Migration to new internet commences tomorrow

. . . Nigerian internet users may witness restricted access
Ben Uzor Jr

Come June 8, 2011, Nigerian internet users will be restricted from accessing the World Wide Web (www). The reason for this however is not far fetched as a test run programme which demands 24-hour migration to a new Internet Protocol (IP) platform (IPv6) will be conducted globally by internet bodies on the said date. Moreover, IPv6 is the sixth revision to the Internet Protocol and the successor to IPv4 platform. For 30 years running, IPv4 has been the foundation of the internet and now that it is almost out of addresses, the transition to IPv6 is no longer a matter of choice but necessity.

Earlier this year, the last batch of IPv4 addresses was allocated at a ceremony in Miami to Asia Pacific Network by Internet Assigned Numbers Authority (IANA) the body that oversees the global allocation of internet addresses. This however underscores the extent to which the internet has become an essential part of modern life. When the test run commences tomorrow, according to analyst who spoke at a roundtable forum organised by DigitalSENSE Africa (DSA) in Lagos recently, Internet Service Providers (ISPs) will be incapable of connecting to Yahoo, Google, Facebook and other online communities.

This is principally because all ISPs in Nigeria are currently on IPv4, which does not operate in concert with IPv6. According to the analysts, the disruption is expected to last for no more than a day. The test run, according to industry analysts was in commemoration of the World IPv6 Day. Businesses wishing to remain competitive, Chima Oleru, a network engineer told Business Day, must apply a mechanism to their infrastructure that would allow both versions to run. “Therefore, it is essential that your network devices are upgraded and configured to run dual-stack, in order to cope with the coming IPv6 traffic.

Dual-stack refers to running IPv4 and IPv6 in parallel. This will allow your servers to respond simultaneously both to the old IPv4 requests, and to the newer IPv6-connected devices”, Oleru disclosed. Some telecommunication companies (telcos) like MTN, Globacom and Etisalat have allayed fears of restricted access to the internet, claiming that they are fully prepared for the migration. Echoing their views, Gbenga Adebayo, president, Association of Licensed Telecommunications Operators of Nigeria (ALTON), stated that telcos have deployed and are deploying world’s most modern technologies.

“It has prepared us well ahead towards significant technology migration as we now face in the world today, therefore we do not foresee any impact on internet networks and users in the course of this migration”. Adebayo went further, “We are fine tuning our equipment and infrastructure to support the migration form IPv4 to IPv6.” According to him, migration will throw another challenge to telcos in terms of infrastructure and software upgrade, hardware replacement. “IPv6 migration may have an impact on ISPs without requisite funding. They may not be able cope.

“It might also open up new opportunities for new operators to take advantage of.” Nkemdilim Nweke, executive director, operations, DigitalSENSE Africa does not believe that Nigeria is indeed ready for this transition, further disclosing that though Nigeria now has 16 allottees of IPv6, none offers internet related services in the country on this new IP platform. She therefore urged Nigerian organisations to position themselves to take advantage of the limitless opportunities IPv6 offers to innovative users of the internet and developers of new technologies.

“We, therefore call on the federal government to establish a task force through it agencies to take immediate proactive actions that will ensure that Ministries, Departments and Agencies (MDAs) as well as organisations in Nigeria prepare their services for IPv6 migration, encourage greater Research and Development investment in activities around the future internet, encourage and support private sector participation as awareness creation is key to the early adoption of the second internet”, she stated.

However, the phenomenal growth of the internet into various areas of society such as mobile devices, IP based consumer electronics, household appliances and even the automobile industry has accelerated the exhaustion of IPv4 addresses. “The heart of any IP network is the IP address system. Every device on the IP network requires a unique address to speak with another device on the network. IPv4 provides 4.3 billion addresses and a large portion of these addresses are unavailable for public allocation.

“IPv4 addressing structure does not provide sufficient publicly routable addressing which will enable a distinct address to every internet service or device”, Cleopas Angaye, director-general, National Information Technology Development Agency (NITDA) said at the roundtable conference. IPv6 functions similarly to IPv4 in that it provides the unique, numerical IP addresses necessary for Internet-enabled devices to communicate. Furthermore, IPv6 is the next generation IP address standard intended to supplement, and eventually replace, the IPv4 protocol used for Internet services.

