I OVERVIEW

The 2015–2016 period has thrown up several developmental issues with regard to the running, operating and management of the technology, media and telecommunication (TMT) sectors in Nigeria. In retrospect, 2015 was quite eventful because social media influenced the political transition that took place that year, and a national broadband plan was also published and was well received. The government signed the cybercrime bill into law and there were calls for protection of ICT infrastructure against vandalism.2 Looking forward, stakeholders anticipate a technology boom, particularly, with MainOne Cable and IHS winning infraco licences.3 However, the 2.6GHz and 5.4GHz spectrum did not get auctioned, while the National Broadcasting Commission (NBC) postponed the Digital Switchover deadline to 2016 and licensed part of the 700MHz spectrum to fund the switchover, while the Nigerian Communications Commission (NCC) appeared to have licensed part of the 900MHz and 700MHz spectra to Globacom and Visafone, which led to the latter’s acquisition by MTN, despite a steeply declining CDMA subsector in Nigeria.4 Yet, other issues remain, such as the constitutionality of the federal legislature regulating state-owned radio and television stations,5 multiple taxation in the TMT sectors,6 scope of the Cybercrimes Act of 2015,7 available tax holidays8 for telecom start-ups,9 and the scope of the proposed Communication Service Tax Bill (the CST Bill 2015),10 among others.

Retrospectively, the TMT sectors in Nigeria have evolved from the colonial and post-independence period during which the government maintained a monopoly of the fixed telephone-based telecommunications industry. The total number of telephone lines at independence in 1960 was only 18,724 for a population estimated at about 40 million people. This translated to a teledensity of about 0.5 telephone lines per 1,000 people. The old era was one of exclusion of private investors, absence of competition, non-accountability and heavy governmental regulation.

Internet use has also grown exponentially in Nigeria. According to the International Telecommunications Union (ITU),11 there were about 100,000 internet users in Nigeria in 1999;12 the number grew to 11 million in 200813 and reached 46 million in 2011.14 As at January 2014, there were about 55 million internet users in the country, and it continues to grow.15

The present high level of activity in the Nigerian TMT sector is attributable to two unrelated events. The first was the passing of the 1997 GATS Agreement on Basic Telecommunications by the World Trade Organization,16 which demanded structural reforms and amendment in member states’ telecommunications laws. The second was the return to democratic government in Nigeria, on 30 May 1999. Thereafter, the government embarked on the introduction of open market legislation, removal of limitations on foreign ownership, granting of financial incentives to Nigerian investors, importation tariff elimination, pioneer status and tax incentives, the elimination of restrictions placed on foreign capital importation and the reduction of import duties.

The post-1999 regimes adopted an economic policy styled as the National Economic Empowerment and Development Strategy. The new economic programmes were oriented towards the principles of laissez-faire, private enterprise, fair competition, economic freedom, liberalisation and attracting foreign investors in all facets of the economy.

TMT law, practice and regulation in Nigeria now focuses on the quality of service, the creation of an equal playing field and encouraging healthy competition among private providers. In fact, competition has put enormous pressure on the operators who are now forced to constantly upgrade their infrastructure, aimed at improving quality and coverage to include rural areas.

II REGULATION

i The regulators

Regulators of TMT in Nigeria include the following.

Nigerian Communications Commission (NCC)

The NCC was established by the enactment of the Communications Act (NCA) of 1992 (now the NCA 2003), with the mandate to create a regulatory environment for the supply of telecommunications services and the facilitation of the entry into the market of persons wishing to supply such services. The NCA 2003 permits private sector participation in several of the deregulated telecommunications undertakings including the public pay phone, operation of public mobile communication and operation of community telephony.

Nigerian Broadcasting Commission (NBC)

The NBC was established by Decree No. 38 of 1992 and has subsequently been amended by the National Broadcasting Commission (Amendment) Decree No. 55 of 1999. Both the decree and the amendment have been adopted as Acts of the National Assembly numbers 38 and 55, respectively. The NBC Act did away with the state monopoly of broadcasting by providing for the licensing of private concerns to establish, own and operate radio and television stations, functions that for more than 50 years since the advent of broadcasting in Nigeria had been the exclusive preserve of the federal government and various state governments. Unlike the Wireless Telegraphy Act,17 which prohibited foreign ownership, the NBC Act allows foreign investors to participate for the first time in the establishment, ownership and operation of broadcasting entities.

