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EVALUATING
THE IMPACT OF GSM OPERATING COMPANIES ON NIGERIAN ECONOMY
ABSTRACT
The
dissertation is on evaluating the impact of GSM operating companies on
Nigerian economy. The objectives of the
study were: to ascertain the impact of GSM operating companies on Nigerian
economy; to determine the impact of GSM technology on the people of Nigeria; to
identify the challenges faced by GSM operating companies in Nigeria. The study
used both primary and secondary sources of data. A total of 300 copies of
questionnaire were administered and 285 were received and analyzed. The
statistical tools for data analyses include tables, percentages, and
chi-square. The findings indicate that the advent of GSM companies facilitate
economic development, increase GDP and attract foreign direct investment (FDI);
the introduction of GSM technology enhances business operation, quality of life
and offer employment opportunities to Nigerians; Inadequate power supply;
transmission infrastructural problems; vandalization of network installations;
lack of good access road network; etc, are some of the challenges facing GSM
operating companies in Nigeria. The study concludes that; the deregulation of
the Nigerian telecommunication sector, hence, the introduction of GSM
technology has made very significant positive impact on the economic situations
of Nigeria. The study from its findings
recommends that: the government should expand tele-density and directly make
telephone communications cheaper and accessible by giving more licenses to GSM
operators in order to allow for healthy competition among the GSM operators;
there is need for the Federal government to provide the necessary economic
infrastructures (particularly power supply) to the GSM operators in order for
them to deliver efficient services and to be
able to reduce their call charges; and government should encourage local
manufacture of GSM operating equipments and components, and above all,
strengthen the security apparatus of the country so as to protect GSM
installations from vandalization by the men of the underworld.
CHAPTER ONE
INTRODUCTION
The world is
fast becoming a global village and a necessary tool for this process is
communication, of which telecommunication is a key player. The quantum
development in the telecommunications industry all over the world is very rapid
as one innovation replaces another in a matter of weeks. A major breakthrough
is the wireless telephone system, which comes in either fixed wireless lines or
the global system for mobile communication (GSM) (Wojuade, 2005).
Without
mincing words, communication is a major driver of any economy. Nigeria is not
left out in the race for rapid developments, as the years of economic reversal
via mismanagement have had adverse effects on its rate of growth and development.
The Nigerian telecommunications sector was grossly under-developed before the
sector was deregulated under the military regime in 1992 with the establishment
of a regulatory body, the Nigerian Communication Commission (NCC). Since then,
the NCC has issued various licenses to private telephone operators. These
licenses allow private telephone operators (PTOS) to roll out both fixed
wireless telephone lines and analogue mobile phones. The return of democracy in
1999 however paved the way for the granting of GSM licenses to three service
providers, MTN, ECONET (which later changed to VMOBILE and now AIRTEL), and
NITEL plc in 2001; with GLOBACOM joining in 2003, and finally, ETISALAT which
is the latest entrant in the industry in January 2007. In fact, this auction
for Digital Mobile Licenses (DML) conducted by the commission- NCC, was
acclaimed locally and internationally as one of the best in the world due to
the high level of transparency associated with the exercise.
The
development of GSM in the world was prompted by the need to provide seamless
telecommunications through Europe. Back in the early 1980s, analogue mobile
telephony was growing rapidly and operators find it increasingly difficult to
interconnect the various networks in Europe. This was so because each
implementation of the analogue service was fundamentally different, which made
inter- working a serious challenge. To address this challenge, a study group
Called ‘Group Special Mobile’ (where GSM got its name) was formed and was
tasked to provide a standardized system for mobile telephony. Out of this group
(and seven years later), the GSM standard was realized. In January 1992, the
first GSM network, OY Radioing AB in Finland went on air.
Today, GSM
covers over 1.2 billion users on 630 networks in over 212 countries, and is the
fastest growing technology of all time. The initial release of GSM was called
GSM Phase I, and it is commonly referred to as the first generation. This
release made provision for the basic voice, SMS and circuit switched Date (CSD)
services. CSD allow a maximum data rate of 9.6kbs and was capable of fax
transmission as well. Supplementary services at that point were very basic
consisting of call forward and called barring capabilities.
