DEREGULATION IN TELECOMMUNICATION INDUSTRY AND ITS EFFECT ON THE NIGERIA ECONOMY 2001 TO 2011: A Study of GLO Nigeria Limited, Victoria Island, Lagos

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

From a monopoly situation in 1992, the last Seven years of this century have witnessed some competition in the Telecom sector in the Country through the operations of licensed telecommunications companies. The very modest gains of sector deregulation indicate improved availability, affordability (in some cases), and penetration of basic telephone in some Commercial Centers and Metropolitan Cities nation-wide. The populace now has more access to telephone services and options of service providers as well as some innovation in service offering and pricing. For instance, on and off peak pricing of telephone services has been introduced. Paging and value added services such as Internet, Voicemail and Electronic Mail are now increasingly being offered to the public (Ojo, 2010).

Deregulation can be described as an economic reform, a fiscal and monetary policy measures in which laws or rules of entry and exit into a market weakened, relaxed or totally removed in order to enhance the competitiveness of economic actors (Adegbemile, 2007). It is the simplification or dismantling of the legal and governmental restrictions in the operation of market forces, especially in relation to price-fixing (Ajayi and Ekundayo, 2008; Ojo, 2010). For there to be de-regulation, therefore, there must have existed a set of rules, which imposes limitation on how business is conducted within a market. Ojo (2010) further explains that deregulation could easily be conceived as ˜anti-regulation’ or:  A situation in which there is absence of regulatory procedure and lack of directive to bring under control, law or constituted authority. It describes a situation in which individual is allowed legally to act as he wants. And to deregulate economy is to give legal backing to individual to fix price arbitrarily of whatever products, goods and services, produced and rendered.

Deregulation of a Country’s telecommunication industry could be conceptualized as privatization, divestiture, and marketization of the information and communication sector. It can be  referred  to as the doing away with the regulations that are concerned with telecommunication industry. This is considered as an element of economic reform programme aimed at improving the overall economy through well spelt out ways. In essence no government but private participation in the Country’s economic activities. This is kin order to ensure competitive economic system devoid of monopoly and allow price mechanism of demand and supply’s principle of economy to prevail (Ajayi and Ekundayo, 2008).

In Nigeria, deregulation and privatization were adopted for several reasons, ranging from the demand for efficiency and effectiveness in public enterprises (PEs), to the need for accountability, generation of employment, curb external borrowing, strengthen the capital market amongst others. The question of whether these objectives have been sufficiently addressed in Nigeria constitutes the fundamental questions in this paper. In addition, the work raises probing questions into the nature, practice and the context of deregulation in telecommunication industry in Nigeria.

 1.2 Statement of the Problem

The problems of internal and external imbalances and the undue depend fenced on oil which brought about the adjustment problems still persist in the telecommunication industry. This implies that there is as relative insensitivity of the economy to the corrective policies.

The genesis of deregulation of the Nigerian telecommunication could be hinged substantially on the communication crisis faced by the country communication sector. This commnication crisis could be traced to the lopsided character of the post-colonial developmental path followed by the country. The foundation of this lopsidedness was laid from 1945 when the country was under colonialism. During the period, the country in alliance with foreign capital promoted import-substitution industrialization. This was carried out through the use of peasant surpluses to fiancé the importation of the inputs necessary for the growth and expansion of manufacturing activities (CBN, 1993).

In explaining the causes of this telecommunication crisis in Nigeria many reasons have been adduced. Some of these reasons emanated from the monopoly of communication industry which was solely controlled by NITEL. The monopoly of the telecommunication industry has led to poor services and increase in per billing rate of services rendered.

1.3 Aims and Objectives of the Study

This research work observes deregulation in telecommunication industry and its effect on the Nigeria economy. The objectives of this study are stated below:

1. Identify the effect of deregulation on Nigerian telecommunication industry.
2. Assess the effect of deregulation on employment creation through private sector-driven expansion.
3. Examine the effect of deregulation of telecommunication industry on the public accessibility to communication services.
4. Examine the challenge encountered in the aftermath of deregulation of Nigeria telecommunication industry.

1.4   Relevant Research Questions

The study examines the following research questions:

1. Does deregulation has any effect on Nigerian telecommunication industry?
2. Can deregulation of the telecommunication industry aid employment creation through private sector-driven expansion?
3. What effect does deregulation has on the telecommunication industry?
4. What are the challenge encountered in the aftermath of deregulation of Nigeria telecommunication industry.?

1.5   Relevant Research Hypotheses

The following hypotheses were developed for the study:

H_o: There is no significant relationship between deregulation of telecommunication industries and Nigerian Economy.

H₁: There is significant relationship between deregulation of telecommunication industries and Nigerian Economy.

 1.6 Scope and Limitation of the Study

The work examines deregulation in telecommunication industry and its effect on the Nigeria economy 2001 to 2011 with a view to explore GLO Nigeria Limited, Victoria Island, Lagos. The study focus on deregulation telecommunication sector on Nigerian economy plus how it contributes to social, cultural and financial growth of other untapped resources.

1.7 Significance of the Study

It is hoped that the findings and recommendations of the study will be of great benefit through the following ways:

The study will equip students on the relevance of deregulation in the telecommunication industry as it affects service delivering. This can take the form of call centre, easy connectivity etc.

The study will give customers insight on how telecommunication services can help to ensure accurate and timely transactions, unlike when it was monopolized by NITEL.

Furthermore, the study will serve as added advantage to the telecommunication sector, revealing ways in which interconnectivity can ensure safety of dealings with its customers.

1.8 Definition of Terms

1. Telecommunication: Are devices and systems that transmit electronic or optical signals across long distances.
2. Computer Network: It is a system used to connect two or more computers using a communication link.
3. Deregulation: The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry..
4. Asymmetric Transmission: Data transmissions where the traffic from the network to the subscriber is at a higher rate than the traffic from the subscriber to the network.
5. SIM: Subscriber Identity Module; A smart card containing the telephone number of the subscriber, encoded network identification details, the PIN and other user data such as the phone book.
6. Economy: The wealth and resources of a country or region, esp. in terms of the production and consumption of goods and services.

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