly established National Frequency Management Council (NFMC) is
directly under the control of the Ministry of Communications. The NFMC will identify
bulk frequency ranges available to public communication while NBC and NCC allocate
specific frequencies to licensed operators. These suspicious relationships have meant that
the competitors or would-be competitors have to be wary of an appearance of market
protectionism for NITEL. There would be more confidence if the regulatory agency is
under the control of the legislative house that would limit the impulsive regulatory
actions, which is more prevalent because the agency is under the federal administration.
There are other concerns, beyond the unstable market and the appearance of
unfair regulations that may have kept several foreign investors away. For instance,
foreign investors have doubts about the profitability of the Nigerian market. BMI-
TechKnowledge (2001) notes that the telephone market in Nigeria is restricted to “15-20
million individuals” who form Nigeria’s working class with the resources to fund
telephone access. It points out that the rest of the country’s population live on about $1 a


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