Nitel out with IP wholesale

Several months after it announced plans to wholesale Internet service, Nitel is out to provide IP transit and managed modem services to usher in a new level of relationship between it and dozens of ISPs poised to sign up to its new product offering.

At the formal launch in Lagos, Nigeria’s Communications Minister, Chief Cornelius Adebayo expressed optimism that the telco’s IP wholesale service would increase public access to telecommunications services. His words: “Todayss event which is the official launch of Nitel's IP wholesale service is another step towards increasing public access to telecommunications services and subsequently bringing down cost of providing such services.”

Adebayo’s optimism is not unduly unrealistic. With most of Nitel’s SAT-3 optic marine access laying fallow, analysts think IP wholesaling by Nitel could potentially increase usage by 60% within a year and enhance the profit margin of the telco, billed for privatisation later this year, by well over 30% in few months. If this happens, Nitel would be given a positive meaning to the SAT-3 sub marine cable running from Europe through West Africa to the south of the continent. The West Africa’s end of SAT-3 has earned notoriety as a wasting investment and is tagged ‘the great elephant sea project’ because much of it has remained unused owing to incumbent operators’ reluctance to let other players access it. With Nitel selling wholesale IP services to other ISPs, SAT-3 “could get the big kick,” said one Lagos ISP.

The plan to wholesale Internet service has not been without its own hurdle in an industry where other players view Nitel’s competency and intentions with suspicion. But with new management, under Chief Executive Officer Albert Mashi, stepping up confidence and appearing to have a more cordial strategy towards winning the market, Nitel may have found its endearing magic among ISPs.

When Nitel first mooted plans to wholesale IP services under the former management team led by the Dutch firm Pentascope, it provoked outrage. Most ISPs considered it a surreptitious move by the state-owned telco to monopolise the Internet industry and get competitors off its SAT-3 access. Pentascope did not help matters. A war of wits with ISPs and pre-paid calling card operators over whether their licence provision allows them to have raw access to SAT-3 which would have cheap unfettered access for VoIP had generated controversy that painted Nitel as a stone age company, too old to be dynamic and too incompetent to act decisively on business issues.

Wholesaling opens great potentials for Nigeria’s difficult Internet sector with higher chances of stepping up data networking in corporate Nigeria as well as the numerous numbers of growing SOHOs. There is hope for improve efficiency in the Internet system since customers could be connected from their remote locations directly to the Internet backbone through an all-cable transmission facility less vulnerable to the vagaries of the weather would have been the case with VSAT. But the benefits of Nitel’s IP wholesale rest on better and faster Internet access as it rests on lower access charges for end-users on more bandwidth.

Would Nitel do well as the ISP for ISPs in a market with high mortality rate where players fade out by the day owing to high operations cost and lower margins? Mashi thinks the new deal for ISPs could re-define their business and make them focus more, in a competitive market, in giving more value-adds to end-users rather than struggling with getting Internet access and desired bandwidth from offshore ISPs. “Today’s event has been the high point of our endeavours as Nitel has been working overtime in recent times to efficiently perform its role as the ISPs’ ISP” said Mashi.


IP Wholesale has strong root in the US where AT&T sells managed modem services to a large number
But the US wholesale IP transit market is dominated by Level 3, Sprint, and MCI while the smaller players include AT&T and Savvis which provides services to call centers, conferencing providers, enhanced service providers such as broadband telephony companies, and long distance and international carrier voice termination. How far Nitel would go with its IP wholesale service would depend on its own capacity to accommodate Nitel dynamics and the propensity of the industry to experiment as had been the case in the US.

For Nigerian ISPs, change is certainly in the offing with cost saving in the offing on the more costly satellite access. “We now get our backbone infrastructure from Nitel’s SAT-3 cable and the speed and capacity is huge which allows us the choice of backing up with our satellite infrastructure” said Phillip Obiora, managing director, DCC satellites. Mr. Seni Williams, CEO of Tara Systems, the first ISP to sign up as Nitel’s IP Wholesale customer described as the remarkable, the difference his business recorded in the almost eight months of test running the platform. Mr. Sylvester Okonkwo, the CEO of Chinto Technology, an international call card operator expressed a similar view. Nitel's network had sufficient strength to change the Internet service landscape but whether it would deliver depends on how it wants to ‘parley the market, particularly ISPs,” said Okonkwo.

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