This research work is based on the
effect of Deregulation of telecommunication Industry in Nigeria In 1992
through the promulgation of Nigeria communication commission (NCC)
Decree No. 75 of 1992 introducing private participation in the provision
of telecommunication service in Nigeria thus ending the state owned
(NITEL) monopoly of the sector and ushering in competition.
The objectives of the research project
is to examine low Deregulation in expected to enhance efficiency of the
Telecommunication industry in Nigeria in two ways.
First is through the curtailment of the inefficiency that arises as result of regulation and isolation of forms from actual and potential competition.
Secondly rents accruing to rent seeking
group benefiting from regulation would be dissipated by a mere
competitive market environment.
The objective were addressed by asking
relevant question in the questionnaires and formulating various relevant
hypotheses in line with the set objective the data collected were
analyzed using simple % and frequency distributing the hypotheses were
tested by using chi-square statistical method.
The research finding shows that most of
the NITEL staff are experienced graduate. It also indicates that
deregulation of the telecommunication sector will improve the
organization performance, motivation, profit and competitive market
It was recommended that, in order for
Nigeria to be able to boost their bargaining position there are a number
of factor that need to be taken into account.
As technology advance and there is
greater convergence of telecommunication computer networking and
broadcasting services and industries developing countries that are
attempting to liberalize their market will be faced with newer, more
powerful competitor. It is important to understand the underlying
meaning of the convergence. If linearization is undertaken to enhance
the infrastructural capacity provided by the telecommunication sector as
is more often the case than not tem unless there is a strong regulation
framework and technical and financial assistance, the incumbent
operator may not be able to compete successfully in the market.
The rapid and phenomenal growth of the
internet and mobile data service have created new channel for
distribution of content (voice, data and video).
Finally the falling cost of technology
and its rapid pace of change means constantly having to keep up to date
and having an efficient decision making structure to adapt to these
changes and take advantage of new technologies.
TABLE OF CONTENTS
Table of contents
1.0 Background of Study
1.1 Significance of the Study
1.2 Statement of Problem
1.3 Aims and Objectives
1.4 Statement of Hypothesis
1.5 Research Methodology
1.6 Scope and Limitation of Study
1.7 Plan of the Study
Literature Review and Conceptual Framework
2.2 Post Colonial Era
2.2.1 The 1960s
2.3 The 1970s
2.3.1 The 1970-75 Plan Period
2.3.2 The 1975-80 Plan Period
2.4 The 1980s
2.5 The Present
2.5.1 The Existing Network
2.6 Extent of Current Services
2.6.1 Maritime Services
2.6.2 International Services
2.6.3 Scope of National Service
2.6.4 Cellular Telephone
2.7 Institutional Structure
2.7.1 Management Structure of Nitel
2.8 Telecommunication Regulation
2.9 Telecommunications Financing
2.11 Trends in Technology Adoption
2.12 Regional and Continental Collaboration
2.13 Pattern of Traffic between Nigeria and Other Countries
2.14 Process of Change
2.15 Future Trend
2.16 Benefits from Telecommunication Liberalization
2.17 Potential cost of Trade Liberalization
2.18 Challenges faced by Developing Countries in Liberalization
2.19 The Structure of the Nigerian Telecommunication Industry
2.20 The Reforms Undertaken in Nitel
Research Methodology and Analytical Framework
3.1 Research Design
3.2 Research Hypothesis
3.3 Population and Sample of Study
3.4 Sample Size
3.5 Questionnaire Design and Administration
3.6 Source of Data
3.7 Data Analysis Instrument
3.8 Significance test of Statistical Analysis
3.9 Choice of Statistical Analysis
Data Analysis and presentation
4.2 Response Analysis
4.3 Analysis of Data According to Research Question
4.3.1 Management level of Respondents
4.3.2 Sex Distribution of Respondents
4.3.3 Marital Status
4.3.4 Age Group
4.3.5 Educational Background
4.3.6 Working Experience in Nitel
4.3.7 Working Experience in Telecommunication Industry
4.3.8 Do you mean what Deregulation means?
4.3.9 Is there need for Deregulation
4.3.10 Would Deregulation affect Nation's Security?
4.3.11 Is the cost of owning each of the means of Communication
Expensive in Nigeria?
