Nigeria’s 4G/LTE revolution: An operator’s perspective

Nigeria’s telecoms industry has become, perhaps, the most exciting in Africa, in terms of prospective growth and aggregate size, but certainly the biggest in subscriber terms. And even after allowing for recent naira adjustments against the US Dollar, it remains among sub-Saharan Africa’s most valuable markets.

However, these compelling truths are less significant than the other big news about Nigeria’s Telecoms market.

One key fact is this: Nigeria’s mobile customers are shifting, proactively and with little or no incentive, from narrowband to broadband mobile services. In this connection, we have seen 2G/GSM subscriptions peak, at the end of September, 2015, at some 118m, making this trend both unmistakable and, most likely, irreversible. From that point, all of Nigeria’s new mobile subscribers are joining a 3G or a 4G network.

Even more interesting is the trajectory of Nigeria’s mobile broadband migration: by 2020, forecasters from GSMA to OVUM predict that 88% of Nigeria’s mobile subscribers will have a broadband subscription.  Importantly, this total will account for some 195m mobile broadband subscribers: equivalent to about 155m more than there are today.

This is a stunning transformation: in effect, less than 5 years from now, the number of mobile subscribers in Nigeria that would have migrated to broadband is projected to be greater than the total growth of active mobile subscribers in the first 15 (fifteen) years of this genre’s evolution in Nigeria.

Now that we have the key facts, there are a few questions to consider:
•What is driving this transformation?
•What business opportunities does it offer? And,
•Who will be its winners and losers?

The transformation:

Today, Nigeria has some 92m internet active subscribers. This is the number of mobile subscribers who regularly access the internet and pay for doing so. Interestingly, this number has grown steadily at the rate of roughly 2.8% per month, since 2012. So, with regard to being always connected, Nigerians’ appetite for the internet is at par with that of consumers in the most connected countries in the world.  And there is more: only 1/3 of these Internet active subscribers do so on a broadband connection.

So, for the vast majority of Nigeria’s internet-active subscribers, it seems that the desire for internet access is matched only by Jobian levels of patience required to watch pages download at narrowband speeds, ie, substantially below 1mbps. On this basis, it is no surprise that the average volume of data downloaded in Nigeria stands at a meager 200MBs per month: this is a fraction of the global average of 746MB and pales into insignificance against advanced mobile broadband markets, with over 95% 4G/LTE coverage, such as South Korea, of 2.7GB per month!

As Nigerians, we are hungry for access to the internet, just like everyone else on the planet (today there is a global total of 7bn mobile subscribers, 4bn of whom are on mobile broadband networks). But we are not, by any stretch of the imagination, patient! Our seeming dependence on narrowband Internet connections is a reality arising from limited and, where present, poor mobile broadband coverage.

It is this deficit that 4G/LTE is specifically designed to address: mass market, ubiquitous superfast internet access alongside voice and messaging services. We say mass-market, because contrary to popular speculation, and to evidence on the ground, all Nigerians (not just a comfortable middle-class), across the whole country (not just those in city hot-spots), want to access the internet at more comfortable speeds. And, increasingly, we are willing and able to pay for the right to do so.

So, what does a mass-market mobile broadband network look like? Well, to answer this question, you must accompany me on a brief excursion into the Natural Sciences: Physics to be precise!

There is an inverse relationship between the distance radio signals can travel and their frequency range, this is sometimes described as their propagation ability. This means that low radio frequencies like 700 or 800Mhz can travel several kilometres (and also penetrate buildings with ease) while those at the 2600 or 3500MHz range do achieve significantly lower levels of propagation (and can find it difficult to penetrate buildings without assistance).  Equally, in relation to building the optimal broadband network, there is another relationship at work: that between the throughput achievable from radio signals and their frequency range: This is a direct one: the higher the frequency of radio signals, ceteris paribus, the higher the throughput possible.

Optimizing these two variables is vitally important, because the results will define, forever, or at least for the life of your spectrum, the fundamental economics of your mobile network: choose high frequency spectrum and you are focusing on delivering high throughput in relatively modestly-sized hot-spots; on the other hand, choose low frequency spectrum, and you are banking on relatively low levels of throughput demand, spread evenly across the population.

There is, however, an interesting middle ground. Those with a head for numbers would have noticed that the negative gradient of our frequency propagation curve would in fact interest the positive gradient of our frequency throughput line identifying a so-called “sweet-spot” or even “Goldilocks” spectrum range that appears to optimally balances propagation against throughput. Such a spectrum range would not have to make the uncertain bet, as between high throughput and high coverage, as the “sweet-spot” optimizes them both. For those who have not guessed it already, this sweet spot occurs at roughly 1800Mhz!