“IPv4 uses 32 bits for its Internet addresses. That means it can support 2^32 IP addresses in total — around 4.29 billion. That may seem like a lot, but all 4.29 billion IP addresses have now been assigned to various institutions, leading to the crisis we face today. IPv6 utilizes 128-bit Internet addresses. Therefore, it can support 2^128 internet addresses — 340,282,366,920,938,000,000,000,000,000,000,000,000 of them to be exact. That’s a lot of addresses, so many that it requires a hexadecimal system to display the addresses. In other words, there are more than enough IPv6 addresses to keep the Internet operational for a very long time”, Adebayo noted.

Giving insight into some reasons why ISPs are not implementing IPv6, Muhammed Rudman, managing director, Internet Exchange Point of Nigeria (IXPN) said ISPs lacked the technical know-how to migrate. “ISPs are faced with challenges bordering on core equipment compatibility issues, lack of IPv6 upstream service providers, and more importantly, no request from Nigerian internet users”, he added. Finally, IPv6 can accommodate the immensely growing number of users, devices with wireless or wired access, and web services on the Internet. Moreover, this new IP platform will enable Nigerian enterprise customers to have more public IP addresses to allocate within their organisations.

Nigeria to benefit from Bharti’s $1bn new Africa investment

Ben Uzor Jr

Airtel’s Nigeria, Ghana, Kenya and Uganda operations will benefit from an additional $1 billion investment earmarked by Bharti International to support network expansion of its Africa mobile business. This investment move is subsequent to the telecom firm receiving the necessary regulatory approvals in all 16 countries on the African continent acquired in the preceding year.

Sunil Mittal, group chief executive officer, Bharti International, has disclosed that the Indian firm will invest an additional $1 billion in its fledgling Africa mobile business this year. Bharti Airtel acquired Kuwait-based Zain’s Africa operations for $10.7 billion in 2010 in what has been described by many analysts as the largest cross-border takeover in an emerging market.

Analysts, yesterday, see the Indian based firm injecting about $500 million into its Nigerian operations. Mittal has also reiterated the firm’s resolve to further grow its Nigerian business, stating earlier that the success of Airtel on the continent was largely dependent on Nigeria. “We have already invested $11 billion here and have committed nearly $1 billion investment for this year for expansion of our networks,” said Bharti’s boss in a report sighted by BusinessDay yesterday. However, Mittal seemed to dismiss rumours of further expansion into other African countries.

“At the moment, we are focusing on our 16 countries and for any future expansion in Africa, we will see as the opportunities come, as there is nothing on the table at the moment.” According to the report, in its last fiscal year (2010-11), Bharti reported a net loss of $97.7 million in its Africa operations on revenues of $3 billion. At the end of the company’s fiscal fourth quarter (ending March 31), it had 44.2 million African subscribers, which included quarterly net additions of 2.1 million.

With Average Revenue per User (ARPU) for the African unit at $7.2 per month, Mittal noted that some of the Africa businesses were doing better than others. “Out of the 16 countries, most of them are profitable. As far as Africa is concerned, we have to grow in Nigeria; we have to grow in Ghana, Uganda, Kenya. There are a few countries where we have to step up.” Relating to network expansion, Airtel is building a 3G network expected to cover 80 percent of Nigeria’s population by 2012 and required to offer cheaper and reliable internet services to its customers.

Rajan Swaroop, chief executive officer, Airtel Nigeria, who confirmed this in an interview recently, said the project was strategic for increasing market share as the bulk of telecom revenue in Nigeria was expected to come from data services in the next five years. An analyst told BusinessDay yesterday that the extra investment by Bharti would further strengthen the project; adding that Airtel was spurred on by the prospect of increasing revenue from data services as voice revenue continues to drop.

Speaking in an interview with Russell Southwood of Balancing Act accessed by BusinessDay at the weekend, Swaroop declared: “We are building a 3G (Third Generation) infrastructure and by the time we’re finished, we will have covered 70 to 80 percent of the population and that’s, maybe, one year away. We currently have 100,000 to 150,000 subscribers but we strongly believe that the overall potential for this is something like 2 million subscribers out of an overall total of 16 million”.

