Nigeria’s $600m 3G spectrum underutilised as poor operating environment persists

Mobile Network Operators (MNOs) in Nigeria, Africa’s largest economy by GDP, are under-utilising third-generation (3G) spectrum frequency due to the harsh operating environment which limits broadband expansion initiatives, especially in the rural communities, industry insiders have said.

Nigeria is currently utilising only about 30 percent of its 3G capacity, six years after commercial rollout of 3G services, according to the Oxford Business Group (OBG).

Meanwhile, telecom operators say the ability to deliver pervasive high quality broadband services to homes and offices is impeded by serious environmental challenges, some of which are infrastructure vandalism, multiple taxation, power inadequacy, as well as the prohibitive cost of doing business in Nigeria.

“Telcos will not venture outside major cities for the simple fact that there is still much room for growth in data services in the cities, especially with the launch of 4G,” said Taj Onigbanjo, chief executive officer, Africa Digital, a local digital services and consulting firm.

In addition to the high cost of network installation, which Segun Ogunsanya, chief executive officer, Airtel Nigeria, attributed primarily to multiple taxation as a result of numerous government entities involved in the sector, the country’s four mobile GSM operators have struggled to roll out new broadband infrastructure to keep up with the demand for data services.

Accordingly, high-speed 3G and 3.5G mobile data services, which have been on offer in the country since 2007, are centred in Lagos and other urban areas, though, according to the four major GSM operators, 3G subscribers are still in the minority.

The National Communication Commission (NCC) issued 3G licences to MTN Nigeria, Airtel, Globacom and Alheri Mobile Services in March 2007. By December 2010, Etisalat Nigeria acquired a licence to provide 3G services by buying start-up Alheri, a wholly-owned subsidiary of conglomerate Dangote Group. Globacom launched commercial 3G services in December 2007 in Lagos, Abuja and Port Harcourt.The four successful applicants were expected to each pay the $150 million fee, being the Reserve Price, less the Intention-to-Bid deposit of $15 million.

But poor spectrum utilisation by MNOs is hindering government’s objective of spreading ubiquitous broadband service across the entire country. Nigeria has set the target of an 80-percent growth penetration in 3G services by 2018, in consonance with the National Broadband Plan (NBP). As at April 2014, there were 65.8 million active internet subscriptions on GSM networks, out of total active mobile subscription base of 129 million.

This figure, according to market observers, is indicative of operators’ defective strategies in terms of proficiently driving up utilisation of the 3G spectrum.

In view of this, many Nigerians, particularly those in the rural communities, remain cut off from the global cyberspace.

With the large cities far outpacing rural areas in terms of broadband connectivity and infrastructure, there are calls by some to have spectrum allocated on geographic basis.

“The time has come for the NCC to begin to allocate spectrum based on a regional and zonal basis, based on the need and the vision to expand services to the whole country,” said Bayo Banjo, president, Nigerian Internet Group (NIG).  

“The current allotees are preoccupied with deploying services in urban areas such as Lagos, Abuja, Port Harcourt and other major cities in the country. This kind of situation is capable of hampering the target ubiquity of internet access planned by the Federal Government,” he said.

In view of the country’s huge population and landmass, Banjo said the commission should divide the country into zones and allocate spectrum accordingly.

“This is very vital because people in Sokoto and other parts of the country also have the right to be part of the global village,” he said.

Availability of requisite spectrum will play a critical role in encouraging the deployment of 4G and Long Term Evolution (LTE) networks, according to market observers.

Meanwhile, some telecommunications operators in the country are demanding that the telecoms regulator make 4G frequency spectrum available even as they begin to work on 4G-compliant networks.

“Anytime I hear clamour for more frequency spectrum allocation, the next thing that comes to mind is: what has mobile operators done with the bands allocated to them?” said Kazeem Oladipo, general counsel for MainOne, in an interview with BusinessDay.

“Look at the 3G spectrum, mobile operators have not done much with this scarce resource, from a broadband penetration standpoint. They certainly have not made the most efficient use of these spectrum frequencies to even justify further allocation,” he said.

Ben Uzor Jr