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The landmark revolution of 2001 has indeed, brought about unprecedented growth in all aspects of the telecom sector making Nigeria the fastest growing telecom market in the African continent.
It is however, an irony that while it is an era of great joy and fulfillment for some telecom operators especially the voice telephony providers, it is doom for some players in the traditional Internet service providers sector.
The continued emergence of new technologies as well as some infrastructural challenges has negatively played on the market strength of the ISPs such that they have been forced out of business prematurely.
ROMMY IMAH looks at these and other possible factors in the following report…

It is not an uncommon knowledge today that doing business in Nigeria especially Internet related business, is most challenging owing to so many factors ranging from human to economic and then to social. Business in Nigeria is not for the lily-livered; it is for the bold and the toughest of men.

Ever since the telecom revolution of 2001, Nigeria has no doubt done well in voice telephony as well as in penetrating Internet access. However, there is still a lot to be done in pushing Internet further to the reach of majority of Nigerians. Experts have continued to argue that Internet penetration in Nigeria is still on the low side.

In a country of an estimated 140million people, only about 10million representing 7.2 per cent has access to the Internet. And this is a country where access to voice telephony has astronomically grown to about 52million.

Is it not an irony therefore, that while Internet penetration stunts in Nigeria, voice telephony is enjoying such a massive growth?
“In the G8 countries, the number of people with access to computers and Internet is growing at an exponential rate, in many developing countries, the story is not exactly cheering,” Ernest Ndukwe, EVC/CEO of the Nigerian Communications Commission admitted this much at an event last year.

Sometime last year, a study conducted by a research firm showed that in seven years of steep rise in mobile telephony in Nigeria, the number of Internet Service Providers (ISPs)-(some people call them bandwidth resellers) in the country was ironically on the decline.

The report noted that within a short space of three years of commencing business in Nigeria, about 60 ISPs were forced to close shop.

The report in giving reasons for this sad development observed that there existed a huge gap between demand and supply of bandwidth brought about by consumers' inability to buy the Internet infrastructure.

The report suggested that this was a spill-over effect of non-accessibility to public power supply, which is a common

phenomenon in Nigeria.
According to the report, “51of the 60 ISPs that closed shopsaid that poor power supply was responsible for their predicament promising to execute their licenses if power situation improved.”

The problem however, is that instead of public power supply improving, it is degenerating with greater rapidity.
It is argued that the general high cost of doing business in Nigeria can also be blamed for exorbitant Internet fees. Nigeria has a massive shortage of electricity supply and

service providers rely heavily on diesel-powered generators. This adds an extra layer of costs for which consumers have to carry the burden.

Jide Awe, versatile IT practitioner once observed thus: “Already the Internet and ISP business in Nigeria is suffering. Ours is the only field in Nigeria where despite the escalation in fuel prices, almost non existent power supply and other operational factors the public expects lower prices for our services. The results and outcome of forcing the ISPs in Nigeria is not even good to be imagined not to think of becoming a reality.”

The poor state of power supply in Nigeria has monumentally affected Cyber café business in Nigeria such that many of them have wound up business. This on the other hand, has a spill-over effect on the existence or otherwise of Internet service providers. Many ISPs that rely solely on the patronage of Cyber cafes have all gone under.

Power may not in the real sense of it, be the only albatross of Internet Service Providers in Nigeria as there are alternative sources of power generation outside of public power supply that could still keep their business running.

The inclusion of data service provision in their service offerings by Fixed Wireless Operators and lately, the GSM operators have without doubt, enormously affected the business fortunes of Internet Service Providers in Nigeria.

Virtually every fixed wireless operator in Nigeria today has data service in its offering portfolio. In fact, observers insisted about two years ago that by including data in their service offerings, the PTOs had commenced a gradual extinction of the ISPs from Internet business.

The PTOs now offer Internet services through dial-up connection, which is mainly patronized by individuals at homes and offices. Even in some small business enterprises like the cyber-cafes, dial-up serves as their gateway to the super-highway.

From Starcomms to ZoomMobile to Multilinks-Telkom and indeed to the GSM operators, there has been a renewed interest in playing in the 'lucrative' Internet market with varieties of offerings. There is the Internet card, the USB cable and the Pocket PC, all aimed at offering Internet services.

