By Chinenye Anuforo, [email protected]
Nigeria’s drive for widespread broadband access is encountering more obstacles as the number of operational internet service providers (ISPs) diminishes. Despite the issuance of new licenses, the count of active ISPs has dropped to 242 in July from 252 in May due to a decrease in renewals. This downturn risks stifling competition and impeding the last-mile delivery of broadband services, especially in underserved regions.
The Nigerian Communications Commision (NCC) had expressed concerns about this trend, noting a total of 568 inactive licensed ISPs as of March 2022.
Industry leaders point to several challenges facing ISPs, including: Competition from dominant mobile operators (MTN, Airtel, Globacom, and 9mobile) who offer internet alongside voice services. The launch of 5G by MTN and Airtel has reportedly driven some enterprise customers away from ISPs.
Limited resources is one the reasons for the above challenge as ISPs, often categorised as SMEs, struggle financially compared to the larger mobile network operators (MNOs).
Another factor is market dynamics as MNOs hold a significant advantage with 163.8 million active internet subscriptions compared to the leading 106 ISPs with a combined 262,206 customers (Q1 2024).
Industry leaders urged the government to address the decline of ISPs, emphasizing their role in achieving ubiquitous broadband access. Mr. David Omoniyi, CEO of VDT Communications, called for targeted interventions to support ISPs, including: Identifying factors hindering ISP growth, such as funding limitations, operating environment, or regulatory hurdles.
Ensuring regulations encourage a healthy market with a diverse range of players and considering a regulated increase in data prices to improve ISP sustainability.
The NCC acknowledged the declining renewal rate and, through its research department, suggested that artificially low data prices due to stiff competition might be a contributing factor.
The researchers, therefore, called for a regulated increase in the prices of data to save the ISPs from dying.
Beyond the concerns raised by ISP leaders, other industry experts weigh in with additional solutions to save Nigeria’s broadband ambitions.
Jide Awe, Founder Jidaw Systems Limited argued that streamlining licensing and regulatory processes can be a solution. He said, “The current licensing and regulatory hurdles can be a significant barrier for new ISPs entering the market. Simplifying these procedures would encourage investment and growth in the sector.”
He added that government investment in infrastructure projects, such as fiber optic networks, could create a more level playing field for ISPs and reduce their reliance on leasing infrastructure from dominant players.
Another expert who spoke on condition of anonymity said a large portion of the Nigerian population lacks the skills and knowledge to fully utilize broadband services. “Investing in digital literacy programs can increase internet adoption and create a larger customer base for ISPs, making them more sustainable”, he said.
“The success of Nigeria’s National Broadband Plan hinges on the participation of all stakeholders. Supporting ISPs is crucial for extending internet access to underserved areas and fostering a competitive telecommunications landscape”, Awe concluded.