Reducing the cost to build new networks


On December 16, 2019, Nigeria inaugurated its 2020-2025 National Broadband Plan (NBP) by presidential directive from President Muhammadu Buhari GCFR. The NBP seeks to facilitate rapid rollout of broadband services in order to “address various socio-economic challenges faced by the country, including the need to grow its economy, create jobs, rapidly expand the tax base, and improve digital literacy and educational standards.” Nigeria has already begun to experience the positive social and economic benefits associated with greater broadband coverage. In the six year period between 2013 and 2019, mobile broadband penetration in Nigeria doubled from 16% to 32%, and from 2017 to 2019 the rural-urban digital divide shrank from 66% to 47%. GSMA reports that the increase in mobile broadband networks in Nigeria was correlated with a 7% reduction in extreme poverty and an expansion of the workforce, particularly for women. Specifically, the World Bank points out that Nigerian households covered by mobile broadband experienced 3.3% greater participation in the labour force and a 1.4% increase in wage employment.

The 2020-2025 NBP outlines key goals designed to continue this progress. These goals include 1) delivering data download speeds of 25 Mbps in urban areas and 10 Mbps in rural areas, 2) making effective coverage available to 90% of the population (currently at 28%), 3) achieving 70% broadband penetration (currently at 42.06%), 4) deploying 120,000 km of fibre optic cable (currently at 54,725 km), and 5) making broadband coverage available at a cost of no more than ₦390 per 1GB of data ($1.03) (2% of median income or 1% of minimum wage). To achieve these goals, the NBP applies a four-pillar approach focusing on: 1) infrastructure, 2) policy, 3) demand drivers, and 4) funding and incentives.

A critical element of both the infrastructure and policy pillars pertains to Right of Way (RoW) permits and fees. RoW fees are levied by federal and state authorities against telecommunication companies for the right to install infrastructure, such as fibre optic cables, along roads. Nigeria’s first NBP, announced in April 2013, identified high Right of Way (RoW) charges as a barrier to the development of infrastructure, constituting up to 70% of the total cost incurred by companies to deploy fibre optic cables. The first NBP set federal RoW pricing at ₦145 ($0.37) per linear meter, however, pricing at the state level ranged from ₦300-₦500 ($0.79-$1.32) per linear meter. Like the original NBP, one of the priority initiatives outlined in the 2020-2025 NBP is implementing a national, harmonized ₦145/meter RoW pricing in all 36 states. However, the federal government only enforces RoW pricing on federally maintained roads, and not on roads maintained by state governments. Therefore, the National Economic Council, in agreement with the Nigerian Governors’ Forum, passed a resolution to establish a national RoW price ceiling. Despite the agreement, 14 states, making up about 25% of the Nigerian population, increased their RoW pricing in early January 2020 to an all-time high ranging from ₦3,000-₦6,000 per linear meter.

The Association of Licensed Telecom Operators of Nigeria (ALTON) warned that the effects of the increased RoW pricing in 14 states may include entry barriers to locations currently without internet access or refusal to maintain existing fibre optic lines. When interviewed in January 2020, ALTON chairman, Gbenga Adebayo, said that ALTON may have no choice but to increase tariffs on voice calls and data to recover increased service costs.

In light of the National Economic Council’s resolution to set a nationwide RoW price ceiling of ₦145/meter, and despite widespread refusal to comply, seven states out of 36 are indeed complying by decreasing their previous RoW pricing. In some cases, governors have decided to reduce their RoW pricing to below the national price ceiling or to remove RoW fees entirely.

The first state to reduce its previous RoW pricing was Ekiti. On May 14, 2020, Governor Dr Kayode Fayemi signed Executive Order No. 007 of 2020 explicitly stating that “the Right of Way charges related to the laying of broadband or any other telecommunications infrastructure in Ekiti State shall not exceed ₦145 per metre.” This constitutes a 96% decrease from the previous pricing of ₦4,500/meter. According to Governor Fayemi, the intention behind enforcing the federal RoW pricing is to “increase economic prosperity, attract new businesses, enhance job growth, extend the reach of affordable high quality healthcare, enrich students’ learning with digital tools and facilitate access to the digital marketplace.” The Governor asserted that Ekiti State would be more attractive to local and foreign investment in the development of broadband and telecommunications infrastructure if companies could count on transparent and certain RoW pricing. Following Governor Fayemi’s lead, the state governments of Imo, Plateau, and Katsina reduced their RoW pricing to comply with the federal rate.

Some of the seven states have gone a step further by dropping their RoW pricing below the federal price ceiling, and in some cases waiving it entirely. Kwara State reduced RoW fees from ₦5,500/meter ($14.49) to ₦1/meter (one quarter of a cent, USD). The states of Anambra and Kaduna waived all RoW fees allowing operators to deploy fibre and install site base stations for free. However, the remaining 29 states have not yet complied with the federal RoW price ceiling.

About one week after reducing its RoW pricing, Ekiti State entered a contract with O’odua Infraco to lay 606 km of broadband infrastructure across the state. The project is contracted to take place over a period of 14 months. In Nigeria’s 2013-2018 NBP, it was estimated that a state the size of Ekiti would require a fibre optic network of about 250 km. Therefore, the contract for 606 km of fibre optic cable would make a significant difference in broadband connectivity for the state. Furthermore, the deployment of 606 km of fibre optic cable in Ekiti positively contributes to the national goal of achieving 120,000 km of fibre optic cable by 2025.

Ten months on from when the seven states either reduced or waived their RoW fees, two other states can be spotlighted for recent developments that are positively contributing to national broadband goals. In February of 2021, Nigerian telecom company, 9mobile, announced the launch of its 4G network in Kwara’s capital city of Ilorin. This development contributes to the 70% national broadband penetration goal.

In addition to waiving RoW fees, the state of Anambra is executing a “Broadband Infrastructure Development Program,” which works alongside key stakeholders in the telecommunications ecosystem to enable successful broadband rollout in the state. The state held a stakeholder forum on March 30, 2021 on the subject of, “Facilitating Broadband Access in Anambra State through a Favourable Right of Way Regime.” The forum convened federal and state government officials, members of the diplomatic corps, investors, and industry associates. The Minister of Communications and Digital Economy, Isa Pantami, has stated that Anambra State is going a long way to support the National Broadband Plan, asserting that it is among few Nigerian states that have positioned themselves to embrace the digital economy.

While Ekiti, Kwara, and Anambra States have seen some results from the decision to reduce or remove RoW fees, the country as a whole is still far from realising the goals outlined in the NBP. Without consistent, widespread reduction of RoW fees, reducing RoW fees in a minority of states is not sufficient to stimulate nationwide investment in infrastructure development. A year after the resolution to establish national RoW pricing, 29 states have yet to comply, something that Minister Pantami cites is slowing down the rate of broadband deployment and penetration in the country.

GSMA data from 2020 found that there is still a 30% gender gap in internet usage in Nigeria and a 47% gap between rural and urban internet usage. Increasing broadband coverage in all regions of the country would go a long way to reduce the digital divide in Nigeria and stimulate economic growth. The path forward to achieving broadband goals in Nigeria may require the federal government to enact incentives for states to abide by the national RoW pricing.