Section 9(1) states as follows:

The Commission shall, in the consideration of an application or a licence under this Decree, be satisfied that the applicant inter alia:

(a) is a body corporate registered under the Companies and Allied Matters Decree 1990 or a station owned, established or operated by the Federal, State or Local Government;18

(b) can demonstrate to the satisfaction of the Commission that he is not applying on behalf of any foreign interest; […]

(e) can give an undertaking that the licensed station shall be used to promote national interest, unity and cohesion and that it shall not be used to offend the religious sensibilities or promote ethnicity, sectionalism, hatred and disaffection among the peoples of Nigeria.

(4) In determining the grant of a licence the Commission shall consider the following, that is:

(a) the structure of shareholding in the broadcasting organization;

(b) the number of shareholding in other media establishments,

(c) the distribution of those stations and establishments as between urban, rural, commercial or other categorization.

(5) It shall be illegal for any person to have controlling shares in more than two television stations in Nigeria.

National Frequency Management Council (NFMC)

The NFMC, established by the NCA 2003, is responsible for the planning, coordination and bulk allocation of the radio frequency spectrum in the country. The Council liaises with the Nigerian Communications Commission (NCC) and the NBC on the assignment of frequencies.

Federal Inland Revenue Service (FIRS)

The FIRS, established by the Federal Inland Revenue Service (Establishment) Act No. 13 of 2007 (FIRSEA), is responsible for the administering and collecting all taxes and levies including 5 per cent value added tax (VAT), 12 per cent customs and excise duties paid on ICT devices, and 20 per cent tax levied on subscriber identification module (SIM) cards.

The Federal Ministries of Communications, Technology and Information are also regulators of TMT in Nigeria.

ii Regulated activities

All operators in the broadcasting and telecommunications industry are required to obtain the relevant licences from the NBC and NCC respectively, via the licence application process and in compliance with the stipulated requirements.

Section 10 of the NBC Act disqualifies religious organisations and political parties from the grant of a broadcast licence. Upon approval, the successful applicant is expected to pay the prescribed licence fee and sign a licence agreement before being assigned an appropriate frequency. Currently, a licence life span is five years and is renewable for a further period of five years. A licence, however, lapses and stands revoked if not utilised within two years of issuance.

To obtain a telecommunications licence, the applicant must submit an application to the NCC. The NCC will conduct a legal check on the applicant, with regard to its incorporation, taxes, etc. In addition, the NCC will be interested in finding out whether the applicant holds, has held, or been refused any licence or permit in the past, and to assess circumstances as applicable. The procedure at the NCC also includes a technical examination of the applicant company, a check of its organisational plan with regard to structure, the competence and experience of key personnel, training programmes, staffing and the involvement of expatriates.

iii Ownership and market access restrictions

Foreign investors are now allowed to participate in the ownership, establishment and operation of broadcasting stations in Nigeria. There is no condition that requires that the grant of a broadcasting licence is dependent on Nigerian citizens holding a majority of the shares in the company applying for the licence. However, the licensing procedure outlined by the NBC retains the requirement that an applicant for a broadcast licence should be able to demonstrate to the satisfaction of the Commission that he or she is not applying on behalf of any foreign interest. In addition, religious organisations and political parties are disqualified from the issuance of broadcast licences. Foreigners are also not precluded from participating in the telecommunications sector in Nigeria.

iv Transfers of control and assignments

Any transfer of more than 10 per cent of the shareholding in a telecommunications licence must be approved by the NCC in compliance with the NCA 2003 and the Competition Practices Regulations 2007 (the Regulations) published pursuant to the Act. NCC approval must also be obtained before licensees enter into joint ventures.

As set out in the regulations, for any transfer of control and assignments to be approved, the NCC must be satisfied that it would not result in a substantial lessening of competition that can lead to identifiable injury to competitors or consumers.

The procedure for approval is as follows: submission of a formal application by way of a letter to the NCC at least 60 days prior to the completion date of the proposed transaction, along with prescribed documents. An ownership interest greater than 10 per cent must be disclosed including information on:

  • a description of the proposed transaction;
  • b how the transaction would be financed;
  • c the communications markets in which the applicant currently operates; and
  • d a description of the effects of the transaction on the control of network infrastructure.

III TELECOMMUNICATIONS AND INTERNET ACCESS

i Internet and internet protocol regulation

The NCC has published its guidelines on the provision of internet services, pursuant to Section 70(2) of NCA 2003. The regulation of internet and internet protocol services being treated under a different structure from traditional telephony, especially with the emphasis that the guidelines place on inappropriate or illegal use of the internet, terrorism and data retention. The guidelines also provide for additional protection for minors, and places liabilities on ISPs as intermediaries.

ii Universal service

The government embarked on the opening up of the telecommunications market to various operators to promote competition and equipped the NCC with greater powers with which to perform its regulatory activities. The government advertised for expressions of interest in the second network operator licence and granted digital mobile licences to three operators with provisions for international gateway services.

