(L-R) Mrs Virginia Alozie, executive director, finance and Mr. Nnamdi Okafor, MD/CEO at the May and Baker Nigeria Plc's special press briefing in Lagos.

The ongoing competition in the sub-marine cable services segment of Nigeria’s telecom market is taking a new dimension as the Nigerian Telecommunication Limited (Nitel) and MainOne Cable Company engage in price war that may lead to further crash in the price of bandwidth acquisition by telecom operators and Internet Services Providers (ISPs) in the country.
At its launch into Nigeria, MainOne introduced $500 per megabyte of bandwidth per month to beat Nitel’s SAT-3 cable of $800 per megabyte per month. Few weeks ago, however, Nitel has responded by crashing its price to $400, a 50 per cent price reduction in its SAT-3 offer.
Although, information about the pricing of Globacom’s cable services is scanty, sources close to the operator disclosed that the company sells at $300 per megabyte per month. Other telecom operators are not favourably disposed to open discussions with Globacom on its Glo1 since they see the network as offering competitive services with them. Analysts see Nitel’s price reduction as a major threat to MainOne whose sole business is in bandwidth sale. Investigations also show that telecom operators and most corporate organizations in the country prefer SAT-3 services having being in operations for about 10 years.
BusinessWorld Intelligence can reveal that major ISPs, financial institutions, telcos and many corporate organizations in the country already have long term transaction agreement of between 10 and 15 years with Nitel on SAT-3 and to pull out of the deal would pose another huge financial burden on them. Apart from this, many of them see the recent crash in SAT-3 offer as more favourable for them to continue with Nitel. The different fibre hub located in various strategic areas of the major cities, close to users is another important factor which the SAT-3 customers have found advantageous.
Lanre Ajayi, former president of the Nigeria Internet Group, while commenting on this development, said irrespective of the prices offered by different cable service providers for bandwidth acquisition, government’s favourable policy for the sector will determine the extent to which cheap internet services is offered by the operators in the country.
Ajayi noted that the death of all the traditional ISPs in the country was consequent upon government’s directive to vacate ISM band, the free spectrum band that ensures they offer reliable services few years back without providing another alternative.
According to him, since then most ISPs don’t have access to spectrum they can use to take internet services to the end-users. “The cost of bandwidth may continue to crash, but the major challenge is the availability of spectrum that will ensure ISPs provide services to end users,” he said. “Until that time when government provides the enabling atmosphere for the traditional ISPs to thrive, internet services may not be as cheap as we have it in other parts of the world.”
Ajayi noted that the GSM operators are able to offer internet services at the moment because they use their existing spectrum as contained in their licences to transmit data services to users.