NigComSat has been misunderstood – CEO, NigComsat

No Comments » August 15th, 2008 posted by // Categories: ICT Industry Development Project




NigComSat has been misunderstood – CEO, NigComsat

updated: Wednesday 13-08-2008

Ahmed Rufai

About a year after the launch of Nigeria Communications Satellite1, the company that holds one of the crucial telecommunication infrastructure for the country and an explosive dynamite with which Nigeria can make bumper harvest in Africa is still struggling to find its footing. At a media interaction with OLUWASEUN AYANTOKUN and some other telecommunications journalists in Abuja recently, Engr Timasamiyu Ahmed Rufai said the major headache facing the company was traceable to the misunderstanding of the intention of the management of NigComsat by the major players and the powers that be in the Nigerian telecoms sector, which is the company’s immediate constituency. He also spoke on other relevant issues. Excerpts:

Nigeria Communication Satellite1 has been launched over a year ago, could you kindly state what percentage of the market you have in Nigeria and the whole of Africa?
This question on the percentage of the market is very germane to the essence of this project. As at the time we did the viability of this project in 2003, the cost of bandwith sold to Africa was about $660 million: and Nigeria was accounting for about $16 million. In 2006, the figure jumped to $916 million with Nigeria accounting for about $100 million of bandwith. Today, the figure stands at about $1.2 billion.

World-wide, the total cost of satellite market services stand at $62 billion. That is the total revenue accruable to all satellite operators. And Africa is contributing $1.2 billion out of this $62 billion. This is an index for the digital divide. We can only be a percentage of what we are contributing and we can only be connected to that extent.

So, from what we are buying and from what the super market is, it is a ratio of one to 62. Now, it forms the basis of the economic perspective that if Nigeria is buying bandwith worth $100 million for various government requirements, commercial connectivity as needed by financial institutions, oil companies and other businesses, it means that if you have a satellite that is less than $300 million then in three years you break even, especially with a satellite that has a life span of 15 years.

And we projected, at that time, the annual revenue of around $50 to $56 million. That actually indicated that within six to seven years, we would break even and start to make profit. But at present, I don’t think we have up to 10 per cent of the Nigerian market, much less the African market. The reason, I believe, is very obvious to most of us here. The biggest challenge came from quarters we thought could have been most supportive of this vision.

Also, the dream has been misunderstood, misconstrued and mis-portrayed to the public. So, that is one of the reasons too that we felt it is important that those that anchor this sector should interact with us to have the fundamental objective of this project. The project was seen as critical IT infrastructure to bridge the so-called digital divide; to also create digital opportunities, businesses.

The issue of power is also there. Power and telecommunications infrastructure in this information age is an egg and chicken question. So, we’ve not been able to capture the market principally because of the challenges we have from the regulatory authority. That is what we’ve been battling with till date.

To what extent has the objective of this organisation been fulfilled as far as poverty alleviation and job creation are concerned?
On the issue of poverty alleviation and job creation, it is one of the key objectives of this project as captured by the Federal Executives Council’s conclusion when the project was approved and declared as a national priority project. Why this will be so is that if you are going to create jobs, you first have to create skills. And if you are going to create skills, you are to create a knowledge base for them, a learning base for the entire country. Japan, Singapore, Korea, England, even the US are all what they are today because of knowledge and technological innovations.

The U.S. has the world largest oil reservoirs, they are followed by Canada but they are under lock and key till date, particularly the off-shore. They are not exploring. So, oil is not the basis of their position in the world economy. They got to that position from the day John F. Kennedy made that proposition that they were going to put a man in the moon. The result of that was that more than 20,000 small and medium scale (SME) engineering companies were formed to achieve excellence in various areas: that feat had spill over effects in all the micro-electronic industry of the entire world. Prior to that time, the European technology was far ahead of the United States.