The recent introduction of the Strategic Management Plan by the NCC is geared towards areas such as last-mile access, planned e-government push and further telecoms service rollout in the rural areas.

The effect of a competitive environment has led to the provision of better services in some cases. Thus, in 2013 Globacom signed deals with Huawei and ZTE worth US$1.25 billion in total. In addition, in May 2013 Emerging Markets Telecommunication Services Limited (Etisalat) secured a US$1.2 billion loan to fund its network expansion plans in Nigeria.

In an era of trade liberalisation in Nigeria, the NCA is the needed progressive law that gives the NCC as a regulator, absolute power, devoid of government or other external interference to regulate the telecommunications industry in accordance with global best practices as enshrined by the ITU19 and regional telecoms regulatory bodies.

Therefore, the current NCC policy guarantees a safe market for foreign investors in order to bring foreign investment into Nigeria with the assurance that laws and policy exist to protect their investment.

There is room for business expansion even with broadband services and the need to expand the country’s broadband to a larger portion of the country was emphasised recently.20

The NCC has introduced mobile number portability (MNP) after consultation with the telecoms operators and other stakeholders. MNP allows telephone subscribers to switch from one network to another and still retain their numbers. MNP also gives a more competitive edge to the operators to further expand their customer base.

In addition, the NCC has commenced the implementation of progressive lowering of interconnection rates (termination rates). Interconnection rates are the charges that one telecoms operator charges another for terminating calls on its network and one of the key premises for open and fair competition in a telecoms market is an effective interconnection regime.

Following the expiration of the old interconnect regime in 2012, the NCC reviewed the old rates and introduced a new regime of asymmetric rates in recognition of late entrants as well as the commencement of the Unified Service Licensing Regime to create an enabling environment for healthy competition in the telecoms market.

M&A activity in Nigeria in general is regulated by the Securities and Exchange Commission (SEC), and so where the entities seeking to be merged have a combined annual turnover or assets of over 250 million naira they must seek approval of the SEC. However, for mergers that are deemed small (i.e., below 250 million naira), the merging entities are only obliged to inform the SEC upon conclusion of the merger.21

For the transfer of an internet licence, the licensee must obtain the written approval of the NCC, and such approval shall be made valid only by the application of the seal of the Commission. The licensee must be in compliance with the terms of its licence as at the date of transfer, and must have paid all outstanding fees to the Commission. The licensor must also satisfy the conditions set down by the Commission before any transfer of licence may be considered. Frequency allocations are by concessions and can also not be transferred without authorisation from the NCC.

iii Cable satellite

Nigeria has made tremendous progress with regard to cable satellite services. Nigeria now has four undersea cables enabling the country to explore broadband potential via existing cable infrastructure. Nigeria is in a strong position to achieve success with active investment and exploration of broadband because of its huge bandwidth capacity and fibre optic cables installed by private operators along the Nigerian shores. Since 2003, Nigeria’s SAT 3 broadband cable, with an intended capacity of 320GBit/s, has served as Nigeria’s sole connection to Europe, via Portugal.

There is also the MainOne Cable that went live on 1 July 2010 and now with an intended capacity of 1.92TBit/s, which connects Nigeria to Ghana and Europe in its first phase. MainOne also serves several telecommunications companies in Nigeria.

The third broadband cable, Glo 1, was installed in October 2010, with a design capacity of 640GBit/s 2.5TBits/s. Glo 1 connects Nigeria to the United Kingdom, and it is in the process of deploying last mile access technologies to cater to various business segments.

The fourth cable, the West Africa Cable System (WACS) was installed in November 2011. It is a high-capacity fibre optic submarine cable system linking Europe, West Africa and South Africa. The WACS is a project of a consortium of 11 operators from nine countries. Some of these include MTN Nigeria Communications Ltd (MTN), Angola Telecom, Portugal Telecom, Tata/Neotel, Telkom, Broadband Infraco, Vodacom, Sotelco and Togo Telecom.

iv Restrictions on the provision of service

Prices charged to end-users and other terms of service are sometimes regulated. The NCC intervenes from time to time. For example, prior to February 2013, all domestic off-net SMS were priced at 10 naira (off-net) and 5 naira (on-net). After consultation with stakeholders, in February 2013 the NCC adopted a 60 per cent price reduction with a cap at 4 naira, while leaving international SMS prices untouched.

Networks provide access to anyone who seeks access to their network, provided they meet the requirement of the NCC as regards user registration.

Network owners may favour certain content, applications, or services over others; however, they must meet the minimum standard required by the NCC for the services they choose to render.