4.3.12 Is the Bill Paid Monthly Exorbitant?
4.3.13 Is the Tariff Paid High
4.3.14 Is there Low call Completion Rate?
4.3.15 Is there Congestion in Network?
4.3.16 The Deregulation of the Industry does not Influence
Efficiency of the Industry Negatively
4.3.17 Deregulation does not Discourage Competition
4.3.18 Deregulation does not Exploitation of Consumers
4.4 Analysis of Data According to Tests of Hypothesis
4.4.1 Test of Hypothesis
Summary, Conclusion and Recommendations
1.0 BACKGROUND OF STUDY
At the end of the Uruguay Round of
Negotiation in 1994, 63 countries had made commitments to open up their
telecommunications markets. On February 5 1997, an agreement was signed
by 69 countries (the Basic Telecommunications Agreement, BTA), under the
WTO to progressively open up their te1ecom markets to foreign
investment and competition and to abide by a common set of rules and to
ensure fair play. The agreement was supposed to have reduced the cost of
international calls by as much as 80% and was a major break-through
because the countries involved accounted for 92% of the global telecom
revenues. The areas covered under the agreement include all basic
telecom services including voice, data, fax, radio and satellite - based
services. More than forty countries made reference to or included in
their commitments, the reference paper on regulatory principles, a
framework document for regulating the dominant carrier in each country,
obliging them to give new entrants access to the established network at
non-discriminatory prices. While new entrants would rely on established
networks initially, there would be no barriers to entry. Time scales for
implementation were different from different countries depending on how
developed they were.
In addition, there is an annex on
telecommunications and a references paper that talk about the te1ecom
sector. The Annex on telecommunication is of particular significance for
electronic commerce and was drafted during the Uruguay Round by
negotiators realizing that, despite Article VIII, telecom service
providers were In a unique position in having the potential to undermine
commitments undertaken In schedule In any service sector in which
telecommunications were essential to doing business. The Annex defends
all users of telecommunications services.
Article IV of the GATS seeks to increase
participation by developing countries in services. It is applicable to
publicly available basic networks and services regardless of whether
these arc supplied" by a monopoly or through competition. It requires
governments to ensure that other members' suppliers are afforded
reasonable and non discriminatory access to and use of public telecom
transport networks and services for the supply of services include in
it's schedule The reference paper on telecommunication is was to ensure
competition in the supply of telecom services.
The telecommunications industry in
Nigeria witnessed the deregulation of telecommunications services in
1992 through the promulgation of Nigerian Communication Commission (NCC)
Decree, No. 75 of 1992, introducing private participation in the
provision of telecommunications services in Nigeria, thus ending the
state-owned NITEL's monopoly of the sector and ushering in competition.
Deregulation is expected to enhance
efficiency in two ways. First is through the curtailment of the
inefficiency that arises as a result of regulation and isolation of
firms from actual and potential competition. Secondly, rents accruing to
rent-seeking groups benefiting from regulation would be dissipated by a
more competitive market environment. While much has been written about
the experience of developed economies with deregulation and
privatization of public utilities (Oniki et al, 1992; Imai, 1994;
Wellenius and Stern, 1994), there have been few studies on the
experience of developing countries especially those in Africa.
In the main, this study examines the
impetus for reform, what happened in the wake of commercialization and
deregulation, and the changes in the economic environment. The
telecommunication sector is the most rapidly growing and technologically
dynamic sector and the pressure to move t he sector out or it's
traditional public utility monopoly status is being exerted all over the
world and is ultimately irresistible.
1.1 SIGNIFICANCE OF THE STUDY
Telecommunications infrastructure lies
at the heart of the information economy. Countries lacking modern
telecommunications infrastructure cannot compete effectively in the
global economy. Until the early 1980s, the telecommunications sector was
viewed as the quintessential public utility. Economies of scale,
combined with political sensitivity, created large entry barriers and
externalities, beginning from the 1980s, however, policy makers
gradually began to recognize that telecommunications systems are as
essential infrastructure for economic development. As the economy
broadens and becomes critically dependent on vastly expanded flows of
information, telecommunications acquires strategic importance for
economic growth and development. Rapid innovations in telecommunications
and information technology arc lowering costs, creating new services
and changing U1C cost structure of many industries. Driven by
unrelenting technological and market forces, telecommunications has
become one of the world's most dynamic sectors Wellenius and Stern,
1994; Saunders et al, 1994).
