What Determines The Cost Of Internet Service Access In Nigeria?

In recent years, there’s been a rapid increase in demand for internet services in Nigeria. Internet penetration—the portion of the country’s population that has access to the internet –has risen from 19.1% in 2013 to 55.4% in 2023. Current projections suggest that this trend will continue for the foreseeable future, as more people connect to the internet primarily via mobile devices.

Internet service providers in Nigeria are meeting the nation’s growing need for connectivity. Their services typically come at a cost; fees charged often vary across vendors, just as much as the quality of service on offer. As one would expect, the public has opinions about whether such fees are a reflection of the value that ISPs deliver. This article sets out to answer a question related to this concern: what determines the cost of internet service in Nigeria?

What it Costs to Access the Internet: A Brief Survey of the Current State of Affairs 

According to cable.co.uk, an internet, TV and telecommunications services cost comparison website, internet access in Nigeria was the second least expensive in Africa in 2023 (just behind Malawi and ahead of Ghana). The country also ranked 31st globally in terms of cost of data. This suggests that, compared to most countries, Nigeria’s access fees are (on average) somewhat on the low side.

There’s also evidence that the mean cost of internet data in Nigeria has decreased over the years. A report by Research ICT Africa indicates that the average price for 1GB of data fell by 30.6% between 2014 and 2019. This does not discount the fact of occasional climbs; it just reveals that, on the whole, prices have trended downwards.

However, some dissatisfaction remains concerning the quality of service available from internet service providers in Nigeria. Another point worth considering is the actual worth of the service given local income levels (which global comparisons do not adequately account for). Nigerians find that dealing with these issues may require choosing an ISP that offers relatively rapid and stable internet access at affordable prices.

What Makes the Price of Access to the Internet?

If you have ever wondered what determines the price you pay for accessing the internet via ISPs, here are those factors, discussed in no particular order.      

Infrastructure Investment

Getting the infrastructure in place to support internet provision and access is capital intensive (read: expensive). That’s doubly true in Nigeria, a developing country with a limited history of building such structures. Here, we’re referring to robust network infrastructure, including fiber-optic cables and data centers. These cost billions of naira to set up. Primary providers often pass these costs onto retail vendors, and to consumers through subscription fees.

Regulatory Environment

Observers outside of the IT space don’t always realize how regulations affect costs at first glance. But things become clear upon closer examination of the rules and what it takes to abide by them. For instance, an increase in licensing fees or a tweak in governing laws could drive up costs for ISPs, which they may partially or fully pass on to consumers.    

Technological Advancements

Sometimes, internet service providers in Nigeria, like their counterparts elsewhere in the world, have to upgrade the technologies they use. Upgrading network infrastructure to incorporate technologies like 5G, for example, involves substantial expenses. This partly explains the higher charges that exist for better-quality solutions. However, these investments can also enhance the quality and speed of internet services, potentially justifying the costs.

Access to International Bandwidth

Nigeria relies on international undersea cables for its internet connectivity. These cables are a key part of the infrastructure for global connectivity, spanning thousands of miles and linking up numerous countries. The cost of accessing and maintaining these international links significantly influences the overall cost of internet service provision. As such, fluctuations in global bandwidth prices can impact the pricing strategies of ISPs in the country.

Competition in the Market

This is one of the more obvious determinants of internet access prices in Nigeria. Early on in Nigeria’s history of internet connectivity, access costs were prohibitive for the majority of Nigerians. But as more players emerged in the space, prices declined. A competitive market leads to price wars as providers strive to attract and retain customers. The resultant fall in prices benefits consumers, as they pay less for the same (or even better) service. 

Economic Factors

Much closer to the present time, we have seen economic headwinds, including inflation rates, currency exchange rate devaluations, and overall economic uncertainties, all begin to affect the cost of internet service provision. Internet service providers in Nigeria may (and often do) adjust their prices to account for economic fluctuations and maintain financial viability.

Operational and Maintenance Costs

Ongoing operational and maintenance costs, such as electricity, staff salaries, and equipment maintenance, contribute significantly to ISP’s overall cost structure. This is true even when they try to prudently manage these costs. Ultimately, at least some of it gets passed on to customers in the final service prices.

Final Words: an Affordable ISP that Delivers Quality Service

The cost of internet service provision in Nigeria is shaped by a diversity of factors, as we have just explained. Over the long term, more items—not less –play a role in setting final prices for internet access. Some ISPs are better at managing these costs than others. As a result, they can guarantee reliable internet access at affordable prices.

Layer 3 fits perfectly into this category. For almost two decades, it has delivered IT services to Nigerians. This includes providing residences, private and public sector organizations, and other setups with ultra-fast and stable access to the Internet. Its broadband internet is available via the metro-fiber network, or long haul fiber service, and comes with low latency, real-time bandwidth utilization information, industry standard Service Level Agreements (SLAs), and round-the-clock customer support and network monitoring. All of this is on offer for a fixed and affordable monthly fee, for specific amounts of network bandwidth.

Switch over to a faster, more reliable internet service today. To find out more, you can speak with one of our consultants HERE.