The NCC also has regulations for competitive practices, the operation of short codes, quality of service, as well as a consumer code of practice regulations.

v Security

With the proliferation of computers, digitalised equipment and electronic data processing apparatuses in the past 25 years, Nigeria has witnessed the introduction of new bills to the federal legislature towards the enhancement of safety in cyberspace. They include:

  • a the Cyber Crimes (Prohibition, Prevention, etc) Act, 2015;22
  • b the Computer Security and Protection Bill 2009;
  • c the Interception and Monitoring Bill 2009;23 and
  • d the Telecommunications Facilities (Lawful Interception of Information) Bill 2010.24

The above-mentioned legislation and bills contain provisions regulating cybercrime in general, in conformance to global best practices such as the Council of Europe Recommendations of 1987 Recommendations No. R(89)9, approved by the European Committee of Ministers of the Council of Europe on 13 September 1989 and the Report by the European Committee on Crime Problems: Computer-Related Crime.25

Cybercrime Act of 2015

The President is allowed, under Section 3(1) of the Act, and on the recommendation of the National Security Adviser (NSA) to designate by order published in the Federal Gazette certain computer systems, networks and information infrastructure vital to the national security of Nigeria as well as its economic and social being (i.e., as constituting critical national information infrastructure (CNII)). Under Section 4 of the Act, the presidential order may require the NSA to audit and inspect any CNII at any time to ensure compliance with the provisions of the Act. Under Section 5(1),(2) and (3) of the Act, there are different penalties for contraventions of the CNII provisions ranging from 10 years’ imprisonment without the option of a fine, 15 years’ imprisonment without the option of a fine, to life imprisonment.

Under Section 8 of the Act, where a person accesses, without authorisation, any computer system or network for fraudulent purposes and also obtains data that is vital to national security, he or she is liable on conviction to a term of not more than five years or to a fine of not more than 500 million naira or both. Any unlawful system interference for fraudulent purposes by deleting, transmitting, damaging or suppressing computer data which prevents the system from functioning, attracts conviction of a fine of 5 million naira or imprisonment for a term of not more than two years, or both. Section 38(1) of the Act states that a service provider shall keep all traffic data and subscriber information as may be prescribed by the NCC for a period of two years. Subject to privacy rights under the Constitution of the Federal Republic of Nigeria,26 service providers shall at the request of the relevant authority release any information required to be retained. Under Section 39 of the Act, where there are reasonable grounds to suspect that the content of any electronic communication is reasonably required for the purpose of a criminal investigation or proceeding, a judge may, on the basis of information on oath, order a service provider, through the application of technical means, to intercept, collect, record, permit or assist competent authorities with the collection or recording of content data or traffic data associated with specified communications transmitted by means of a computer system.

Section 43(1) of the Act establishes the Cybercrime Advisory Council (the Council), which shall, among other functions, provide recommendations on issues relating to the prevention and combating of cybercrimes and the promotion of cybersecurity in Nigeria. Also, Section 44 of the Act establishes the National Cyber Security Fund (the Fund), which shall be domiciled with the Central Bank of Nigeria and wherein shall be paid a levy of 0.05 per cent of all electronic transactions by the business specified in the schedule of the Act, grants-in-aid and assistance from donor, bilateral and multilateral agencies; all other sums accruing to the Fund by way of gifts, endowments, bequest or other voluntary contributions by persons and organisations (provided such monies as may be appropriated for the Fund by the National Assembly and all other monies that may, from time to time, accrue to the Fund. The monies accruing to the Fund are exempted from income tax, while all contributions to the Fund are tax-deductible.

The Computer Security and Protection Bill 2009

The bill proposes the establishment of a body to be known as the Nigerian Computer Security and Protection Agency. The Agency shall, inter alia:

  • a establish and maintain a system for monitoring and tracking the suspected misuse of any computer for the commission of any crime in Nigeria;
  • b formulate measures and strategies to prevent the utilisation of any computer for the commission of any crime in Nigeria; and
  • c collaborate with relevant international agencies and organisations on combating crimes and fraudulent activities carried out with the use of computers.
The Interception and Monitoring Bill

The Interception and Monitoring Bill applies to all communications, including written and call-related communications. The purpose of the bill is to:

[...] provide for the interception and monitoring of certain communications, for the interception of postal articles and communications and for the monitoring of communications in the case of a serious offence or if the security or other compelling national interest is threatened, prohibit the provision of certain telecommunication services which do not have the capacity to be monitored and regulate authorised telecommunications monitoring.

If the bill becomes law, it will provide for the imposition of either a monetary fine or imprisonment for a period for up to two years on anyone who unlawfully intercepts a communication.

