Smartphone sales hit 1.82 million in 2012

Ben Uzor Jr

 

Smartphone sales in Nigeria more than doubled in 2012, data obtained by BusinessDay has shown. Nigerians spent an average of N92 billion buying 1.82 million smart phones in 2012, according to data obtained from GfK Retail and Technology Nigeria. These figures, according analysts reinforces earlier studies which showed that Nigeria leads its counterparts on the continent in smartphone penetration. Though the data for comparable period of 2011 was not made available, data available for the comparable period of December 2011 and December 2012 shows that smartphone sales shows that year-on-year growth rate in smartphone have more than quadrupled. 

"Over 100 million Nigeria do not have access to the internet. Many Nigerians are not going to be able to afford $500 laptop. But with an affordable smartphone with a quality screen, software and user experience, we believe that the smartphone will be the window to the world for many Nigerians", Alpesh Patel, chief executive  officer, Mi-Fone, a pan- African phone maker told BusinessDay in an interview. Speaking in the same vein, Kenneth Doghudje, managing director, Gfk RT Nigeria Limited, said, "Smartphones are a highly innovative segment embraced by the Nigerian consumer who constantly desires to acquire the latest technologies in the market”.

“Nigeria has an internet penetration rate of around 45 percent, with most people surfing the internet on their smartphones while on the move. This trend is expected to continue” Doghudje explained. The average cost of a smart phone is put at $300 to $360 (N48, 000 to N58, 000). This is within the affordable range for Nigeria’s rising middle class, analysts say. Earlier data obtained by BusinessDay Research from GfK shows an average of 21.5 million handsets was sold in Nigeria in 2012. The 1.82 million smartphones make up an average of 8.47 percent of total new phone sales in 2012. 

The 21.5 million sales figures exclude sales of “refurbished and used handsets also imported into Nigeria”. Industry analyst told BusinessDay, weekend that the steady reduction in prices will further deepen smartphone penetration as cost seems to be a huge barrier to device acquisition in Nigeria. "Prices of smartphones are likely to decline. The sub-$100 smartphone is steadily becoming a reality. Low-end smartphones are increasingly available and these types of phones will likely grow at a compound annual growth rate of 15 percent over the coming years", James Rutherford of Nokia Corporation said. 

Besides, many Nigerians carry more than one phone or carry a dual SIM phone, the earlier report showed. “Dual SIM phones made up 58 percent of all new phones or two out of every three phones sold in the Nigerian market. This translates to average of over one million dual SIM handsets sold in the Nigerian market in a year”. The dominance of the dual SIMs has been linked to the high incidence of poor network quality which has compelled most Nigerians to use more than one network provider for their phone services. But more interestingly, triple SIM phones are also beginning to make an inroad into the Nigerian market as well, with the market showing immense potential for growth of phones with more than one SIM, states the industry report. 

Smart phones carrying dual SIMs have also made an entrance into the Nigerian phone market, though they are less than 18 months into the market. The report notes that dual SIM phones were first invented by the Chinese, but has recently been adopted by the major phone manufacturers as they see its wide acceptance in the market. “These trends are expected to continue in 2013 as most subscribers continue wanting to enjoy excellent service delivery and lower tariffs by using the different networks”. 

Data from the Nigerian Communications Commission (NCC) shows that there has been a continuous increase in the number of active lines in Nigeria. Active telecoms subscriber base in Nigeria has further increased to hit 114.1 million as at the end of January, 2013, resulting in a teledensity of 81.78 during the same period. This was contained in the latest telecoms industry’s subscriber base data released by the industry regulator, the Nigerian Communications Commission. According to the data, telecoms operators recorded additional 1.3 million active telephone lines in January 2013 alone, bringing the industry total to 114.4 million at the end of the month.

FG threatens $2.25bn investment in underwater cables

Ben Uzor Jr

 

The profitability of undersea cable operators in Nigeria is been threatened by the delay in the approval of a national broadband policy expected to accelerate the pace of wholesale fibre access through infrastructure sharing and deepen broadband penetration. Industry analysts have labelled government's delay in approving a broadband policy counter-productive as cable operators have invested $2.25 billion in deploying these infrastructure. But many of them are not getting the needed return-on-investments due to poor utilisation of the cable infrastructure. Cable operators have however identified prohibitive cost of wholesale fibre access as the fundamental drawback limiting speedy take-up of available bandwidth capacity.

The Nigerian Communications Commission (NCC) had developed a broadband plan based on 'Open Access'. But the policy is still awaiting Jonathan's approval. "The government should intervene to accelerate the pace of wholesale fibre access. We need to agree to a commercially viable framework for infrastructure sharing with incentives for the incumbents to share their proprietary networks", Funke Opeke, chief executive officer, MainOne Cable, said in an interview. Speaking in the same vein, Christian Rouffaert, UK&Ireland Network Strategy lead, Accenture' said Nigeria needs to clearly articulate its broadband strategy with a view to defining expected roles of government and the private sector in the emerging broadband ecosystem.