At the level of learning, the institutions of learning were up and doing. So, we need to start to create the knowledge base and then the skills. Today, you have graduates that, from our experience during recruitment interviews, can’t even defend their degrees. We have about 6,500 primary schools in this country, but less than one per cent of them have access to internet connectivity; the same thing is happening to our secondary schools and universities. Now tell me, what learning will anyone achieve in this age without connectivity to the World-Wide Web?

Nationally, we all make noise that we have over 50 million telephone lines. That is for social interactions. Businesses are not done with just being able to call people and talk for hours. In fact, very few people have time for telephone conversations. So, talking and talking and people making millions out of that is not an indication of development in ICT. What drives the economy is the availability of broadband. And today, what is our index, 16 per cent. We are number 32 among African nations, so I don’t know how we’ll get among the best world’s 20 by 2020 without being the first in Africa.

This is a major challenge. So, we have not started anywhere when we talk about broadband penetration. Ideally, any standard accommodation in the West, is often Internet-ready. Everywhere is a hotspot. Luxembourg, as a country, has a population of just 450,000 and boasts of broadband availability of 2.4 gigabytes. Before the launch of NigComsat, the whole Africa had 1.4 gigabytes. That is a continent of 916 million people.

So, that is where we are. We believe that if we are allowed to deploy broadband multi-media network, which is supposed to be the back-bone that will bring internet connectivity and sell the ancillary services, including education that will help reduce poverty in the country, to home affordably, because the key issues are the three as: availability, affordability and accessibility.

Most Nigerians cannot afford, even the voice telecoms services. And we’ve made several analyses at several forums on this. And we said let’s provide Internet connectivity to homes for average Nigerians, but there was fear of profit erosion, profit maximisation by the established players in the market. That was why they ferociously fought us to a standstill. We’re still at that stand still till date. However, we’ve made our humble efforts to achieve this in the interest of our country.

Don’t you think it took you too long to get to the market?
One of our consultant is named “Organised Mess”. The first time we heard it, it was funny. He later told us how he arrived at it: the tag was used by someone in South Africa. He said when you come to Nigeria, the country will look up to you like a mess. But even though it is a mess, the mess is organised. If you study it properly, you can navigate all the mess and get what you want. That is like our case.

Even before the launch of the satellite, a lot of things were supposed to have been made ready but they were not there. This would have made the time to market speedy and short. Contrary to what is preached in certain quarters today, there is no satellite company without end-to-end services. There is none.

The days satellite operators sat back and lease bandwith were gone. Then, it was governments in charge of the companies and there was no challenge in the market. But after privatisation, they saw a lot of opportunities in home TV services. We were just able to sign an agreement with one company. We need to do certain things now on our part and they have to produce their own decoders: somebody has to manufacture decoders in hundreds of thousands. Renting the bandwith is the last thing to do. A company in the country did that first and later regretted it. The barrier is inadequate funding, for companies concerned to access funding is difficult. You can see it is capital-intensive.. We decided to go to the third mile.

You know there are first, second and third miles; the third mile is the service end. We decided to cover the first two miles, so that any company that wants to do the business will just have to buy decoders, those ones with open standard. That is all, the rest will be marketing and servicing. If you can do it with telephony, the same thing you can do with data services. If masts can be shared, spectrum can also be shared. Rather than slashing it and giving it to 10 people why can’t we just have the multi-media backbone, and people have their own market, more or less like distributors. You can then brand your services the way you like, put in your value-added services and sell to your customers.

So, time to market has been long because Nigeria is not ready because there are some complimentary ground infrastructure, second mile, that is not there. That is why even the mobile operators had to start laying optical fibres or building their connectivity. They would have just leased if those things had been there, and just deployed services.

The satellite infrastructure would have been helpful; that was what we wanted to do but they misinterpreted our intention, saying we wanted to compete with our would-be customers. We needed the spectrum because ours is wireless, if it is wired, you wouldn’t need spectrums. Because before you take a signal and propagate, you must propagate through a spectrum. That was the singular reason we needed a spectrum. But again we were grossly misunderstood in that direction. This has also affected our time to market.The other reason is the IP connectivity: we couldn’t connect to first class backbone until now; it is about being completed now.


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