The competition in the telecoms industry has become so tense that everybody is battling to have a good chunk of the market hence the diversification in service offerings by operators. Currently, Internet service offering is no longer the exclusive of the ISPs as virtually every player in the telecoms industry now offers Internet service.

Analysts insist that the emergence of the Smartphone also known as the mobile PC point to the steady rise in cellphone usage as the most convenient Internet access tool across the globe as against PC. Besides, it is cost-effective accessing the Internet using the cellphone.

With the current convergence drive in information technology, the mobile phone stands a better position to serve the consumer with ease than the PC especially the upwardly mobile. And this is why the entry of traditional voice telephony providers has further depreciated the market control of the Internet business of traditional Internet Service Providers.

A research report by Point Topic and YouGov showed that while current usage of the mobile phone to access the Internet is dominated by work-related applications, new users are much more interested in entertainment and keeping in touch with their friends.

The research pointed out that the quest for this mobile technology is driven by the consumer's desire for convenience and practical solutions especially in the case of Nigeria, now that there is growing interest in mobile banking.

In recent times, personal digital assistants (PDAs) and Smartphones have been seen as having significantly increased in the functionality and capabilities they offer users. Some people even argue that they now offer an extensive range of features that can be used to address enterprise requirements.

Besides power, which seemed to have defied all known solutions in Nigeria, the Internet Service Provider is faced with so many other challenges that remaining in business is likened to the biblical passage through the eye of the needle. In fact, the major challenge faced by traditional Internet service providers in Nigeria is that spearheaded by traditional voice telephony providers.

		With what is today known as technological singularity or technological convergence, services hitherto performed by single device are now packed in one device. One can now use the mobile phone to not only perform the traditional voice service but use it to access the Internet, listen to broadcast services via radio and television, take still photographs, watch movies as well as play music.

Technological convergence as a phenomenon refers to a group of technologies developed for one use being utilized in many different contexts.

Until now, these technologies were working independent of each other but are now able to share resources and interact with each other thereby creating new efficiencies.Amazon.com for instance believes that a trend is underway in which voice and data communications are merging arguing that the irresistible logic is that digitized voice is just another kind of data, after all.

It added that the economies of convergence can be considerable; there would be no need to build and support separate voice and data infrastructure when you can just have one.

Perhaps, it is this combination of infrastructure that presents the problem that telecommunication convergence aims to solve; data people who until now, were not worried about voice in the past, have to worry about it now.

Similarly, people who used to specialize exclusively in switched voice circuits are now considering adapting to the new environment. Only last year, major GSM services providers in Nigeria began the deployment of Blackberry Smartphones which come in the form of a mobile phone, a computer, a camera as well as an Internet connector. In fact, virtually every telecom operator in Nigeria in response to the opportunities allowed by the Unified Licensing Regime, promote one Smartphone or the other in the marketplace.

The emergence of the Smartphone is perhaps, the greatest threat faced by the Internet Service Provider in Nigeria. Since the Internet is yet to assume a mass market status, mobile executives and some middle class citizens now rely on the Smartphone for all their Internet-driven transactions. And this is where the competition comes in.

At the launch of the Internet for Job (I4J) initiative in July last year in Lagos, Executive Vice Chairman of the Nigerian Communications Commission (NCC), Engineer Ernest Ndukwe said, “Today, Internet services are becoming available on even mobile phones making it possible to transact a wide range of services formally only available using a computer device.”

African Business Website, TradeInvestNigeria.com recently reported that “Traditional Internet service providers are facing increasing competition from Internet services offered by mobile operators. The introduction of 3G services has enabled many Nigerians to access the Internet through mobile devices,”
Yet, Internet does not come cheap in Nigeria. One of the reasons for this is the costs involved in using satellites due to a lack of cable infrastructure.

The existing SAT-3/WASC/SAFE cable that links South and West African countries to Europe and Asia no longer has sufficient capacity. Most Internet traffic in Nigeria needs to be routed by satellite via North America and Europe.

It has been variously argued that the use of cell phones helps Internet users bypass cable infrastructure gaps as well as the country's pervasive power outages to access the super

highway, clearly making the cell phone the key to massive Internet adoption. TradeInvestNigeria.com quoting Kanni Adegbile, an assistant project manager with Skannet, an IT solutions provider based in Ibadan, Western Nigeria said, “The Internet landscape in Nigeria is fast changing. Ten years ago, we did not have the different types of access to the Internet that we have today. A public cyber cafe used to be the only access individuals had to the Internet.