"Most of the European nations have an active broadband plan focused on driving high speed connectivity. I don't see any reason why Nigeria does not have one. This is because there is a correlation between broadband and economic growth", he added. There are four active cables carrying an installed capacity of over 19.2 terabytes, about 340 gigabyte combined, a massive increase in capacity available to drive bandwidth dependent services. MainOne, the 7, 000 – kilometre cable, is valued at $240 million. The 10, 000 kilometre Glo-1 cable cost $800, 000 to build. Industry analysts place the worth of NITEL’s South Atlantic 3 (SAT 3) at about $600 million. While MTN’s West African Cable System (WACS), cost about $600 million.

Industry analysts told Benuzorreports, that 95 percent of the capacity on these infrastructure is redundant due to the lack of distribution and lastmile connections needed to move available bandwidth capacity across the length and breadth of the country. Benuzorreports learnt that there is more than 30,000 kilometres of domestic fiber optic cables to connect those international cables to more than 50 percent of the Nigerian population. But from all indications, access to fibre infrastructure to move bandwidth capacity across the length and breadth of the country is so far discriminatory and inordinately expensive. This, according to analyst has grave implications as Nigeria's 70 percent internet penetration target seems very unlikely.  

Beyond that, most Nigerian schools, hospitals, government agencies, and small and medium businesses have been inhibited from accessing broadband services. Kamar Abbas, managing director, Ericsson Nigeria told Benuzorreports in an interview that "Government should try to identify and maintain a public database of where the fibre is today and where it is planned in the short to medium term so that investors and indeed consumers can understand where there is supply and where there is deficit. That is the first thing we will encourage government to think about." He added that there is an extremely convoluted process of securing right-of-way to embed fibre in the ground. This, Abbas went further discouraged investment in fibre deployment.

Telcos block Skype over revenue loss on international calls

Ben Uzor Jr

Concerns over revenue loss from international calls may have compelled some telecommunications firms in Nigeria's highly competitive market to block subscriber from accessing Skype services on mobile, Benuzorreports has gathered. Skype is a proprietary Voice Over Internet Protocol (VoIP) software for calling other people on their computers or mobile phones. It was learnt that phone calls using Skype software can be placed to recipients on the traditional telephone networks. Moreover, calls to other users within the Skype service are free-of-charge, while calls to landlines and phones though reasonably priced are charged via a debit-based user account system.

"Generally, the main fear of the telecoms operators here will be that customers will increasingly use Skype as a substitute for conventional international calls", said Mattew Reed, principal analysts at Informa Telecoms and Media. Sources close to some networks told Benuzorreports, that international calls make up a critical part of telecoms operators' revenue because of Nigeria's large expatriate and Diaspora population. This apprehension, according to analysts is further exacerbated by the steep decline in voice revenue. Last year, mobile networks were over exuberant, giving away lots of free minutes which market analyst say has taken away a lot of value from the industry. 

In the new business year, mobile operators are looking offset the fallout of intense competition by closing gaps in the business that spurs revenue leakage. Operators have however refuted the allegation of blocking Skype on mobile. "It is impossible", Wale Goodluck, corporate services executive, MTN Nigeria puts it succinctly. Our reporter sought the view of the telecoms regulators on the issue. "We don't have any evidence of that. We do no regulate the internet", Tony Ojobo, director, public affairs of Nigeria Commission Commission (NCC) told Benuzorreports. "I am not aware of this development but globally operators and network equipment makers don't really embrace Skype. 

"They liken Skype to an individual who takes undue advantage of other people's generosity without giving anything in return. Globally, there is this apprehension amongsts telecoms operators that Skype only steals their customers while they invest billions of dollars to build out, expand and upgrade networks", Kenneth Omeruo, managing director, TechTrends Nigeria, told Benuzorreports. In the United Arab Emirate (UAE), Etisalat and Du had recently lifted a ban on Skype services. Both telecoms companies had announced that telecoms user can now download the application online and make Sykpe-to-landline or mobile calls, which were not previously permitted. 

Many telecoms operators worldwide – including some companies in the United States (US), the United Kingdom (UK) France and Spain – prohibit their mobile phone customers from downloading Skype’s software or outlaw the use of voice over the internet phone services in their standard sales contracts.  Other carriers have imposed fees to undermine Skype’s attraction. Moreover, barriers to Skype software and similar Internet calling services are coming under increasing scrutiny as the internet goes mobile. By 2013, the number of internet-ready mobile phones will surpass the number of computers in the world for the first time, according to Gartner, a research firm.