Telecommunications Facilities (Lawful Interception of Information) Bill 2010

The purpose of the bill is to ensure that telecommunications service providers can enable national security and law enforcement agencies to exercise their authority to intercept communications, and to require service providers to provide subscriber and other information, without unreasonably impairing:

  • a the privacy of individuals;
  • b the provision of telecommunications services to Nigerian citizens; or
  • c the competitiveness of the Nigerian telecommunications industry.

In addition, telecommunications service providers with over 100,000 subscribers are obliged under the proposed bill to acquire and install equipment or apparatus for the purpose of facilitating communication interception.

IV SPECTRUM POLICY

i Development

After the May 1999 return to democratic rule, the federal government, after soliciting credible bidders, resuscitated the process of auctioning four mobile cellular licences in December 2000. Four winners emerged from this auction process with an agreement to pay a licence fee of US$285 million each. In 2001, licences were granted to three digital mobile operators (MTN, Econet, and M-Tel). Further, Nigeria Telecommunications Limited (NITEL) was licensed as the national carrier. The NCC also granted a second carrier licence to Globacom, and further, licences to various fixed wireless access operators. The NCC later introduced the unified access service licensing–basket licence that enables an operator to provide all kinds of communication services: including mobile, fixed wireless, long-distance and internet services.

3G spectrum licences were introduced and granted in March 2007. The new GSM licences were originally awarded for a period of five years and all operators could operate in the 900MHz and 1,800MHz spectrum bands. They originally provided for a potential upgrading of future networks to GPRS (general packet radio switching). Now, they encompass 3G networks. Existing GSM operators obtained preferential access to the bidding process. All licences permit operation of an international gateway.

ii Flexible spectrum use

Because of the lack of sufficient spectrum to satisfy the growing demand, digitalisation is an important phenomenon in the TMT sectors. This is in order to allow the flexible use of spectrum, because channels that only carry one analogue television programme are capable of supporting more than one digital television programme. With the digitalisation having commenced in January 2015, there is now increased spectrum sharing in Nigeria.

iii Broadband and next-generation mobile spectrum use

The Nigerian National Broadband Plan (NBP), submitted by the Presidential Committee on Broadband was publicised in 2013. The plan was necessitated by the government’s recognition of the impact of broadband and internet on national development. According to the plan, it has been empirically proven that every 10 per cent increase in broadband penetration in developing countries results in a commensurate increase of 1.3 per cent in GDP.

The number of Nigerians accessing the internet through the Global System for Mobile Communications networks leaped by 18.42 million in the past year. It rose from 63.4 million in February 2014 to 81.9 million by the end of January 2015, which was as a result of relentless efforts by the nation’s telecom watchdog, the NCC, to increase broadband penetration in Nigeria’s economy by creating an enabling business environment in the telecoms sector. The number of active subscriptions within the period showed an increase of 29.02 per cent, the rising rate of internet subscriptions on the GSM networks reflects the increasing importance of data services to subscribers and also, as a stream of income to mobile telecommunication service providers. Resultant effects of broadband penetration in Nigeria can be felt all over the critical sectors of the economy such as: online shopping outlets, electronic payment systems, online social media platforms, online advertisement, online exams/interviews, improvement in electoral process via card reader machines, e-libraries, efficient criminal investigations, etc. Broadband access is gradually gaining acceptance in Nigeria but its wide adoption and utilisation remain unevenly distributed, lagging considerably among low-income groups, the elderly and people living in rural communities.27

iv Spectrum auctions and fees

The NCC imposes spectrum user fees on an annual per state basis, with a prescribed formula, and states classified into five tiers based on their economic capacity. In addition, the Commission carries out auctions of spectrum, the latest of which was announced in a public notice on 19 February 2014.28

V MEDIA

i Restrictions on the provision of service

Online media has been relatively free from content restrictions. The government does not filter content that is shared on the internet; however, the National Assembly attempted a bill that threatened the relative freedom enjoyed in the use of online media. This bill expired and was not reintroduced.

Some ISPs often block users’ access when they attempt to download copyrighted content, but this is more to manage the traffic on their networks than to protect intellectual property.

ii Digital switchover

Following the approval of the Presidential Advisory Committee on Transition from Analogue to Digital Broadcasting in Nigeria by the Federal Executive Council on 4 April 2012, the Nigerian Broadcasting Commission set an initial deadline of 17 June 2012 for the migration. However, the date has been further shifted twice, first to December 2012 and more recently to 1 January 2015. However, the 2.6GHz and 5.4GHz spectrum did not get auctioned, while the NBC postponed the Digital Switchover deadline and licensed part of the 700MHz spectrum to fund the switchover. Finally, on 30 April 2016, the City of Jos, Plateau State was switched over from analogue to digital television in the pilot scheme of the federal government digital transmission.29

iii Internet-delivered video content

There are a lot of video-sharing websites that have sprung up locally in the past two years. For example, Ericsson and Airtel recently launched NUVU, and there are others such as IrokoTV etc. Despite the availability and popularity of video-sharing websites such as YouTube30 in Nigeria, internet video distribution has not affected mainstream broadcast video distribution substantially. Internet-delivered video content now provides an alternative for the fraction of the population with access to the internet, and created an avenue for revenue generation through advertising.

iv Mobile services

The growing demand for mobile telecommunication, and in turn media services was of some influence on the federal government’s National Broadband Plan. There is relatively recent activity in the area of broadcasting to mobile devices, however, we have seen more activity in digital rather than terrestrial mobile broadcasting.

