Mr. Ikechukwu Nanmani is the Chief Executive Officer, Medallion Communications Limited. In this interview with The Sun Tech and Gadgets, he speaks about his company and issues in ICT sector. Excerpts:
About Medallion Communications
Medallion is a telecomm infrastructure provider. We provide the enabling infrastructure that the major telecomm operators and ICT players need to offer efficient services to their subscribers. We offer services in two major areas, one is on interconnection, connecting the different networks together and ensuring that seamlessly subscribers on one network would be able to talk to subscribers in another network. Then we also offer data centre services, where operators are able to host their equipment and cross-connect with others in the industry.
Basically, because we have an interconnect switch, we are able to generate independent records of calls that goes through our network and that call record can be use for accurate daily reconciliation and settlement of interconnect bills and invoices. Unfortunately, the problem is that, as it has been said severally, more than 95 per cent of available interconnect traffic is still exchanged among the operators. So, that limits the volume of traffic that have to be settled through the clearing houses and that is partly why we have some of these challenges in the industry today.
Level of indebtedness
No, the last information available, it has been going up and again the fact why it is going up is clear. One, the current means of interconnection, which primarily is direct connection, peer-to-peer among operators is still the case. So, the challenge which has resulted from that still remains there. The second is because there is no clear settlement scheme, operators that pass traffic, until they agree to pay, you don’t have a way to collect the money, and that has to be changed to move this forward.
Interconnect settlement scheme
I know that a number of options and proposal are still under review. So, if anything has been done in that regard, not to the best of my knowledge. It is a work in progress but it definitely has to be done because that’s the only way the current challenges with respect to interconnect indebtedness can be resolved. Every other thing has been tried and it has not worked, disconnecting operators, that does not solve the problem. That even makes it worse in the actual sense of it because if somebody has passed traffic and has not paid and you disconnect, he simply does not have a means to pay. That’s really at the heart of it, we must be specific. The last 10 to 12 years mostly in annual basis, the regulators have tried addressing this issue and result has remained the same which is threatening people with disconnection even those that were disconnected, that doesn’t mean they went to pay their debt, they simply went out of business. If you check, some of the older PTO’s that were disconnected, they simply went out of business and those debts went with them. So, there has to be a more efficient way to resolve this.
Why Nigeria needs more data centres
Because content needs to be hosted locally and develop locally in the country. Because we still have a lot of challenges in our transmission facility, national backbone and all that. There are still a lot of challenges on that area. Getting the content closer to the people becomes very key. You want to be able to switch as much of this and make it available under a regional and ultimately state base structure, that is the goal and that is why we need more carrier neutral data centres where people at various region and within the major cities would be able to put their content and host it locally. And then, from those locations, the content gets to the end user, you don’t have to unlike what we do some few years back go to Europe or North America to access your content. Now, a lot of that content have been brought here and domicile within Lagos, now, we also need to spread it across the country in terms of domiciliation of where these contents are located, so that access to them will become faster, cheaper and more efficient.
Why people don’t host data locally
It is a combination of several factors. One, lack of awareness on the strategic benefits, you can’t rule that out because some of the people you talk to, they will always tell you this is the challenge why we cannot host our data here; first, it has been that there are not good data centres here. That has been their excuse but they cannot say that anymore because with companies like Medallion nobody can say we don’t have modern and efficient data centres to host their data.
The next thing we have come to hear is that the cost is higher compared with what is obtainable abroad. Well, that’s stability statement because you are discussing based on the exchange rate you are using. So, if somebody says it is $10 today, $10 at what exchange rate? Because if the rate changes, that $10 can be any amount. This is where the lack of appreciation of benefit comes in because if you understand the benefit, even if there is marginal price difference between hosting locally and abroad, you will want to still host locally because you know that as more people host, price goes down for everybody. So, there is that time frame where the number of entities should match the minimum price point to offer its cost effectively. Until we get to that point, it is a numbers game. If you have a platform that should be able to take 100 companies and you have only three companies using it, your unit cost for the three of them will be much higher than when it is 100. That is where we are going to, we are saying that, there is a transition period where the cost may be slightly higher but it is within reason because as more people understand, despite the initial price cost, that the price will ultimately keep going down, then, they will come on board because over a period of time you are going to notice ultimately that it is cheaper to host locally than abroad.
30% broadband target by NCC
There are a number of critical building blocks that will make that happen. If those building blocks are not in place, we may have the best intentions but we won’t see results. One of the building blocks is adequate funding. Is the funding already in place to be able to do this because this require long term return on investment thinking strategy for this kind of infrastructural project. It is not something you do today and the money is there tomorrow because if you want to price it to recover your investment, then it is going to be expensive for people, they will not use it and when people don’t use it, then, you don’t have the subscriber base to be able to generate revenue. For me funding is key and if the funding is not there, then, not much will be achieved.
We are working on it. Infrastructural build out is something that takes time but in the cities we are interested in, we have mapped out the right location and we are just working around on getting it done.
Medallion in 5 years
Hopefully we would have achieve our strategic plan of regional expansion and across various regions multi-states operations. We also hope that with the infrastructure we are putting in place that the telecom landscape will be much better, more robust and more prosperous and that ultimately will translate to some element of profitability for our shareholders and stakeholders.
We also want to be so relevant in the industry that we become a critical part of the system and one that everybody will look up to for the growth of the industry.
We are facing challenges that have to do with the right means of funding. Issues you want to be sure you’ve got corporation from your end users and operators. Sometimes we prefer that because they have specific needs that they will be ready to sign up for a solution. But most of them will say no, you go do it and we want to see first before we sign up. For investments, sometimes they want to see the letter of intent from your end users before they agree to put the money. Even, when the operators have specific thing they are trying to bridge for them and they are not ready to do the minimum expected from them, it then becomes a little challenging, it then means, you have to go with blind faith with believe and patient that it will take much longer for you to achieve return on investment. But people like us we believe in long term future of the country and we are ready to take some of these business risk.
I think is the career neutrality. If you go through our client base you will notice that there is no major player even with the minor ones that are riding on our infrastructure and this is because they look at us as not competing with any of their core services. So, career neutrality is our biggest niche. Then next to that is having a light idea of the business model and what needs to be done and what is the need of ICT and telecom industry of country is and try to work towards that and that has to do with the kind of staff we got and workforce we have supporting our operation.
Q1 assessment of ICT industry
First quarter (Q!) typically is a learning curve. A time the industry tries to ascertain what really the plan is for the rest of the year is. Most times, first quarter is a strategy quarter where progress that were envisioned in the previous year is plan it and Q2 is normally the build out quarter, while third and fourth quarter is expected to be the growth quarter. So, basically companies spent most of the time in the first quarter planning. So, ideally this quarter is going to be a build out time.