Commenting on the company’s financials, the Airtel boss revealed that over the last 12 years, the performance of the business has been declining but by virtue of the investments made in infrastructural development, he believed Airtel Nigeria would be self-funding and cash-flow positive in the next 18 months. “We also intend to encourage the Nigerian Communications Commission (NCC) to introduce Mobile Number Portability. Then the best provider will be successful,” he said.

Giving a vivid insight into the company’s position with regard to international fibre and acquisition of bandwidth capacity, Swaroop disclosed that the telecom firm had bought significant capacity from both MainOne and Glo-1 cables. “The price per MEG is down to US$300-350 per MEG per month at volume and this price is a substantial drop from what was available previously. We will probably double our capacity in the next 6 to12 months and prices will come down again. They are currently pretty high compared to rates across the world. In India, it is sub US$10 per MEG”.

Bharti Airtel, who took over mobile operations in 15 African countries in a deal that makes it the world’s fifth-biggest mobile firm with 180 million customers in 18 countries, is known for its low-cost strategy; but the firm has revealed that it will not adopt the same strategy which has made it India’s market leader. In India, Airtel’s call rate charges are as low as 1 US cent as against the 20 US cents charged in Nigeria currently.

Why mobile phones will replace cash, plastic cards

Ben Uzor Jr

As Nigeria gradually moves towards the era of mobile payment system, plastic cards (debit and credit) may soon become old-fashioned, analysts told BusinessDay at the weekend. This is even as mobile money operators, regulators make every effort to sustain the shift from card-based transaction to mobile-based transaction. A prominent industry analyst who pleaded anonymity told BusinessDay at the weekend that Nigerians are increasingly ‘living their lives on their mobile phones’.

A development, he added could drive the adoption of mobile payment services. “I definitely believe that the mobile money will eventually replace the plastic card. It is going to take some time though because consumer habits take a long time to change. We hear that some of the 16 firms granted Approval in Principle (AiP) by the Central Bank of Nigeria (CBN) to commence pilot programmes of Mobile Money services have begun submission of trial reports to the apex bank for verification.

“We are going to see it move beyond trials and into reality. Ultimately, we are going to see more and more people leave their homes without their wallets”, he further maintained. In relation to m-payment, industry watchers strongly believe that 2011 will be a dynamic year with service providers positioning in various diverse ways to redefine the digital payment landscape. In 2010, the Central Bank of Nigeria (CBN) granted 16 operators approval-in-principle to operate mobile money services in the country.

They include; Stanbic IBTC Bank Plc, Ecobank Nigeria Plc, Fortis MFB, UBA/Afripay, GuarantyTrust Bank Plc/MTN and First Bank of Nigeria Plc. Others are Pagatech, Paycom, M-Kudi, Chams, Eartholeum, E-Tranzact, Parkway, Monitise, FET and Corporeti. The operators were given four months (January to April this year) to demonstrate their capacities to roll out mobile money networks. Beyond this, millions of mobile phones capable of making contactless payments are expected to be shipped out this year.

Recent Pyramid Research report has projected that the global mobile money industry would generate over $200bn by 2015. But more importantly, industry analysts believe that the success and expected growth will be largely dependent on subscribers’ trust in the system in respective countries. Onajite Regha, CEO, Electronic Payment Providers Association of Nigeria (EPPAN) who spoke at a forum organised by the body in Lagos recently, said the industry need to “agree on what strategy we must adopt to create an enabling environment which will ensure the success of m-payments to adequately protect investors and ensure credibility within the operations to gain consumers trust.”

Chuma Ezirim, group head, eBusiness for FirstBank of Nigeria (FBN), pointed out that the robust mobile payment ecosystem would drive incremental value propositions to all parties involved in the scheme. “For banked consumers, mobile payment provides new ways and places to make payment. For Banks (Issuers & Acquirers), it helps to grow payment revenue, merchant accounts. Mobile payments also open up new business opportunities for financial institutions and reduce cost of service delivery.