VI THE YEAR IN REVIEW

Several procedural and management issues were in contention during the period under review. Some have been resolved, while some are still under review. The enactment of the Cybercrimes Act of 2015 now provides the legal framework within which telecom operators may carry on their businesses, while bringing Nigerian cyber law to the same standards as contemporaries such as Canada’s Information Technology Act (2000); Singapore’s Electronic Transactions Regulations (1999); Australia-NSW’s Electronic Transactions Act (2000); Mauritius’ Electronic Transactions Act (2002); South Africa’s Electronic Communications and Transactions Act (2002), etc.

There is also the issue of multiple taxation.31 Telecom sectors are subject to various taxes, to wit: 30 per cent companies income tax; 5 per cent value added tax (VAT); 12 per cent customs and excise duties; 20 per cent levies on SIM cards; among other state and local governments’ duties and levies. Thus, telcos have complained about multiple taxation, which affects their operations at the local, state and federal level, as well as complained about service disruptions due from tax enforcement agencies leading to huge operating costs. These lockouts and service disruptions have affected the quality of service. Currently, operators are faced with over 30 lines or headings of tax demands from various governmental agencies in various forms. According to the Global System for Mobile Telecommunications Association (GSMA), Nigeria has a sector-specific tax burden-per-connection rate of about 0.18 per cent, which is higher than figures for Mexico, South Africa, Egypt and Gabon.

In addition to all of the above taxes there is the new Communication Service Tax (CST) Bill presently before the National Assembly, generating concern among the communication-consuming public and other stakeholders about the implications for the industry and the end-users of telecoms services.32 The bill, which has passed the first reading in both chambers of the National Assembly, will affect end-users of communication services and may constitute a hindrance on the plan to extend mobile services to the most vulnerable segment of the society. The bill proposes to impose a 9 per cent tax on services rendered by communication service providers to the subscriber, such as SMS, MMS, voice calls, data usage from telecommunication companies and internet service providers and pay-per-view TV, which might create additional cost to the communication subscriber for services rendered by the operators. The CST Bill will have an effect on the long-term national digital strategy objectives set by the government, since the new tax regime, as proposed, would result in an increase in prices for consumers, and may affect the NBP, which hopes to achieve 30 per cent broadband penetration by 2018, which is just two years away, given that the increased cost will prevent people from subscribing to data services. Comparatively, all of the countries that recorded lower sector-specific tax burden-per-connection rates also have higher mobile penetration rates than Nigeria. Stakeholders have suggested that a combination of best practice, mutual long-term benefit and overall national interest would promote continuous growth of the TMT sectors. Therefore, existing tax regimes should be reviewed towards reducing the incidence of sector-specific charges, streamlining tax rates, and introducing tax regimes with fewer taxes on network input vis-à-vis more taxes on business output.33

Another issue of contemporary concern is that of regulation of state-owned radio and television stations. State-owned radio and television stations in Nigeria are beholden to the NBC by virtue of Sections 2(1)(b)(ii), 9(1)(a) and (6) and 14(2)(a) of the NBC Act 1992.34 The said provisions of the NBC Act (promulgated as a Military Decree in 1992, but now deemed to be an Act of the National Assembly) empower the NBC to exercise regulatory control over such stations. To foster continuous growth of the state-owned radio and television stations, the NBC should not be the regulator, because by virtue of Section 40(3) and Item 66 of the Exclusive Legislative List of the 1999 Constitution, the National Assembly lacks the power to enact any legislation that purports to regulate such stations. For ease of reference, Item 66 of the Exclusive List provides that the National Assembly may legislate in respect of ‘wireless, broadcasting and television other than broadcasting and television provided by the Government of a State, allocation of wavelengths for wireless broadcasting and television transmission’.

