The incoming Nigerian president should revise the country's broadband penetration targets to more realistic levels, make public subsidy available, and consider a range of alternative technologies to improve the development of Nigeria's broadband infrastructure.

Earlier this year, Muhammadu Buhari became the president of Nigeria, defeating incumbent Goodluck Jonathan in the national elections. In 2013, the outgoing president had approved publication of the Nigerian National Broadband Plan (NNBP 2013–2018) which set out ambitious targets to improve the penetration of broadband infrastructure.

Given the levels of broadband take-up that have been achieved to date, our analysis suggests that the targets were over-ambitious and unachievable.

Further, it is unlikely that the targets can be met through market investment alone, and so there will be a need for significant government subsidy.

This article argues that to improve the development of and investment in broadband infrastructure the incoming president should revise the targets to more realistic levels, make public subsidy available and consider a range of alternative technologies.

More realistic targets

Overly ambitious broadband targets are unlikely to be met. The NNBP set out national broadband penetration (take-up) targets of 21% (2015), 42% (2018) and 76% (2020), based on mobile broadband (the most popular means of accessing broadband in Nigeria).

Figure 1 (above) plots these targets against Analysys Mason's forecast of 3G and 4G mobile penetration in Nigeria (to 2019). The line labelled 'Linear (Analysys Mason forecast mobile broadband connections)' shows the forecast to 2020 based on a historical linear trend.

It can be seen that the Nigerian national broadband target for 2015 is higher than the forecast take-up of 3G and 4G services. Moreover, the gap between Analysys Mason's forecast of mobile broadband take-up and the NNBP targets widens significantly in 2018 and 2020.

In light of current take-up levels, it appears that the incoming government needs to revise the broadband targets downwards so that they are more realistic.

Care should be taken when revising the targets, however, as they must be sufficiently ambitious to ensure that development of Nigeria's broadband infrastructure does not fall behind that in other African countries.

Public subsidy should be made available to encourage investment in broadband networks.

Meeting the 2018 and 2020 targets would require significant investment in broadband infrastructure. However, even revised targets are unlikely to be met through market investment alone, particularly in rural areas or in areas deemed to be commercially unattractive.

Therefore, the incoming president should make public subsidy available to encourage private-sector investment in broadband networks, particularly in areas that are commercially unattractive to operators.

In order to determine the level of public funding required to subsidise the development of broadband infrastructure, the government can undertake a detailed and iterative process involving broadband infrastructure coverage analysis and financial modelling.

A range of initiatives are available to encourage investment in mobile networks.

To enable a higher rate of broadband take-up, mobile operators (who are leading the development of broadband in Nigeria) will need to make significant investments in fixed (fibre) and 3G and 4G infrastructure, particularly outside urban areas where 3G coverage is most concentrated.

Due to the lack of fibre infrastructure in Nigeria, the previous government led an initiative to create infrastructure companies (InfraCos)2 to give last-mile providers (such as mobile operators) open access to metropolitan backhaul fibre networks.

However, the InfraCo initiative alone is unlikely to promote the development of wireless networks.

Therefore, the government – along with the regulator – should consider a range of initiatives to encourage investment in mobile networks and reduce the cost (to operators) of building 3G and 4G infrastructure.

These initiatives could include:

• encouraging network sharing, which can reduce the capital investment required to build new sites and cut the operating costs associated with running existing sites

• government funding for the development of passive infrastructure in areas that would otherwise be commercially unviable

• promoting the use of innovative technologies such as TV whitespace which makes use of licence-exempt UHS spectrum and benefits from the strong propagation characteristics exhibited by UHF spectrum, and so requires fewer base stations to cover a given area.

* Iqbal Bedi is a principal analyst at Analysys Mason.