In response to the need to overcome
persistent shortfall in telecommunications investments and performance,
telecommunications restructuring has assumed a global dimension and the
wave of telecommunication reforms that began in the 1980s in a few
highly developed economies quickly spread to several developing
countries. By 1993, major reforms had been undertaken in at least 15
developing counties and a comparable number were In preparation
[Wellenius and Stern, 1994). The impact of these new policy initiatives
has been profound, hut if the new pragmatism in telecommunications
policy is to succeed, policy initiatives will need to be broadened and
1.2 STATEMENT OF PROBLEM
Prior to commercialization, NITEL
operated as a very inefficient. monopoly grappling with lack of clear
policy direction, counter productive bureaucratic red tape and a myriad
of other problems. These problems led to sub-optimal performance in all
spheres of its 'operations, from inadequate infrastructure to very low
quality customers services, Up to 1991, access to telephone services was
limited to about 20% of the population and area of coverage. As at
December 1991, there were about 450,000 direct exchange lines giving an
average penetration level of about 1 line per 250 inhabitants as against
international telecommunications union recommendation of 1 line per 100
persons for developing nations. There were over 500,000 waiting
applicants nationwide, while telex subscriber figures stood at 7,985.
These figures reflects poor capacity
utilization since installed telephone and telex capacities were over
500,000 and 15,000 respectively. The quality of services was also poor
and constant congestion of switching equipment led to long dial tone
delays and very low call completion rates. On average, the call
completion rates for local, long distance and incoming international
calls were as low as 40, 40 and 45 respectively, as against the expected
60 and 50% for local and international calls (Nwafor, 1997).
Furthermore, an efficient billing system
was lacking and in fact it was suspected that about 20%) of subscribes
did not receive bills, while only 7% of amounts generated were being
collected. These factors culminated in consistent. operating losses and
low returns on investment as showed in it's audited accounts, which
recorded persistent losses.
1.3 AIMS AND OBJECTIVES
The main objective of the study IS to
ascertain the quantitative and qualitative evidence concerning the
efficiency and welfare improving effects of deregulation of the
telecommunications sector in Nigeria. the specific objectives of the
- To analyse the production structure of Nigerian telecommunications and estimate the total factor productivity growth.
- To decompose total factor productivity growth into scale economies
and deregulation effects with a view to estimating efficiency gains due
- To assess the regulatory changes in the sector in the wake of commercialization.
- To analyse the options for evolving a viable telecommunications sector in Nigeria.
1.4 STATEMENT OF HYPOTHESIS
Ho: The deregulation of the
telecommunication industry does not significantly influence the
efficiency of the industry negatively.
HI: The deregulation of the
telecommunication industry does significantly influence the efficiency
of the industry negatively.
Ho: The deregulation of telecommunication industry does not discourage competition.
H1: The deregulation of telecommunication industry docs discourage competition.
H0: The deregulation of telecommunication industry does not result to exploitation of consumers.
HI: The deregulation of telecommunication industry does results to exploitation of consumers.
1.5 RESEARCH METHODOLOGY
Data to be used in this study would be
secondary and partly primary data. Primary data will be derived from
questionnaires, while tile secondary data would constitute publications
from the Nigerian communications commission (NCC), the ministry of
communications and also unpublished write-ups.
The qualitative data analysis will he
through chi-square technique to evaluate the desirability of
deregulation in the telecommunication industry in Nigeria.
1.6 SCOPE AND LIMITATION OF STUDY
Since it's inception a little over a
century ago, Nigeria's telecommunications system has progressed through
various stages of development from the primitive communications
equipment in it's colonial days to "the enormous variety of technologies
available today. The process of Nigeria's telecommunications
development and its progress, problems and prospects are examined and
discussed from it's emergence to the expansion and modernizat.ion
efforts of the 1990s.
This research work will be limited in
coverage to the Nigerian telecommunications limited (NITEL). The
business environment will include the employees, customers, competitors,
the regulatory body etc. the research work will endeavour to make both
the descriptive and empirical analysis of the desirability of
deregulation In the telecommunication industry with special emphasis
being placed on NITEL.
1.7 PLAN OF THE STUDY
Chapter one will give a background of
the study, it also contains the objectives, significance of the study as
well as the scope and limitations of the study.
Chapter two which is the literature
review and conceptual framework would review a conceptualization of
issues relating to the study.
Chapter three would show the research methodology used in the study.
Chapter four would show the presentation
and analysis of data here, results of research findings will be
analyzed, interpreted and summarized."
Chapter five will include summary of
findings, which will lead naturally to it's conclusion. The conclusion
will thus be used as basis for making recommendations regarding the use
of the information provided by the study.