Cyber security concerns rises as banks embrace social media

Concerns are that the brand and customers of banks in Nigeria will become the main targets of cyber criminals as more financial institutions increasingly adopt social media platforms as a means of providing banking services, an industry analyst told Benuzorreports at a cyber security conference in Lagos. Tope Aladenusi, head, Security, Privacy and Resiliency, Deloitte, Aladenusi warned that organisations who delve into social media banking without necessary cyber security systems will have to deal with reputational loss, Intellectual property leakage and identity theft via social engineering, which could have adverse impact on the long-term sustainability of the business. 

"Some Banks in Nigeria have commenced social media banking and this will make their brand and customer prime targets of cyber criminals", he added. GTBank Plc is one of such banks. The bank recently commenced its social banking service on Facebook. The service allows the public to open accounts and get customer service support via Facebook. Sources say other banks are also planning to roll out services on social media in coming weeks as they explore this new opportunity to grow customer base by connecting to them on a more personal level. Many banks have already integrated social media strategies into their Customer Relationship Management (CRM) systems. 

Speaking at a Cyber Security Breakfast Session, Aladenusi told Benuzorreports that social media is evolving to become the de-facto method of information dissemination. In view of this trend, most banks, are been compelled to increase their online presence, he further added. Globally, businesses are grappling with the issue of cybercrime. Two years ago, hackers orchestrated multiple breaches on Sony's PlayStation Network knocking it offline for 24 days and costing the firm an estimated $171 million. Last week, LivingSocial, the second-largest daily deal firm behind Groupon Inc was hit by a cyber attack that compromised the data of more than 50 million customers.

In 2012, the internal website of the US Federal Reserve bank was broken into by hackers who stole the details of about 4, 000 bank executives. Social media throws up complex security challenges for banks. Over the past two years, there has been a massive surge in the number of malware attacks on the website of many banks. One prominent malware attack urges customer to provide bank details, "in order to enhance the security of online transactions as per regulatory guidelines for additional level of authentication." The growth of the banking industry, according to analysts, and Nigeria's gradual transition into a cashless mode is driving this unhealthy attraction. 

In fact, many Nigerian hackers previously based overseas are returning home because the 'Cashless Project' offers fresh opportunities for them to perpetuate electronic fraud. "There are lots of infected machines today and many customers are not even aware of it. The banking industry is witnessing lots of malware and phishing attacks currently and it poses significant challenges for banks in terms of revenue loss", Dennis Lupambo, group manager, alternative channels, Ecobank said at another cybercrime forum in Lagos. The public sector in Nigeria is also witnessing a rise in cyber attacks.

In 2012, cyber attacks on Nigerian government owned websites increased by 60 percent, according to a report. "This has shown no one is immune to these attacks, its only a matter of time before they shift focus to other industries", Aladenusi noted. Speaking in the same vein, Gordon Love, regional director for Africa, Symantec, a cyber security firm, pointed out that Nigeria does not really appreciate the magnitude of cybercrime and how it can derail an economy. "Over 20 million malicious threats and attacks were released into the cyberspace in the last twelve months. These threats are here in Nigeria."

Love said Nigeria has become a target for the cyber criminals globally. The booming economy, increase in bandwidth capacity and the proliferation of mobile devices, he explained were some of the reasons why Nigeria is a such a huge attraction. Many governments across the globe have place cyber security on the top list of their agenda. They are adopting strict measures, stepping up investment in cyber security and developing robust policies and harmonising cross-border legislations on cybercrime to curb the menace. Unfortunately, Nigeria, Africa's sleeping giant  is lagging behind in this regard.

Cyber blackout imminent as Nigeria's Internet addresses run out

Ben Uzor Jr, with agency reports

Nigeria's 45 million internet users will soon be restricted from accessing the World Wide Web (WWW) because the Internet Protocol 4 (IPv4) on which most connectivity in the country are runs through is on the verge of extinction, according to a report. This worrying development, which can disrupt economic activities in the country if measures are not taken quickly. According to analysts, there is an urgent need for an infrastructure upgrade and migration to IPv6. 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 globally and now that it is almost out of addresses, industry analysts say the transition to IPv6 is no longer a matter of choice but necessity. 

Otunte Otueneh, chapter officer, Internet Society Nigeria Chapter, was quoted in a recent report, saying that the IPv4 is almost finished. "By the time the IPv4 finishes most PC cannot be connected to the internet”, he however warned. BusinessDay gathered that the last batch of IPv4 addresses was allocated two years ago 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. Today, most home appliances such as TVs, fridge can connect to the Internet. 