Clearly, state government-owned radio and television stations are expressly excluded from the legislative powers of the National Assembly when it comes to regulating radio and television stations in Nigeria. Thus, to the extent that the President (or the National Law Reform Commission) has not modified the said provisions of the NBC Act 1992, to bring them into conformity with Item 66 of the 1999 Constitution, they are ultra vires, invalid, null and void. It follows that the NBC is incompetent to regulate state-owned radio and television stations. The necessary implication of this is that regulation of such stations is deemed to be in the Residual List of the Constitution in respect of which only State Houses of Assembly are competent to legislate.

In 2015, there were cases that tested the telecoms laws, operators and operations. The most notable is the imposition of a US$5.2 billion fine on MTN Plc by the NCC in 2015. Following an alleged failure of MTN to deactivate unregistered lines, the NCC imposed the US$5.2 billion fine on MTN, predicated on the alleged violation by MTN of the Nigerian Communications Commission (Registration of Telephone Subscribers) Regulations 2011 (the RTS Regulations). Section 70 of the NCA empowers the NCC to make regulations on issues including any fees, charges, rates or fines to be imposed under the NCA or its subsidiary legislation. Similarly, Section 140 of the NCA sets out the powers of the NCC to impose general penalties. While Section 53 of the NCA gives the NCC the discretion to issue direction in writing to any person regarding the compliance or non-compliance of any licence conditions or provisions of the NCA or its subsidiary legislation. The RTS Regulations were made to regulate the registration of telephone subscribers in Nigeria including the establishment, control, administration and management of a central database. Part IV of the RTS Regulations sets out the penalty for non-compliance with the registration regime. Relevant to this opinion are paragraphs 19–21 of the RTS Regulations:

19.—(1) Any licensee who fails to capture, register, deregister or transmit the details of any individual or corporate subscribers to the Central Database as specified in these Regulations or as may be stipulated from time to time by the Commission is liable to a penalty of N200,000.00 for each subscription medium.

(2) A licensee who activates any Subscription Medium without capturing, registering and transmitting the personal information to the Central Database commits an offence and shall on conviction be liable to a fine of N200,000.00 for each unregistered activated Subscription Medium.

20.—(1) Any licensee who activates or fails to deactivate a subscription medium in violation of any provision of these Regulations is liable to a penalty of N200,000.00 for each unregistered but activated subscription medium.

Based on paragraphs 19–20 of the RTS Regulations, the NCC imposed a fine of US$5.2 billion on MTN for failing to deactivate unregistered lines. MTN opposed the legality of the fine. A strong defence for MTN is that a subsidiary legislation cannot impose a fine higher than that prescribed by the principal statute and that NCC had not complied with the relevant provisions of NCA in imposing the fine under consideration. The matter now appears to have been settled out of court for a lesser sum and one of the conditions imposed for lessening the fine was for MTN to become a publicly listed company within a stipulated period of time.

VII CONCLUSIONS AND OUTLOOK

With the 30 April 2016 switchover from analogue to digital broadcasting and the granting of infraco licences, the future of the TMT sectors in Nigeria looks set for a boom. However, there are some infrastructural impediments to be surmounted. The TMT sectors rely heavily on provision of power and electricity. Without a stable power supply, the TMT operators will have to source their power supply independently, with alternative and arguably more efficient sources such as wind and solar still a little far off the local landscape. Another factor that will affect the growth in the TMT sectors is the increase of operational costs caused by an acute lack of general infrastructure and multiple taxation by different agencies. Recently, in August 2016, the federal government inaugurated a National Tax Policy Review Committee headed by Professor Abiola Sanni, with one of its goals being the eradication of incidences of multiple taxation and creating certainty in tax administration. Lastly, crude oil vandalisation, lack of a stable and meaningful foreign exchange policy, which has seen the value of the local currency plummet to an all-time low in recent months, and security concerns must be tackled headlong so as to foster confidence in the minds of foreign investors who are the major drivers in the industry. Despite the above challenges, the future of the TMT sectors remains encouraging and it is clear that with the market due to increase in the form of the adolescent population and engaged consumers, the TMT sectors are likely to continue to witness steady growth.

Footnotes

1 Olumide K Obayemi and Ademide C Ademola are associates at Ajumogobia & Okeke.

2 Jinmi Oluanuiga, ‘A 2016 outlook for Nigeria’s ICT Sector’, 13 January 2016. Available at: www.financialnigeria.com/a-2016-outlook-for-nigeria-s-ict-sector-blog-87.html#sthash.38juo4Ar.dpuf. (Oluanuiga).

3 Infraco licences are licences granted to telecom companies to provide infrastructure.

4 See, Oluanuiga, supra note 2.

5 Abubakar D Sani, ‘Regulating state-owned radio and television stations’, The Guardian [Nigeria], 15 August 2016. available at: http://guardian.ng/opinion/regulating-state-
owned-radio-and-television-stations/.

