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Internet Service Providers (ISPs) in Nigeria, facing growing crisis 

Internet Service Providers (ISPs) in Nigeria, facing growing crisis 

September 19, 2023
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Internet Service Providers (ISPs) in Nigeria, facing growing crisis 

Hauwa Ali by Hauwa Ali
September 19, 2023
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Internet Service Providers (ISPs) in Nigeria, facing growing crisis 
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Internet Service Providers (ISPs) in Nigeria are facing a growing crisis as they grapple with a dwindling customer base in a fiercely competitive market. 

In a landscape dominated by mobile giants like MTN, Globacom, Airtel, and 9mobile, the challenges for ISPs have intensified, with some critical factors contributing to their struggles.

While the competition between ISPs and mobile operators has long been a concern, recent developments have exacerbated the situation. The rollout of 5G technology by MTN and Airtel has prompted some enterprise customers of ISPs to make a significant switch to 5G routers, abandoning their previous service providers. This shift has had a detrimental impact on the already fragile customer base of ISPs.

Data from the Nigerian Communications Commission (NCC) paints a grim picture for ISPs. The latest figures indicate that core ISPs have been witnessing a steady decline in their customer numbers since last year. As of June this year, the data showed that 126 ISPs, whose data were submitted had a total of 193,199 active customers. This marked a 9% decline in active customers compared to the 210,597 recorded in the same period the previous year. In essence, 17,398 customers, primarily enterprises, have shifted away from ISPs in the last year.

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Mobile Operators’ Steady Growth

In stark contrast to ISPs, mobile network operators (MNOs) have experienced consistent growth in their customer base. As of June this year, the four major mobile operators recorded a combined total of 158.9 million active Internet connections. During the past year, the MNOs collectively added 8.2 million new internet subscriptions, signifying a 5% growth from the 150.7 million subscriptions they held in June 2022.

Even the mobile operator with the smallest number of internet customers, 9mobile, boasted 3.9 million active internet subscriptions at the end of June. This figure surpasses the total customer base of all 126 ISPs combined.

One significant factor contributing to ISPs’ customer loss is the pricing disparity. While all telecom operators in Nigeria have called for a review of pricing to account for the increasing cost of doing business, ISPs have borne the brunt of this situation. Customers have migrated to mobile service providers because of their comparatively lower prices. The Executive Vice Chairman of the NCC, Prof. Umar Danbatta, acknowledged this issue during a meeting with telecom CEOs in Lagos. The regulated low pricing regime, coupled with the high cost of business, has led to service providers selling their offerings below the cost of production.

Role of ISPs in Broadband Penetration

ISPs are essential players in Nigeria’s quest for widespread broadband access. However, the decline in their numbers and customer base is concerning for the nation’s broadband ambitions. The Chief Executive Officer of VDT Communications Limited, Mr. David Omoniyi, has called for government support to help struggling ISPs, many of which are Small and Medium Enterprises (SMEs). He emphasized that keeping ISPs operational is crucial to delivering services to underserved areas and creating employment opportunities.

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Regulatory Action Needed

To address the challenges faced by ISPs, industry experts suggest that regulatory intervention is necessary. The Nigerian Communications Commission (NCC) must consider mitigating factors such as funding, operating conditions, and regulations that may favor larger players. There is a need for a targeted approach to support smaller ISPs and encourage competition.

The regulator can play a pivotal role as an umpire, ensuring that anti-competitive practices by larger players are discouraged. Additionally, a regulated minimum price level may need to be established to address the issue of artificially low data prices, allowing all telecom operators to compete on network quality and customer service.

As Nigeria’s internet landscape continues to evolve, finding a balance between competition and support for ISPs is essential for the growth of the sector and the delivery of affordable and accessible internet services to all Nigerians.

Tags: Internet Service Providers (ISPs)Nigeria
Hauwa Ali

Hauwa Ali

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