Why ISPs are unhappy over telcos’ takeover of mobile internet market

Internet Service Providers (ISPs) in Nigeria have expressed displeasure over the rate at which telecommunications operators are taking over the mobile internet market which was hitherto dominated by them.

In recent years, notable Nigerian wireless carriers (such as MTN  and Glo), have continued to delve into the provision of data services, but much to the displeasure of the ISPs. This is seeing as they (the ISPs) are steadily losing their market shares.

The effect of this development is so debilitating to the extent that a great number of internet service providers are being forced out of the market. At the moment, the total number of registered ISPs in the country stands at 99, according to the Nigerian Communications Commission (NCC). This is a drastic reduction from 205 back in 2015.

A disgruntled sector

Operators in the ISP sector, which was once very vibrant, are now calling out their competitors for what they perceive as ‘sharp business practices’. According to them, it is unacceptable for the telcos to compete with them in the provision of retail services; instead of focusing on the provision of wholesale service.

The operators are also unhappy about the generally-harsh business environment they operate in. According to the CEO of Swift Networks, Mr Charles Anudo, ISPs are facing several major challenges including the issue of arbitrary price fixing by bigger firms with the intent to stifle smaller ones and edge them off the market.

Meanwhile, telcos are meeting an urgent need for data…

Recall that we recently reported on MTN Nigeria’s refocused its business model, which entails an increased redirection of its capital expenditure (CAPEX) towards investments in data facilities. The company said this is intended to meet their subscribers’ need which is steadily shifting away from voice to data.

This development is also in line with global trends where more people are using data to communicate on social media other than making calls.

In view of this increased demand for data, it appears that the ISPs have failed to meet Nigerians’ growing demands, hence the takeover by telcos. Recently, we predicted that this perceived inefficiency of ISPs could spell their doom. Unfortunately, that seems to be happening already.

Hopefully, both the telcos and the ISPs will find a way to co-exist and operate successfully in a market with huge potentials.