The decision of some states to increase the right of way (RoW) charges by over 1,200 per cent is raising dust among stakeholders in Nigeria’s telecommunication sector.
Some see the move by the states as a plot that will cripple Federal Government’s broadband plan and digital economy’s drive.
The RoW charges refer to fees paid by telecommunication operators to government for the permission to install some of their infrastructure.
In Nigeria, 14 states, including Lagos, Kano, Anambra, Ondo, Cross River, Kogi, Osun, Kaduna, Enugu, Adamawa, Ebonyi, Imo, Kebbi and Gombe, have allegedly increased charges by over 1,200 per cent, accorfing to a recent report.
“Agencies and ministries of some of these states have increased the cost of RoW from the initial fee of between N300 to N500 per linear metre to between N3,000 and N6,000 per linear metre, which represents not less than 1,200 per cent increment,” the report said.
Unfortunately, this report come in barely 72 hours after the Minister of Communications and Digital Economy, Dr. Isa Pantami, said that he had written to state governments to comply with the directive of N145 per linear metre contained in the Nigerian National Broadband Plan (2013-2018).
Similarly, the Governors’ Forum had been briefed on the same subject by the executive vice chairman of the Nigerian Communications Commission (NCC), but all these seem to have been forgotten by the states, who ought to implement the Federal Government’s N145 per linear meter for RoW.
Last week, Pantami had to speak out strongly against the increase, describing the indiscriminate hike in RoW charges as total disregard for the resolutions reached by the National Economic Council in 2013.
He said he received with dismay the decision of some states to increase the RoW charges in disregard of NEC’s resolutions.
According to the minister, NEC had in 2013 set up a committee comprising governors and ministers to review the issue of multiple taxations in the telecoms industry.
He said, “The committee, after extensive and wide-ranging consultations, resolved to harmonize the taxes applicable to broadband related activities and streamline the taxation management processes across the federation. Specifically, to deepen broadband penetration for the social and economic development of the country, the committee agreed to the uniform RoW charge of N145 per linear metre of fibre.”
He said his ministry wrote to all the state governments last October, drew their attention to those resolutions and solicited their support and collaboration towards realising the National Digital Economy by fast-tracking the deployment of broadband infrastructure for the provision of affordable internet services to underserved and unserved areas.
However, he said, many states disregarded the resolutions and hiked the RoW charges by over 1,200 per cent in some cases.
Pantami pointed out the strong correlation between a country’s broadband penetration and its gross domestic product. He said an ITU study on Africa indicates that a 10 per cent broadband penetration would result in a 2 per cent GDP increase per capita.
Also reacting to the development, telecoms operators, under the aegis of Association of Licensed Telecommunications Operators of Nigeria (ALTON), said the move was a huge disincentive to the regime of digital services in the country.
Chairman of ALTON, Gbenga Adebayo, said the body was worried about the proposed increase in RoW charges in some states. He said the high rate will not only impact on network roll out with attendance impact on capacity injection as well as negative effect on quality of services, it will equally affects the effort of Federal Government on digital economy and broadband penetration.
Adebayo said the moves by the state will increase cost of deployment with attendant increase in end user prices.
“The Federal Government has set a good example by charging N145 per meter and this should be used as a benchmark and the upper limit of charge by any state Government. Telecom is not an extractive industry and state governments should not see our operations as a source of internally-generated revenue. Rather, they should consider above all the socio-economic impact of our services and the attendant positive impact on other sectors critical to their state economic interest, job creation, security and other elements of development,” the ALTON boss said.
Adebayo called on the Federal Government to act fast by curtailing these excessive charges in order not to create negative impact on the overall business economic development of the country.
Though, the minister said pervasive broadband penetration would certainly make Nigeria a truly digital economy, Adebayo opined that the states’ demands may not allow that to materialise if the matter is not resolved as fast as possible.
The Association of Telecommunications Companies of Nigeria (ATCON) also added its voice condemnation of the recent hike in right of way (RoW) charges by state governments saying it will be counterproductive and slow down broadband development in the States.
ATCON statement signed by Mr. Olusola Teniola, its president, said the state governments are needed by telecom companies to make policies that would motivate investment and development of telecom infrastructure needed to deliver hitch free broadband services.
According to him, the current move of RoW hike would make it difficult for the broadband development goal to be achieved.
Teniola said the socio-economic development of the states is not mutually exclusive to broadband infrastructure development. He said ATCON was aware that the state governments were passionate about improving life expectancy, literacy, and increase level of employment in their respective states and with friendly business environment for telecom companies, all these goals could be achieved on the condition that the RoW charge is not inimical to the spread of broadband infrastructure development.
He noted that his members, which are principally telecoms and ICT companies, rely heavily on the states and its agencies to make policies that promote further investment, which would lead to building more telecom infrastructure that are needed by the citizenry, governance and businesses to deliver hitch-free broadband services.
“But with the recent upward review of the RoW, this might be difficult to achieve. We therefore appeal for a reversal of the cost back to what is being charged before,” the ATCON boss added.
In her response, head of the new NBP team, Opeke, urged states to support the Federal Government’s plan of moving the sector and the economy forward.
“I think the government is sincere about wanting to move the sector forward, and all well meaning Nigerians need to support. Not about interests but doing things that benefit the entire nation,” she said.
Opeke pledged that her team would deliver the NBP: “Projections for 2020 is that we will deliver a National Broadband Plan for Nigeria, and the government will take necessary steps to implement.”
Meanwhile, Pantami has called on the 14 states that hiked their RoW charges to revisit their decision.
He said, “We are, therefore, calling on all state governors, especially those that have made public their decisions to increase the RoW charges, to reconsider these decisions in the interest of Nigerians as well as for the socio-economic growth and development of the country.
“We also drew their attention to the fact that these decisions, if implemented, would result in an increase in the costs of operation of the telecoms operators, which would naturally be passed to the consumers.”