Slashing right of way fees speeds up Nigeria’s broadband roll-out

When Nigerian officials deliver speeches at events, they invariably outline the benefits of a more robust digital economy and its promises of an avalanche of social and economic opportunities. But even though the government repeatedly acknowledges the transformative power of a thriving digital environment, progress on broadband infrastructure, access and affordability has eluded policymakers for years.

Several bottlenecks have constrained the expansion of broadband connectivity. One major barrier is right of way (RoW) fees. Telecommunication firms have to pay RoW charges to federal and state authorities before they can dig road ducts to lay fibre. But each of Nigeria’s 36 states designs its own pricing system, and with governors alighting on these charges as an easy way to generate much needed revenues, arbitrary pricing has thrived across the country.

This has slowed down the rollout of fibre infrastructure, caused unnecessary delays in processing permits, and thwarted the potential of projects which operate across state lines. Weary of committing to projects with uncertain costs, telecoms operators have instead prioritised investment in urban areas to maximise profits. 

The issue has been on the federal government’s agenda for years. Tackling high RoW charges emerged as a priority in Nigeria’s first National Broadband Plan announced in April 2013, which found that RoWs, which could take up to two years to obtain, cost firms up to 70% of the overall cost of deploying fibre. The plan envisaged a reduction in fees and four-year waiver agreements for operators, while the National Economic Council attempted to persuade states to unify their charges. Yet progress was frustratingly slow.

Governors accepted national rates during meetings with federal authorities before reneging on the plans when they returned to their states. Despite the federal fee of N145 ($0.37) per linear metre, pricing in states ranged from N300 to N500.

By 2018, most of the plan’s ambitious targets had not been achieved. Fibre networks remained heavily concentrated in big cities and urban centres. Metro fibre connectivity in at least five major cities, including Lagos, Abuja and Port Harcourt, accounts for 25% of Nigeria’s fibre distances, while other areas struggle with poor fibre networks and unreliable connectivity. 

Progress at last

Last November Nigeria’s federal government tried again, unveiling an ambitious new document – the National Digital Economy Policy and Strategy – to improve regulation, increase digital literacy and skills, and expand broadband investment.

As strategies were being hashed out in December, state governors again emerged as a major roadblock. Fourteen states, including Lagos and Kano, increased their RoW fees in early January. The new pricing mooted by these states was between N3,000 and N6,000 per linear metre, a massive increase from the N300 to N500 which they charged before.

A frustrated Isa Ali Ibrahim, minister of communications and digital economy, warned that if the states moved ahead with their decision, telecoms operators would incur significant operation costs and pass them on to the customers. After much pressure, the Nigeria Governors’ Forum, the umbrella body for all governors, agreed to implement a uniform RoW of N145 per metre.

Some states have proved constructive. In mid-May, Ekiti state, in Nigeria’s southwest, became the first state to reduce its RoW charges from N4,500 to N145 per meter, meaning 1km of cable will now cost N145,000 ($374) rather than N4.5m ($11,316) in the state.

Ekiti state officials said the goal was to attract investment in broadband connectivity and create new businesses, jobs, and improve access to quality healthcare and digital education. Soon, other states – Plateau, Imo, and Katsina – followed their lead and aligned their charges to the national rate.

Other states took even bolder actions. Kwara slashed its RoW from N5,500 per linear metre to N1 per kilometre of fibre. Anambra and Kaduna removed RoW of charges completely, meaning operators can lay fibre and site base stations for free.

It remains to be seen whether other states will stick to the national rate or again renege on their promises in favour of easy revenues in a time of economic dislocation. But analysts welcome the signs of progress.

“This is a highly commendable step and one that has been due for so long,” says Adeboye Adegoke,  programme manager for Anglophone West Africa at Paradigm Initiative, a Lagos-based social enterprise working to increase digital inclusion and rights across Africa.

Adegoke said unifying RoW charges will help to expand access to remote areas which have lacked broadband connectivity for too long. “Internet service is as important as power or water; it is the bridge to access other essential services,” he says, adding that reducing charges will drive down costs.

Benefits visible

The benefits of slashing RoW fees are becoming visible. Barely a week after it slashed its RoW fee, Ekiti entered an agreement with O’odua Infraco to lay broadband infrastructure across 606km in the state. The project will commence later this year and is expected to be completed within 14 months.

It is hoped that creating a centralised pricing regime will help fibre operators lay 120,000km of fibre required to expand broadband connectivity throughout Nigeria. So far, only 38,000km has been deployed. 

Buoyed by the support from the states, Nigeria adopted its National Broadband Plan 2020-2025 in March. The new plan aims to provide broadband speed of 25 megabits per second (Mbps) in urban areas and 10Mbps in rural areas, and provide internet coverage to 90% of the population.

By 2025, federal authorities hope to achieve a broadband penetration rate of 70% for at least N390 per 1GB of data or 2% of median income.

It remains to be seen whether the plan will prove more successful than its predecessors. Nigeria’s latest plan also targets other bottlenecks hindering broadband access, including high data costs, digital illiteracy, regular power cuts, and the development of local content.

Expanding broadband penetration will have a far-reaching impact on many sectors, says Adegoke.

“It is no-brainer that internet access will improve many indices of development in Nigeria,” he remarks. “Access to education, access to information, access to banking services, access to healthcare, access to opportunities for the previously unconnected people in our population are some of the anticipated benefits.”