“In the case of telecoms operators, mobile payments reduces airtime cost, churn and helps grow ARPU (Average Revenue per User) and VAS (Value Added Services) and so on”, Ezirim stated. Commenting on the huge potential of mobile money in Nigeria, Luqman Balogun, divisional head, e-Banking, UBA told Business Day in an interview, “today, we have less than 30 million accounts in Nigeria relative to the population of 150 million. As at the last count, figures show that we have almost 100 million mobile subscriptions. “The question is why don’t you convert those phone lines to bank account”.

The future of mobile payments industry in Nigeria looks bright, many industry analysts believe. However, Nigerians are doubtful about its successful implementation. Emmanuel Okogwale, principal consultant, Mobile Money Africa, thinks that a robust agent network drives mobile money, not technology. “Stakeholders should endeavor to build a shared agent network to serve all the stakeholders. Since agency is the Heart of mobile financial services and the agents do not sell primary products of the licensee unlike in Mobile Network Operator (MNO) driven ecosystem.

“There is a need to source, develop, train and deployed agents on a shared basis. “Aside from technology which is available off the shelf though expensive, another issue that many of the providers are still faced with is the mind set of thinking mobile money is a technology offering rather than an agency offering. “Signing the agents, recruitment, training and deploying a well developed agent network is the major obstacle facing the providers”, he posited. According to Okogwale, many potential agents do not know on what authorisation are these providers acting on.

He called on the CBN to step in by allaying the fears of the agents and also help the industry develop a standard enterprise Risk and mitigation framework.

Mobile Money Service operators begin submission of trial reports

. . . CBN may issue final license in July
Ben Uzor Jr

Nigeria is gradually moving towards the era of mobile payment system as operators, regulators make every effort to sustain the shift from card-based transaction to mobile-based transaction. Indication however are that some of the 16 companies granted Approval in Principle (AiP) by the Central Bank of Nigeria (CBN) to commence pilot programmes of Mobile Money services in the country have begun submission of trial reports to the apex bank for verification, Business Day can reliably reveal.

Mobile Money Service Providers granted provisional licenses by the apex bank include; Stanbic IBTC Bank Plc, Ecobank Nigeria Plc, Fortis MFB, UBA/Afripay, GuarantyTrust Bank Plc/MTN and First Bank of Nigeria Plc. Others are Pagatech, Paycom, M-Kudi, Chams, Eartholeum, E-Tranzact, Parkway, Monitise, FET and Corporeti. The firms, informed sources told Business Day, are expected to show concrete evidence that 50 customer have carried out live transactions on their mobile payment platforms during the four months trial giving to them by the apex bank.

Other conditions, Business Day further also include: the logs of the transactions, showing dates and time. Besides, each of the 16 companies must submit at least names and locations of 30 agents for verifications. Meanwhile, it was also learnt that the apex bank may issue final licenses in July based on the advice of the auditors. Emmanuel Obaigbona, deputy director, banking and payments system department of CBN at an industry forum recently disclosed that the CBN has invited Enhancing Financial Innovation & Access (EFInA), a body set up to promote access to financial services for the unbanked and under banked in Nigeria to do an audit trail of the operators to ensure that there are no systemic risks.

Obaigbona stated that subsequent to the audit trail, licences would be issued to deserving operators, further adding that any mobile money service providers that fall short of the required criteria for assessment on the pilot by the CBN would not be licensed. Moreover, the apex bank had earlier warned mobile money operators that the approval-in-principle does not guarantee them automatic license after the four month period. According to the CBN, each of the operators must earn their place in the new initiative which is expected to take banking services to underserved and unserved areas.

Emmanuel Okogwale, principle associate, Mobile Money Africa, who spoke with Business Day in an interview, confirmed that mobile money operators had begun submitting trial reports, further stating that the apex bank was checking the provider's processes to validate technology, agency network, risk, customer protection. Okogwale pointed out that the audit is necessary to understand the operations of the providers and if necessary advice them, drop some and approve some as the case may be. “Some of them do have compelling services for the unbanked however, Mobile Network Operators (MNOs) connectivity challenges might be standing in their way but that is not to say they will not pass through.

“The CBN in their wisdom are not looking for perfect systems but checking for vulnerabilities to prevent a systemic risk that will have a knock-off effect not only on primary business of the providers but the whole economy. I welcome the audit process and I also commend the providers that are ready for such audit. It is to all Nigerians advantage to have a working and secure mobile payment system”, he said.