July 22, 2024

The number of active Internet Service Providers (ISPs) in Nigeria declined to 242 in July from 252 in May this year as operators whose licences expired failed to renew them. 

According to the July updated database of the ISPs published by the Nigerian Communication (NCC), the decline in number came even as two new firms; Sulfman Consulting Ltd. and NGCOM Lastmile Solution Ltd. were issued an ISP licence on July 1. 

This indicates that 12 ISPs relinquished their licences in June this year. The five-year tenured licence costs N500,000 and it is renewable.  

However, the NCC had recently lamented that many of the ISPs were not renewing their licence, leading to a continuous decline in the number of active operators in that telecom market segment.  

The immediate past Executive Vice Chairman of the NCC, Prof Umar Danbatta, recently noted that a total of 568 licensed ISPs had become inactive as of March 2022, citing anti-competition practices in the industry as a major challenge.  

The former NCC boss added that other issues confronting the internet providers include inadequate spectrum, high price of bandwidth, high cost of Right of Way, and lack of good corporate governance practice in the companies. 

Although ISPs in Nigeria have always complained about the unhealthy competition between them and the mobile operators, who are considered the big players, industry analysts said the situation got worse with the launch of 5G by MTN and Airtel, which has seen some enterprise customers of the ISPs dump their service providers for 5G routers. 

While the mobile operators comprising MTN, Airtel, Globacom, and 9mobile could also be regarded as ISPs because they provide internet service alongside voice and other services permitted by their Unified Access Service Licence (UASL), the core ISPs are licensed to provide only internet service and are mostly indigenous companies. 

However, the MNOs have remained the dominant players in the internet market. ISP customer data recently released by the NCC shows that the leading ISPs with a significant number of customers, 106 of them, had had a cumulative 262,206 active customers as of Q1 2024.  

In the same period, the four MNOs, MTN, Airtel, Globacom, and 9mobile had 163.8 million active internet subscriptions.  

While emphasizing the role of the ISPs in the country’s quest for ubiquitous broadband, the Chief Executive Officer of VDT Communications Limited, one of the leading ISPs, Mr. David Omoniyi, appealed to the government to come to the aid of ISPs in the country.

According to him, the ISPs that could be classified as Small and Medium Enterprises (SMEs) in the telecoms market are dying by the day.  

Omoniyi added that the implementation of the National Broadband Plan 2020-2025 requires the input of every stakeholder to succeed, hence the ISPs, which play significant roles in taking the services to the last mile must be supported.  

“We need to carry everybody along and one way is to keep the ISPs alive. We need the majority of them around to keep employing people and to take the service closer to the people. There is a need for targeted intervention for them to survive,” he said.

According to Omoniyi, the telecom industry regulator would need to understand the mitigating factors to address the problems of the ISPs. 

“What is obstructing the growth of these ISPs? Is it funding? The operating environment? Is it regulation itself? If it is regulation, that is within the ambit of the regulator. The regulation probably favours the bigger ones. What I mean is that the regulation should be targeted at promoting the ISPs, the smaller ones. 

“The smaller players play in the same market. They sell to the same subscribers. Otherwise, the tendency is for the bigger players to be monopolies. When you are a big fish, you would want to be the only fish in the pond.

“Of course, when you are the only fish in the pond you would become a target for another bigger predator. The regulator needs to play the role of an umpire and frown at any anti-competitive practice from the bigger players,” he said.

Meanwhile, the NCC in a recent study by the Emerging Technologies Research Unit of its Research and Development Department acknowledged that licence renewal rate of ISPs in Nigeria continues to drop, even as new firms take up the licence. 

The researchers, therefore, called for a regulated increase in the prices of data to save the ISPs from dying. According to the study, there is currently a regime of “artificially low data prices” in the market due to stiff competition among the operators. 


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