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GSM Operations Start in Nigeria (Posted 8th Aug, 2001) Tell your friends about this page! Email it to them.

As we write, the Global System of Mobile Communications (GSM) would have become a reality in the Nigerian communication milieu. Indeed, Nigerians have waited long enough to enjoy an unencumbered telephony network due mainly to the epileptic services experienced with the Nigerian Telecommunications Limited (NITEL), the sole national service provider.

The journey began in December 2000 with many local and foreign telecommunication companies competing for the coveted Nigerian Communications Commission (NCC) GSM licenses. By February 2001 after a highly competitive Digital Mobile License auction, which was internationally acclaimed as free, fair and above board, three firms and NITEL emerged as GSM licensed operators in the country. These major players are ECONET WIRELESS (NIGERIA), MTN and Communication Investments Limited (CIL). The only indigenous firm at the time, CIL was eased out of the game by the NCC after allegedly failing to meet up with the deadline for payment of the balance of the license fee by midnight of February 9 2001. This singular act has generated much controversy and still rages on.

The race started in earnest between the two digital mobile licensed operators – ECONET and MTN – who embarked on vigorous publicity drive to catch the large market in the country. Thus, the recent announcement by the operators of plans to commence operations by  7th and 8th August by ECONET AND MTN respectively came as much-awaited news to many Nigerians.

But, the expectations of many Nigerians were dampened by the release to the press of the tariffs of the operators, which is perceived to be on the high side by Nigerians. A graphic detail of the tariffs is shown below:

CHARGES AMOUNT (NAIRA)
  MTN ECONET   NITEL*
CONNECTION FEE PLUS SIM CARD 20,000 15,000 _
AIR TIME (PER MINUTE)      
PEAK HOURS 30 32 _
OFF PEAK HOURS 20 19 _
MONTHLY RENT CHARGES 4,000  4, 000 _
Sources: MTN Nigeria & Econet Wireless Nigeria

Many Nigerians have indicated their displeasure through media outlets, a radio phone-in program Radio Express Network on Metro FM 97.6 on Tuesday August 7 2001 requested their audience to comment on the vexed issue. This was an opportunity for many Nigerians to put into expression their grievances in the outcome of the much-awaited GSM network. The tariffs have shown, contrary to popular belief that the GSM technology appears not to be targeted at the low and middle income earners as it obtains in other African and European countries.

Why is the Nigerian GSM operation different? A recent comparative survey carried out by News Agency of Nigeria (NAN), which was widely reported by a number of national dailies has shown great disparity in the tariffs of cellular operations in Africa. In Southern Africa, NAN reported that a pre-paid cellular phone service provided by either MTN or Vodacom costs about R1000 or 13,673 Naira, this includes at least a Nokia 5110 handset and a starter pack containing the Sim card and cell phone number for connection. On the other hand, in Zimbabwe ECONET’S pre-paid cellular phone service costs 11,500 Zimbabwe dollars, about 28,000 Naira and comes with similar packages, which obtains in neighbouring South Africa.

On the part of the operators they have based their arguments on the problems they encountered in the country especially in the area of the supposedly high license fee (US $285 million), importation and clearing duties paid on their equipment and the unstable status of the Naira in the international foreign exchange market which thus increases the net worth of their services. Again, they see Nigeria as a high-risk market for foreign investors and refute the claim that they are seeking short-run gains on their investment in the country.

This calls to question the role of NCC as a regulatory body. Many believe they should have mandated the operators to review their tariffs rather than to keep a studious silence on the matter. One wonders the motive behind the seemingly unpatriotic stance on the issue as a number of foreign observers have taken up the gauntlet commenting about the tariffs as a calculated attempt to exploit the country’s desperate need for efficient telecommunications services. Andile Ngcaba, South Africa’s communications Director-General, describes the rates as “exploitative”. Ian Robins, a Johannesburg based telecom consultant sees the tariff as “completely outrageous”. The rates have been seen by many as the highest in the world.

Probably, due to the rising public outcry ECONET on Tuesday, August 7, 2001 announced a minimal downward review of its rates as plans were under way to switch on its network for GSM operation. Subscribers will now pay 32 Naira instead of the old rate of 35 Naira during peak period and 19 Naira per minute for off peak periods as compared to the former 24 Naira, even with its timely review it is still perceived as high.

Nigerians are now awaiting the release of NITEL’s tariff, which is believed, will place national interest as a major factor in considering the price regime especially putting into consideration the economic capacity of the average Nigerian. In a country where the Federal Government pays its public service workers a minimum wage of 7,500 Naira, it is assumed that the Government will prevail on the national telecommunications body to have rates that will be affordable for at least middle class workers. It is perceived that such a move will force the other two private operators to cut their rates, as market forces will level he price differentials.

*Below is NITEL's GSM tariff released on the 9th of August:

Connection - N10,000.00.
Calls originating from or terminating in NITEL mobile phone - N21.00 per minute.
Trunk calls - N22.00 per minute.
International calls - N110.00 per minute.
Monthly access is free.

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