Today, most operators in Nigeria use this spectrum band for 2G, with one critical exception: ntel. The result is that ntel has the fundamental ingredients for Nigeria’s most cost-efficient, mass-market and high-throughput network to address emerging mobile broadband needs. And is already well on its way to doing so. It would appear that the equally revolutionary words of 1984 are still relevant today, albeit slightly misquoted: “2G good, but 4G better!”

Today, ntel’s is the largest 4G/LTE network in Abuja. By the end of this month, ntel will have many hundred of sites On Air. And significant coverage of 3 states of the federation that account for some 50% of national mobile broadband spend. By this time next year, ntel’s 4G/LTE coverage will be further expanded on its way to delivering true mass-market coverage across multiple states and across all geotypes: dense urban, urban, suburban and even semi-rural communities. In effect, we aspire to provide every single prospective mobile broadband customer, in Nigeria (at least to start with), the opportunity to choose the ntel experience.

The Opportunities

So, what does this all mean? Well, if we go back to the 1980s when the GSM standard was being agreed, it was clearly designed for a world of mobile voice, and for considerably fewer users than the 7 billion we have today, globally. Some 20 years later, when the 3GPP standard was agreed, for 3G networks, following the success of GPRS and EDGE on 2G networks, it was to accommodate both voice and data alongside one another, but with voice still circuit-switched, in the sense that a dedicated channel through the network was created for each and every voice call. With the 4G/LTE standard, the emphasis is clearly on building high-capacity AND high-throughput networks. This means all-IP, for both voice and data and the ability to handle the most demanding of data use cases: streaming video.

So, if, as a customer, you want the most complete data experience (high-throughput and mass-market coverage) or, as an operator, you need the most efficient mobile data network, then 4G/LTE is the choice. If you are particularly keen to insure your network against high demand, you can add multiple antennae technology, aka MIMO, to your network. And if you have access to spectrum in non-adjacent bands, no problem, simply acquire Carrier Aggregation (or CA) technology, another feature of 4G/LTE, to make your full range of spectrum, irrespective of its band, function as a whole.

Has any network operator been able to optimize MIMO and Carrier Aggregation in Nigeria? The answer is yes, ntel. And the result is delivery of peak throughput speeds of 230mbps: faster than a great many fibre connections in Nigeria today. Though this value is a theoretical maximum, much like 42mbps is the theoretical maximum for 3G, ntel has recorded peak speeds on its network of 150mbps, using specialized equipment, and 102mbps using a standard smartphone without CA or MIMO employed.

All of which means that ntel’s customers can enjoy higher speed access to the Internet than many fibre customers. And as usage grows, ntel’s network will be better able to withstand the shocks of enormous demand. Indeed, ntel has deliberately cultivated that demand by offering truly Unlimited Access to the Internet for customers choosing to purchase one of our 2-daily, weekly or monthly data bundles. One happy, if a little bleary-eyed, customer used 60GB of data on our network for each of 10 consecutive days in the early days of our launch. And has lived to tell the tale, as have we. The important thing about why we offer an unlimited tariff is that it enables our customers to explore and to discover the genuine productivity opportunities and benefits on-line. Increased productivity delivers greater incomes, and greater incomes afford more spending and more investment, we see this initiative as directly driving new and sustainable growth of our presently, slightly sluggish, economy.

To the future: Winners; Losers

The changes now being forecast, and already emerging in Nigeria’s Telecoms industry are, to put it mildly, fundamental. Their scale dwarfs even the superfast growth of 2G mobile over the last 15 years. The speed with which it is forecast to occur is, metaphorically speaking, of course, simply meteoric. What this means is that, it has the potential to fundamentally change the tidy and well-ordered structure and players in this industry.

That said, there are still a great many plays left. There are opportunities for new forms of partnership that better leverage existing assets, especially at the level of highly sought-after 4G/LTE spectrum, Goldilocks or otherwise. And there is the potential for mergers and consolidations to create the opportunity for meaningful volumes of high-quality spectrum to be liberated for its application to the 4G/LTE opportunity.

What is clear, however, is that consumers are in for an absolute delight: access to superfast Internet Access with an increasing range of products that will extend from the traditional voice and data, to applications that transform today’s choices: Live TV, music collections, entire on-line libraries, all available in a fully mobile context and just seconds, even milliseconds away from your device. Most importantly of all, will be the vibrant eco-system that develops, to support and accelerate the penetration of high-speed Internet Access in the places that we live, work and play.

We, at ntel, are delighted to be in this industry at this time. And look forward to driving faster and ever more complete transformations through the power of mobile broadband.

Abass is CEO of ntel