6 Prince Osuagwu & Emeka Aginam, ‘Multiple taxations weigh us down, telecom operators’, Vanguard [Nigeria], 10 February 2016. Available at: www.vanguardngr.com/2016/02/multiple-taxations-weigh-us-down-telecom-operators/.

7 Femi Daniel, ‘Cybercrimes Act 2015: Legal risk exposures of information technology companies’, The Guardian [Nigeria], 9 February 2016. Available at: www.ngrguardiannews.com/2016/02/cybercrimes-act-2015-legal-risk-exposures-of-information-technology-
companies/.

8 Franklin Alli, ‘Technology startups to enjoy tax holiday – FG’, Vanguard [Nigeria], 11 February 2016. Available at: www.vanguardngr.com/2016/02/technology-startups-to-
enjoy-tax-holiday-fg/.

9 ‘Telecoms Sector in Nigeria is Overtaxed’, ThisDay, 27 January 2015.

10 Adeyemi Adepetun, ‘‘Communication service tax of controversy’, The Guardian [Nigeria], 24 August 2016. Available at: http://guardian.ng/technology/communication-service-tax-of-controversy/.

11 ITU Telecom organises global events for governments, industry leaders and regulators that form part of the world’s ICT community. The ITU is the United Nations’ specialised agency for telecommunications.

12 Workshop hosted by the Yaba College of Technology in Lagos in collaboration with the Nigerian Communications Commission, the National Data Bank, the Literacy Training and Development Program for Africa (University of Ibadan), the Administrative Staff College of Nigeria, the United States Information Service, the Regional Information Network for Africa, and the British Council. United Nations Economic Commission for Africa, ‘Nigeria: Internet Connectivity,’ www.uneca.org/aisi/nici/country_profiles/Nigeria/nigeriainter.htm, accessed 27 August 2014.

13 See, ‘Nigeria Internet Users Tops 11 Million, Penetration Now 7.8%’, Web Trends Nigeria (blog), 8 October 2009, http://webtrendsng.com/blog/nigeria-internet-users-tops-
11-million-penetration-now-7-8/.

14 See ITU, ‘Percentage of individuals using the Internet, fixed (wired) Internet subscriptions, fixed (wired)-broadband subscriptions’, 2011, accessed 4 August 2014, www.itu.int/ITU-D/ICTEYE/Indicators/Indicators.aspx#.

15 See, We are Social, ‘Global Digital Statistics 2014’, accessed 4 August 2014, www.slideshare.net/wearesocialsg/social-digital-mobile-around-the-world-january-2014.

16 See, Background Document, The WTO Negotiations on Basic Telecommunications, World Trade Organization, 17 February 1997.

17 1961 No. 31. L.N. 108 of 1968; as amended in 1998 No. 31.

18 Section 4 of the National Broadcasting Commission (Amendment) Decree No. 55 of 1999.

19 As stated earlier, the ITU is the United Nations’ specialised agency for telecommunications.

20 At the October 2013 ITU Conference held in Abuja, FCT, Nigeria.

21 Section 120 of the Investment and Securities Act of 2007.

22 Signed into law on 15 May 2015.

23 Currently before the Senate.

24 Currently before the House of Representatives.

26 Cap C23, Laws of the Federation of Nigeria 2004.

27 ‘Broadband penetration to develop Nigeria’s economy’, National Daily [Nigeria], 16 May 2016. Available at: https://nationaldailyng.com/2015/broadband-penetration-
to-develop-nigerias-economy/.

28 See, ‘Public Notice – Announcement of Provisional Award of Frequency Licence of One Slot of 30MHz in the 2.3GHz Band’, accessed 4 August 2014, http://bit.ly/1xXMLhk.

29 News Agency of Nigeria (NAN), ‘Nigeria’s Switchover to Digital Broadcasting Kicks Off in Jos’, 1 May 2016. Available at: www.bellanaija.com/2016/05/nigerias-switchover-to-digital-
broadcasting-kicks-off-in-jos/.

30 According to Alexa, a website rating company, YouTube is among the top five websites in Nigeria, see www.alexa.com/topsites/countries/NG (accessed 4 August 2014).

31 Charles Coffie Gyamfi & Kingsley Jeremiah, ‘Multiple taxation stifles telecommunications firms, says NCC’, The Guardian [Nigeria], 3 August 2016.

32 Lucas Ajanaku, ‘Anxiety over Telecoms Tax (The Communication Service Tax (CST) Bill)’, The Nation, 21 June 2016. Available at: www.thenationonlineng.net/anxiety-telecoms-tax/.

33 ‘Telecoms Sector in Nigeria is Overtaxed’, ThisDay, 27 January, 2015.

34 Cap. N.11, LFN 2004.