“Now there are Internet service providers (ISPs) in various shades and sizes, delivering direct access to individuals and businesses on a variety of platforms. CDMA-based providers are upgrading their networks to the more advanced EVDO technology.

GSM operators - who were initially reluctant to tap into this area - are now aggressively marketing Internet services as part of their offerings. Internet access is fast becoming a commodity item in Nigeria.”

“There is widespread availability in urban centres, and fairly good availability in smaller towns. The deployment of VSAT-based systems has made this possible.

But more so has packet data on GSM networks. With MTN, Celtel, and GloMobile providing GPRS, EDGE, UMTS and HSDPA all across the nation, it is almost amazing to find Internet access in some of the most remote locations in the country,” said Yomi Adegboye, principal partner at DomainStandard Networks, a Lagos based online services provider.

“Last year, I took a road trip from Lagos to Abuja and back. All through the trip I was online, managing my mails and carrying out other tasks this is in spite of the fact that my route was far removed from urban centres.

Most people are unaware of this level of availability, and I hope that the providers will do much more to inform the

public,” Adegboye added.
Besides the challenges posed ISPs by the emergence of Smartphones, there are other factors that have continued to contribute to the stunted growth of the sector. Today, traditional voice telephony operators now offer Internet service in their platforms, leveraging on the unified license regime.

Charles Anudu, managing director of Swift Networks said part of the problems confronting the telecoms sector emanates from the very obvious scenario of an industry that has been up against so many impediments.

According to him, “For a lot of the ISPs that do not have their own access infrastructure, it has been a very big struggle because if you are for instance just looking at people who relied at the dial-up infrastructure of the Fixed line operators, you will begin to ask what has been the penetration of the copper or the Fixed wireless line if all of them sum up to below 1million lines country-wide.

		“And of course, you take into consideration that some of the PTOs started competing with them which made it much more difficult for some of them to survive. But those of them who have access infrastructure; those who have the 3.5GHz spectrum, those with wired infrastructure and those who were able to put some DSL or copper infrastructure, all survived. But again, remember there were a lot of quacks in the ISP industry, and gradually, market forces are taking care of them.” Experts contend that bad ISPs exist because it is not everyone that has the know-how to manage Internet service provision. They say that some of the people that venture into the business do so because they see it as a money spinner. And with this mindset to come and make quick money, such ISPs

hardly last in the business. It is a common occurrence in Nigeria that whenever it is raining, Internet access speed at some instance runs at snail speed and some instance, the server goes down. This is why most Internet users go for services provided by mobile operators.

High-speed broadband requires fibre optic cables. Yet, most ISPs in Nigeria do not rely on fibre optic to deliver service. In fact, it has been argued in some quarters that what the service providers call broadband service is only but shared bandwidth.

It is further argued that only a few of them provide dedicated bandwidth service. With shared bandwidth, services are often faster in the early mornings and odd hours but slower at peak periods.

This has resulted to Internet users going for wireless, plug

and play solutions that are faster and more reliable.
As a result, many users are going for voice telephony operators providing Internet services, using their wireless platform.

This has taken a larger chunk of the market away from traditional ISPs. Nigerians are to say the least, unsatisfied with the quality of Internet services they receive from providers. The speed of the service in some cases is rather frustrating.

Most Internet access here is in the form of dial-up. The packaged based services running on CDMA 1x, EV-DO or UMTS/HSPA are often classified as broadband, but are far from proper broadband,” added Adegboye.

Many of the ISPs are also involved in what is known as 'Bandwidth Oversell', which is a situation where the service provider sells a limited bandwidth capacity to too many users at the same time, thereby causing the network to become over-crowded. Bandwidth oversell is responsible for service fluctuations, slow download speed and other poor quality issues in Internet provisioning.

There are growing fears that the fortunes of the country's ISPs would continue to dwindle as long as telecom consumers are consistently exposed to new technologies that make Internet access a lot easier and convenient. If this should be the case, traditional Internet Service Providers stand the obvious risk of completely losing grip of their market to mobile operators.

Perhaps, they could borrow from the advice of the President of Association of Licensed Telecom Operators of Nigeria (ALTON) that ISPs should do more than they are doing today. They should give all kinds of services that are within their license scope at the best quality. Mobile will however, remain mobile.