• Friday, May 24, 2024
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BusinessDay

Data services restricted to 5% of Nigerian population

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In spite of the huge successes recorded in the voice segment of Nigeria’s telecommunications market, data services will likely remain a minority activity restricted to the top 5 percent of the population, an industry analysts has said. The country has a population of 167 million, according to data from the Nigerian Population Commission (NPC). Infrastructure deficit, according to industry analysts, remains a fundamental drawback to the development of data services. Until better network coverage and quality of service standards are achieved in Nigeria’s telecoms industry, analysts say majority of the population will remain cut-off from the information super highway.

“The challenge facing mobile data services is three-pronged”, Wale Goodluck, corporate services executive, MTN Nigeria, said. The market, according to him, is becoming more sophisticated and data-intensive. “Customers want data and they want it now. So, in terms of being able to access data, there is a great need to leapfrog on infrastructure development. Given, the lack of fixed-lines network to build upon, there are physical difficulties in building infrastructure that is required, as well as bureaucratic obstacles, and this would take time and investment to overcome.”He also said there is a need to develop locally relevant content to excite people to buy data packages.

The ability of operators to deploy requisite broadband infrastructure needed to improve internet penetration is being hampered by prohibitive costs of Right-of-Way (RoW). RoW procurement contributed 50 percent of the cost of fibre build, according to Omobola Johnson, minister of communications technology, at a recent conference. She noted that the cost of RoW procurement was probably the highest in the world. High cost of maintaining the infrastructure after deployment, she added, had become a disincentive to investment in infrastructure. “No right thinking infrastructure provider will invest in the deployment of infrastructure, if this situation prevails.

“We will continue to have tremendous under-utilised capacity of international bandwidth,’’ the minister said. There are now four active submarine cables with up to 7.78 terabit per second serving Nigeria. Only 5 percent of the capacity on these cables is been utilised, analysts said. Incidences of vandalism, power constraints and wanton theft of fibre cables is rife specifically in an industry where the mobile Average Revenue Per User can only discourage investment in fibre build. Despite the infrastructure bottlenecks, data traffic is improving, even if the value lags, growing 83 percent quarterly in Q1 2012, according to BuzzCity, a United Kingdom (UK) – based mobile advertising firm.

There is a surge in mobile data traffic without the corresponding increase in data revenues. “Overall, there is a general shift to data services from voice, where revenues are starting to plateau. There is a growing focus on data plans and operators want handsets to reflect this”, James Rutherford of Nokia Corporation was quoted in an industry report. “Prices of smartphones are likely to decline. The sub-$100 smartphone is steadily becoming a reality. Low-end smartphones, according to industry analysts are increasingly available and these types of mobile phones will likely grow at a Compound Annual Growth Rate (CAGR) of 15 percent over the coming years.

 

BEN UZOR JR