Impact of Telecom Infrastructure on Economic Development

By CHARLES AYODELE

Telecommunication is an essential service in every country. It aids quicker connectivity and transmission of information from person to person, company to company.

As a key contributor to economic growth, acting as an enabler of multiple sectors including financial institutions, military and security services, the importance of telecommunications cannot be overstated.

With the rising impact of technology and digital applications, financial institutions and fintechs are rapidly leveraging these services to drive financial inclusion and support today’s cashless economy. Automated Teller Machines (ATMs), online and digital banking systems run on the back of communications infrastructure, and so it is imperative that communications infrastructure is classified as Critical National Infrastructure (CNI) and protected by the government.

Investment in communications infrastructure is a key aspect of this industry that should not be downplayed. It is the backbone on which the various telecom services ride and deliver to the end users – government institutions including the military, security and intelligence agencies, commercial and non-commercial organisations and individuals.

As critical blood is in the human body for the transmission of oxygen, communications infrastructure acts as the live wire for the delivery of uninterrupted, quality voice and data communication.

Telecom operators (MNOs and infrastructure companies (InfraCos)), in collaboration with infrastructure providers, usually make significant investments in infrastructure before the rollout of services, and for every service expansion carried out on their networks. Infrastructure including Base Transmission Stations (BTS), fibre optic cable laying, microwave radio connectivity, antenna installation, transponders installation, among others are capital intensive, and mostly denominated in dollars.

So, when communications infrastructure companies take the risk to acquire telecommunications infrastructure, it is out of their sacrifice and desire to positively impact the socio-economic development and growth of Nigeria.

Therefore, communications infrastructure should be considered Critical National Assets, be well-protected and secured. In addition, there should be no obstruction to their operation, given they enable seamless transmission of voice and data services from one location to another and the goal by all stakeholders should be to optimise service delivery.

The significant cost of acquiring the infrastructure also warrants infrastructure protection considering the macroeconomic factors currently prevailing in the country, particularly the scarcity and cost of foreign exchange since most of the equipment is imported.

In a more strategic way of reasoning, one would expect that the $285 million paid to the Federal Government by MNOs for licence fee acquisition could be used for communications infrastructure rollout across the country; but the government wasn’t.

The misstep by the government created an additional burden for telecom operators to provide their own infrastructure as they have expanded their networks from one state to another. Since then it has been the responsibility of telecom operators to roll out their own infrastructure and pass that cost onto their subscribers.

Unfortunately, telecoms operators and infraCos have also continued to suffer severe losses on their investments due to wilful destruction and theft of infrastructure.

Another pain point is the imposition of multiple or extra levies and taxes on MNOs and InfraCos by agencies of state and local governments, as well as the shutdown of sites to enforce payment. Most times, the levies being demanded by these tiers of government have already been paid to the Federal Government by the operators, thereby amounting to double taxation.

Telecom operators have continued to advocate for the protection of communications infrastructure, but the Federal Government has yet to categorise this infrastructure as Critical National Infrastructure.

Implications

The continuous destruction of communications infrastructure by vandals and the incessant closure of telecoms sites by state governments, and coercive landlords seeking to induce higher rents outside their agreements have to a great extent, impacted quality of telecom service negatively across the country.

Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON) Engr. Gbenga Adebayo, recently called on the government to urgently address issues around communications infrastructure vandalism, as well as multiple taxes imposed by state governments and other agencies of government.

Adebayo said: “The issue of multiple taxes must be addressed because it is gradually killing the telecoms sector and eroding its many gains. The current situation where the telecom sector is struggling with different taxes is not sustainable and the government has to address it.”

For example, telecom operators have continued to raise concerns over what they described as the imminent shutdown of facilities in Kogi State, following disputes arising from unusual taxes and levies demanded by the state government through the Kogi State Internal Revenue Service (KIRS).

ALTON, the umbrella body for all licensed telecom operators in Nigeria, had in a statement, said the issue could lead to a total shutdown of communication facilities and disruption of services in the entire Kogi State. This would also affect parts of the Federal Capital Territory, with possible impact on service availability in nine other states close to Kogi State including Nasarawa, Benue, Enugu, Anambra, Edo, Ondo, Ekiti, Kwara, and Niger, which all share borders with Kogi State.

They are therefore seeking the urgent attention of the government to implement policy reform that will protect communications infrastructure from theft, wilful destruction and undue interference from agencies of governments.

They decried a situation where agencies of governments will deliberately seal the sites of BTS, ignoring the consequences of distorting the flow of voice and data communication from such sites. State government agencies seal base stations with impunity to impose certain state taxes on telecoms operations.

The sector has recently condemned a new development in Osun State, where the State Government recently contracted an agency in the state to begin an infrastructure installation audit, with a view to raising N500 million as revenue from telecom operators licensed to operate in the state.

Chairman of ALTON, Engr. Adebayo, said the development in Osun State was worrisome because according to him, it amounts to double taxation that will add to the 46 existing telecoms taxes imposed on telecom operators across the country.

“Telcos are still facing challenges from Kogi State government that has imposed all manners of taxes on telecoms operations and has gone ahead to seal base stations in the state, without recourse to quality of telecoms services in the state and its environ,” Adebayo said, while calling on the federal government and the Nigerian Communications Commission to stop the impunity of state governments sealing BTS sites.

He added that if the issues emanating from Kogi and Osun states were not addressed, they could spread to other states, with huge consequences on service quality.

Adebayo also decried a situation where communications infrastructure is either stolen or destroyed wilfully, and road contractors inadvertently destroy parts of the infrastructure such as fibre optic cables during road construction, thereby cutting off voice and data communication flow in these areas.

Adebayo explained the importance of telecom service delivery and how these services positively impact people in the areas of financial transactions, through the use of mobile apps, ATMs, and Internet/online banking. He also added that the sector drives commerce and online transactions carried out via the internet and mobile phone devices.

Reinforcing the critical nature of communications infrastructure as the foundation for the delivery of efficient, quality telecom services, and increasing access for more users, the ALTON Chairman concluded that it is in the nation’s best interest to accord communications infrastructure protection under the law of the land.

Charles Ayodele, is an ICT expert, writes from Abuja