The second
generation (GSM Phase 2) was released in 1995 and provided enhanced
supplementary services, amongst which were calling line identity (CLI), all
waiting and multiparty services. Data services however remained limited to
9.6kbs. GSM Phase 2+ was an enhancement to GSM Phase 2 and was released two
years later in 1997. Realizing the need for enhanced data service, Phase 2+
address this requirement by making provision for high speed circuit switched
data (HSCSD) and General Packet Radio Services (GPRS). HSCSD and GPRS allowed
maximum data rates of 48kbs and 177kbs respectively.
In Nigeria,
the National Economic Empowerment Development Strategy (NEEDS) highlights the
nation’s socio-economic development aspiration. Specifically, it called for the
reform of the public sector, enabling a robust private sector-led economy and
the implementation of an effective social charter to reduce poverty, create
wealth, generate employment and re-orientate national values. One obvious
fundamental feature is that it clearly delineates responsibilities between
government and the private sector. While government would provide the enabling
business and regulatory environment, the private sector is to invest in and
manage ventures that stimulate and support socio-economic development.
In the
same vein, being aware of the catalytic role typically played by mobile
telecommunications in socio-economic development in Africa, GSM companies in
Nigeria have developed a Joint Economic Development (JED) framework to support
the government in the actualization of its objectives as set out in NEEDS. JED
outlines the positive multiplier effects of mobile telecommunications on
virtually every sphere of endeavour in the society, previews further prospects
targets, highlights challenges and proffer solutions to such challenges and
assigns specific roles to government and operators for further optimization of
the benefits of GSM services in Nigeria.
Basically,
NEEDS target for the telecommunications sector include: i. Attainment of tele-
density of 1:25 by the year 2007; ii. The development of a national
communications backbone and multi-media super-corridor. Strategies identified
for attaining these targets include the use of fiscal financial incentives to
encourage investment, adoption of a local content policy in the manufacture of
equipment, accessories and components as well as financial support for rural
roll out and Internet access. Today, tele-density stands at about 65%. There is
significant improvement in rural telephone access penetration from just one
(NTEL’s) transmission backbone in 2001, to at least four other backbones have
been constructed across the country today.
In Nigeria,
there has been more expeditious roll out in rural areas covering over 50%
government areas and at least 5,000 communities and villages. These
developments informed the Nigeria’s present rating as the fastest growing
telecommunications market in Africa.
The summary
is that the telecommunications sector has, in respect of tele-density exceeded
its targets under NEEDS. This is essentially due to the advent of GSM companies
in 2001 which has resulted in a dramatic increase in the total number of lines
from just 866,782 in 1999, to over 60million in year 2008, out of which GSM
operators accounted for 57,622,901 lines, while fixed line operators accounted
for 2,537,504 code division multiple access, CDMA, operators connected 780,938
lines (Ndukwe, 2008).
Finally,
from the foregoing, it is pertinent to note that this recent drive in telecomm
reform policy initiatives has made noticeable impacts on the Nigerian economy.
It is however instructive to investigate the extent and the magnitude of the
impacts on the Nigerian economy. Indeed, this forms the background of the
study.
STATEMENT OF
THE PROBLEM
It is a well
known fact that before the advent of GSM in Nigeria, the telecommunications
industry in Nigeria was nothing to write home about. Obviously, in the words of
(Adegboyega, 2008), the journey to success in Nigeria telecommunications sector
has been long and tortuous. Telecommunications facilities in Nigeria were first
established in 1886 by the colonial administration. At independence in 1960,
with a population of roughly 45 million people, the country only had about
18,724 phone lines. This translated into a tele-density of about 0.5 telephone
line per 1,000 people (Magneto, 1998). He however asserted that in those early
days, services were primitive as the coordinated pegboard switching system was
used.
According to
Ndukwe (2000), the commercialization of the then P & T, gave birth to NITEL
in 1985. He however noted that though the network growth rate improved
following the birth of NITEL, the rate was however too small to compensate for
the rate of population growth, and
hence did
not reflect the improved wealth of the nation. Ndukwe stressed that the
Nigerian
Telecommunications
Limited (NITEL), the only national monopoly operator in the sector, was
synonymous with epileptic services and bad management which made the quality of
telephone services then to be unreliable, congested, and expensive, customer
unfriendly and generally unsatisfactory.
