OLUSOLA TENIOLA, engineer and President of Association of Telecommunication Companies in Nigeria [ATCON], spoke about the challenges and development in the telecoms industry as well as what led to the death of CDMA operators. Excerpt.
Let’s look at the IT revolution in the last 17 years, beginning from year 2000, what is your scorecard?
Well, you said it is a revolution and I think the most important thing is that you and I are sitting down here and you are recording with a portable device instead of a the bigger ones. One of the things you need to realize is that Nigeria came late to the GSM world, which was in 2001, whereas GSM was already out in 1982, bringing the network in the UK in 1992.
We are late. However, we tried to bring the service with prepaid platform and I think that is a good achievement. In terms of the average usage of phones in Nigeria, you’re going to find out that everybody even the street hawkers can hardly live without the mobile phone. That’s one of the great stories of telecoms revolution in Nigeria.
Another thing is financial inclusion and the way we engage with our bank accounts is now through mobile phones. You can also use voice and SMS under the GSM technology. We are now having services that are now being accessible which also means that we’ve experienced a real growth in the industry and but also representing a huge percentage of transactions.
So, we have the electronic transfers, mobile payment, health systems, and some manners of e-type services including social media now running on the mobile line infrastructure. The revolution is still ongoing and there are other areas we need to touch but I will leave that for another time. But for now, we have 150 million subscribers. We have 100 million internet subscribers and we still need to see those subscribers added from the un-served and underserved areas.
We have been successful in putting handsets in the hands of Nigerians but that is not all. We still have areas in Nigeria where there are those that have not even used the phone let alone the internet, and they represent 275 market gaps and if we translate that into a number of people, which is about 22 million Nigerians. That means that 22 million Nigerians are yet to see mobile device and that is the trend and the focus of the emphasis of where we still need to get to before we can say we have a total revolution.
Revolution has taken place in the telecoms industry no doubt, but we don’t have fixed wireless any more. CDMA is gone. Many VAS operators have gone underground. The operators are your members. What have you done as an association to help them then and is there anything you’re still doing now in this regards?
Let me first take care of the CDMA and then I will take care of other categories that you have mentioned. You will struggle to name a single CDMA successfully that is operating in Africa right now. Right now, GSM is the successful and dominant technology not only in Africa but around the world. So, there is something in the manner in which technologies were adopted are being successful.
One of the things with the CDMA is that the handset device has the identity of the user built in the device. But with the GSM, this is actually decoupled. The handset doesn’t denote the user. The identity of the user is the SIM card. That SIM card is much more sophisticated in its ability to store more information and has now become the identity of the user. It is more of personal communication that happens in the GSM technology, whereas the CDMA still has this connection with the device.
So, that’s why you mention fixed wireless access [FWA] in terms of the medium that you use to communicate. So, in enterprise businesses such as the hospitality businesses or any of the businesses, you tend to find that there is a handset that is placed on the desk. However, you know that the GSM network can also provide this type of service using the wireless network.
Because the technology has evolved, and I say evolve, in the manner that you use strong mobility which has been the catchword with the GSM network. We tend to find that the CDMA operators that use it for FWA was restricted in terms of the region. The usage of handset from the CDMA is limited. A consumer needed to swap from one ID to another against what he wants to buy like 700 handsets against the name.
Now that the GSM has become national by the way the licensing of spectrum is allocated, it is only a matter of time that you tend to find out that the CDMA operators could not compete favourably on a more nationalistic platform. There is limitation in what the CDMA operators are able to offer.
The other side to look at is that we had issue of corporate governance in that industry. Corporate governance means to say that the licensing regime during a period was easier for any operator or anyone to come in and obtain a license. But obtaining a license is just one part of running a telecoms company. You need the right team, experience to understand how to canvass and monetize network with the customer base.
And that includes having product knowledge to manage and reduce your cost, keep your focus on telecoms and not anything else but telecoms. So, we’ve learnt that many operators that were once successful drifted out of business while still operating a telecoms company. Well, you can’t do that. It is clearly now that those that have succeeded were those who raised telecoms company and focus just on the telecoms as an entity.
Let us talk about the ISP. There was a time the NCC reported that it has issued 400 ISP licenses. 400 ISP licenses in an environment that even support infrastructure-less type of operations. Unlike other jurisdictions outside the country where they have a backbone network that was lacking in Nigeria, it is more of vertical inspiration, and the level of investment of the ISP is quite low. We never could have been able to compete against an enemy not only in voice, SMS, but also ISP internet connectivity.
So, what you find is that actually, the dominant DMA license holders which are mobile network operators, have now entered the space of the ISPs and the ISPs have nowhere to go. So, you’re right and majority of them that didn’t have the deep pocket were unable to compete thereby falling by the waysides. But there is one or two that are still strong in the ISP space.
They’ve found themselves niches and they’ve been able to access infrastructure at a reasonable price they can pay for and they still deliver those services to their consumers. They have the enterprise space where you would see that there is a degree of ISP that focus on delivering enterprise services and those allow them to be differentiated from the mobile network operators. What has ATCON done?
ATCON in its power has advocated for government to look into issues that affect the smaller operators. I know my predecessors have spoken time and time again and raised the issue of why some of their members are no longer in business and I know that in the case of ATCON, we’ve lost some members and in the case of ALTON, they’ve lost even more members.
Many member-companies have now died and now we have a handful of members where we have about 125 members. So, we’ve noticed that though the members have been challenged, some have been unable to transform their business models and address other areas.
We have been fortunate that we not only speak to the ISPs, we speak also to the Infracos. We speak to the mobile operators. We speak to all actors in other parts of the ecosystem. We will continue to advocate, ensuring that government policy does not create additional pressure to the survival of our members.
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