Nigeria’s active Internet Service Providers (ISPs) fell to 242 in July from 252 in May of this year, as operators whose licenses expired failed to renew them.
The decrease in the number of ISPs coincided with the July 1 licensing of two new companies, Sulfman Consulting Ltd. and NGCOM Lastmile Solution Ltd., according to the Nigerian Communication (NCC) updated database of ISPs.
This shows that in June of this year, twelve ISPs renounced their licenses. The N500,000 five-year license is renewable and has a cost.
The NCC had lately bemoaned the fact that a large number of ISPs were failing to renew their licenses, which was causing the number of active operators in that particular telecom market segment to steadily drop.
Militating elements
Prof. Umar Danbatta, the immediate past Executive Vice Chairman of the NCC, recently reported that, as of March 2022, 568 licensed ISPs were no longer in operation, citing anti-competition actions in the sector as a significant obstacle.
The former head of the NCC went on to say that the internet providers are also facing challenges from the low spectrum, expensive bandwidth, expensive right-of-way, and poor corporate governance practices inside their own organizations.
Industry analysts said that although ISPs in Nigeria have long lamented the unhealthy competition between them and the mobile operators—who are viewed as the major players—the situation worsened with the introduction of 5G by MTN and Airtel, which has caused some of the ISPs’ enterprise customers to switch from their service providers to 5G routers.
Internet service provider dominance by MNOs
The core ISPs are primarily Indigenous businesses that are licensed to provide only internet service. While the mobile operators that make MTN, Airtel, Globacom, and 9mobile could also be considered ISPs because they offer internet service in addition to voice and other services allowed by their Unified Access Service Licence (UASL), they are not.
MNOs are still in charge of the internet market, although. According to ISP subscriber data that was recently made public by the NCC, as of Q1 2024, 106 of the top ISPs with a sizable customer base had a total of 262,206 active users.
There were 163.8 million active internet subscribers across the four MNOs – MTN, Airtel, Globacom, and 9mobile – during the same time frame.
Demand government intervention
The CEO of one of the top ISPs in the nation, VDT Communications Limited, Mr. David Omoniyi, urged the government to support ISPs in the nation while highlighting the role that ISPs play in the nation’s pursuit of ubiquitous broadband.
He claims that ISPs that fall into the category of Small and Medium Enterprises (SMEs) in the telecom industry are becoming extinct daily.
Omoniyi continued, saying that in order for the National Broadband Plan 2020–2025 to be implemented successfully, all stakeholders must contribute. As a result, ISPs, who are crucial to getting services to the last mile, must be encouraged.
“We must support everyone, and maintaining ISPs is one way to do it. To maintain employment and bring the service closer to the public, we need the bulk of them to remain in place. For them to survive, focused intervention is required,” he stated.
In order to address the issues with the ISPs, Omoniyi claims that the regulator of the telecom sector must comprehend the mitigating circumstances.
“What is impeding the expansion of these ISPs? Is it funding? The environment in which it operates? Is it the regulation in question? If it’s regulation, then the regulator has jurisdiction over it. It’s likely that the regulation benefits the larger ones. In other words, the regulation ought to be aimed at supporting the smaller ISPs.”
“The smaller firms compete in the same industry. To the same subscribers, they sell. If not, the larger players typically operate as monopolies. Being the only fish in the pond is what you would desire when you are a large fish.”
It makes sense that a larger predator would target you if you were the only fish in the pond. He asserted that the regulator must act as an umpire and reject any anti-competitive behavior by the larger firms.
In the meantime, the NCC admitted in a recent report conducted by its Research and Development Department’s Emerging Technologies Research Unit that the pace at which ISP licenses are renewed in Nigeria is declining, even though more companies are obtaining licenses.
Therefore, to prevent the ISPs from going out of business, the experts recommended a controlled increase in data pricing. The report claims that because of the fierce competition among the operators, there is currently a regime of “artificially low data prices” in the market.