More so,
this period was dominated by chaotic, hopeless and frustrating circumstances.
As the Network was bad, there was weak transmission infrastructural base, inadequate
power supply, huge unmet demand, concentration of lines in selected urban
centers, vandalization of equipments belonging to NITEL which caused long term
break- down in communications, slow growth of subscriber base as well as
limited investment”.
Prior to
this, Nigeria had maintained an unenviable record as the world’s third lowest
in terms tele-density, after Mongolia and Afghanistan, with a Tele-density of
0.73% before 1999 (OKereocha, 2008).
Thus, the
study focuses on evaluating the impact of GSM operating companies on Nigerian
economy.
OBJECTIVES OF THE STUDY.
The specific
objectives of the study include the following:
To ascertain
the impact of GSM operating companies on Nigerian economy.
To determine
the impact of GSM technology on the people of Nigeria.
To identify
the challenges faced by GSM operating companies in Nigeria.
RESEARCH
QUESTIONS
The research
questions for the study are as follows:
What is the
impact of GSM operating companies on Nigerian economy?
What is the
impact of GSM technology on the people of Nigeria?
What are the
challenges facing GSM operating companies in Nigeria?
RESEARCH
HYPOTHESES
Based on the
objectives of the study, the following hypotheses were formulated.
HO: GSM
companies do not facilitate economic development, increase GDP and attract
foreign direct investment in Nigeria.
H1: GSM
companies facilitate economic development, increase GDP and attract foreign
direct investment.
HO: The
introduction of GSM technology does not enhance business operation, quality of
life and offer employment opportunities to Nigeria
H1: the
introduction of GSM technology enhances business operation, quality of life and
offer employment opportunities to Nigerians.
HO: Inadequate
power supply; transmission infrastructural problems; vandalization of network
installations; lack of good access road network; etc, are not the challenges
facing GSM operating companies in Nigeria.
H1:
Inadequate power supply; transmission infrastructural problems; vandalization
of network installations; lack of good access road network; etc, are some of
the challenges facing GSM operating companies in Nigeria.
SCOPE OF THE STUDY.
The study is
evaluating the impact of GSM operating companies on Nigerian economy. It
focuses mainly on GSM operating companies and job creation in Nigeria; GSM
companies and GDP in Nigeria; GSM companies and Foreign Direct Investment (FDI)
in Nigeria; impact of GSM technology on
the people of Nigeria; and the challenges faced by GSM operating companies in
Nigeria.
However, the
research was conducted using three selected GSM operating companies in Enugu.
They include; Mtn Nigeria Communications Ltd, Globacom Nigeria Ltd, and Airtel
Nigeria Ltd.
LIMITATIONS OF THE STUDY
The
following are the limitations encountered by the researcher in the course of
this work. They are:
Time
Constraint:the researcher was quite constrained by the limited time available for
the completion of the study.
Attitude of
the Respondents:actually, some of the respondents especially those in the rural
communities were reluctant at cooperating with the researcher because they felt
there was nothing to benefit from the study.
Finance: an
empirical research of this nature demands much money for its successful
complete Much money was required to cover transportation cost and materials
used for the study.
SIGNIFICANCE OF THE STUDY
This study
will certainly be of immense benefit to every sector of the economy. For
instance, the study highlights the contributions of GSM technology to GDP and
to the people of Nigeria. More so, future researchers will also benefit from
the study.
Finally, it
will also serve as an eye opener for the government to know the areas that the
GSM companies need government intervention in order to sustain their operations
in Nigeria.
OPERATIONAL DEFINITION OF TERMS.
GSM: Global
System for Mobile Communications. It is the world’s most widely used cell phone
technology.
Subscribers:
the users of GSM network.
NICI Policy:
National Information and Communications Infrastructure policy. It is the
federal government policy document that stipulates the government commitment at
developing ICT infrastructure in Nigeria.
GSM
Operators: are the GSM network providers.
BTS: Base
Transmission Station. This is the reception antenna mast that disseminates GSM
networks to the subscribers.
SIM Card:
Subscriber Identity Module. It is a detachable smart card that contains the
user’s subscription information and phone book.
NCC:
Nigerian Communications Commission, regulator of the industry
Tele-Density:
The ratio of number of serviceable telephone lines to number of population of a
given location or country.
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