The Lagos State Government has insisted that it will continue to charge telecom companies N1,500 per linear metre of fibre in Right of Way (RoW) fees, as against the Federal Government’s proposed N145.
The Lagos State Infrastructure Maintenance and Regulatory Agency (LASIMRA) has maintained that the FG did not issue an executive order but only suggested a standardised charge of N145 per linear metre. The RoW charge was pegged at N145 as part of resolutions during a National Economic Council (NEC) meeting in 2013.
The General Manager and Chief Executive Officer of LASIMRA, Funsho Elulade, has stated that despite certain states reducing their RoW charges in line with the FG’s advisory, Lagos will not follow suit as the business operating costs are much higher in the state.
In January this year, state governors had reportedly reached a unanimous agreement through the Nigeria Governors’ Forum (NGF) to reverse the Right of Way (RoW) charges for telcos to N145 per linear metre.
According to reports, the NGF agreed to implement the N145 RoW charge after a meeting in Abuja with the Minister of Communications and Digital Economy, Dr Isa Pantami. Pantami had subsequently informed telcos to reject any hike in RoW by states, citing the agreement between the ministry and the NGF on N145 per linear metre.
Telcos to keep Paying High RoW Charges
Going by the Lagos State announcement, telcos including MTN and Airtel will continue to pay a RoW charge of N1500 per linear metre of every fibre optic cable laid in the state.
This is despite telcos recently demanding a downward review of the RoW fees. Gbenga Adebayo, Chairman of the Association of Licensed Telecommunication Operators of Nigeria (ALTON) told local reporters in June that telcos expect the N145 per linear metre proposed fee for Right of Way charges by the Federal Government to be implemented across all states.
Adebayo explained that telcos still incur additional costs from fibre cuts, stating that the RoW charge in many states is way higher than the cost of deploying an optic fiber per linear meter.
For instance, a fiber cable itself costs about N100 per metre and about N200 to excavate per metre. At a combined N350, this is much less than the N1500 RoW charge telcos pay per metre of fibre in Lagos.
Broadband Penetration will Increase at Slower Rates
Nigeria’s broadband penetration has now increased to 43%, according to the recently released NCC stats. While the broadband penetration will continue on an upward trajectory, punitive RoW fees by states on telcos would likely slow down the pace.
In Lagos for instance, telcos have to continue paying N1.5 million per linear kilometre (km) of fiber. At N145 RoW per linear metre, telcos would only be paying N145,000 per linear kilometre, which is about 0.1% of what is paid now.
For emphasis, at N145 RoW the N1.5 million will be paid per 10km of fiber instead of 1km. This means that lesser fiber optic cables can be rolled out by telcos at the present RoW charge thereby reducing the rate at which broadband penetration increases across Nigeria.
Although broadband penetration increased by 1.28% to 43.3% in August, Nigeria has recorded just a 5% increase from the 38% penetration in January.
With the FG targeting a broadband penetration of 65% by 2024, Lagos state’s insistent on N1500 RoW charge represents a drawback to the FG’s plans.