Otueneh, who spoke on the sidelines of the IPV6 roundtable organised by DigitalSENSE Africa Media, said, "we need to create awareness to tell Nigerians p that version 4 is almost finished and we need to move on to the new version." The exhaustion of the IPv4 pool and the inevitable transition to IPv6 has been the talk of many national and international meetings, particularly during a Sociétés de l’Information dedicated to the AfNOG, AfriNIC and INET meetings held in Abuja at the beginning of May 2007. With IPv4 exhaustion looming and IPv6 taking a rather slow start, there have been extensive debates on the need to act fast at major conference.

Speaking in Abuja recently, Bill Woodcock, Board member of ARIN, the North American Regional Internet Registry (RIR), warned that RIRs should get rid of old ways of thinking and start planning their next step. According to the report, AfriNic managing the end of IPv4 accounts for less than 1 percent of the distributed IPv4 address space. AfriNIC is by far the smallest RIR. However, it has anticipated the end of IPv4 at an early stage. It is expected that its current IP address space will run out in no distant time. Besides, two last requests for further allocations to IANA, the global pool’s steward, should allow delaying IPv4’s regional exhaustion until April 2014, the report said. 

Nevertheless, if IPv4 consumption rate accelerates critically before AfriNIC is able to justify its last request, there could be huge concern to ensure a smooth transition before IPV6 is fully implemented. For Alain Patrick Aina, special project manager for AfriNIC, the technology company in-charge of internet protocol in Africa, the total expiration of IPV4 could be extremely rapid, depending on the rates of consumption. “It is like being warned there is going to be flood, the question is: how do I get prepared so not to be affected or survive it”, Benedict Othello, head, Information Systems, Phase 3 Telecoms, an broadband service provider,  was quoted in the report. 

Commenting on the some of the probable implications of Nigeria's inability to migrate to IPV6, Othello, said, "Before the danger looming takes place, we are creating awareness. It is a two way thing. The service provider will be on version 6, the smartphones should be version 6 enabled. When that happens, they will flow seamlessly. “Now, those on IPv4 platform cannot be accommodated by the service providers at a point. For instance if telecom operators in Nigeria roll out SIM cards and fail to expand their modules for more subscribers it will affect their businesses. It is all about upgrading to that new version to accommodate more customers”, he added. 

"It is unimaginable when the version 6 will finish. Now, we need to create awareness to tell Nigerians that version 4 is almost finished and we need to move on to the new version. Communication providers and end users have to be aware of this, if not they risk losing connectivity because the version they are using is on brink of extinction.“Original Equipment manufacturers (OEMs) while manufacturing their equipment or devices they have to make sure that the technologies are IPv6 enabled. And the end user has to be informed enough to demand for devices that IPv6 enabled", Otueneh explained. 

Fresh revenue window opens up in $11.5bn VAS market

Ben Uzor Jr

A fresh window of opportunity is opening up for Value Added Service (VAS) providers in Nigeria's highly competitive telecommunications market. This emerging sector, according to analysts will witness significant growth over the next two years, riding on the back of rising smartphone penetration, and the successful implementation of the Mobile Number Portability (MNP) scheme.VAS is a popular telecoms industry term for non-core services, or in short, all services beyond standard voice calls and fax transmissions.

"MNP has strong potential to provide impetus for operators to become more pro-active in service delivery to their customers.  "If the scheme runs full throttle, and the challenges plaguing the VAS industry are resolved, we see huge revenue opportunities for us", Simon Aderinlola, National Coordinating Consultant of Wireless Service Providers Association of Nigeria (WASPAN), a body which oversees VAS in the telecoms sector, told Benuzorreports. Africa’s mobile VAS market is expected to reach $11.5 billion next year.

This is according to data from research firm, Informa. The Nigerian market however contributes between 7 and 8 percent to Africa's VAS industry. The country is also forecast to grow to $2.01 billion by 2014. This represents a 17.4 percent of the total African market, according to Informa. Industry analysts expect increase in growth with the introduction of MNP, which allows holders of the country's over 114 million mobile phone lines to retain their mobile phone numbers when changing from one operator to another.

This is because with MNP, telcos would be keen on providing improved service delivery - all in an attempt to wrestle new subscribers from other networks and retain existing ones. Francis Ebuehi, chief financial officer, Spinlet, a mobile music distribution firm, has a slightly divergent view."Yes, VAS is a critical way of luring and keeping subscribers on the network in relation to MNP. But if the quality of service is poor, subscribers will move irrespective of the quality of VAS available on the network", he told Benuzorreports.

"I also think the proliferation of smartphones and tablets offer huge opportunities for VAS providers in Nigeria", he added. Major VAS providers in Nigeria include: MTech, Cellcast, TaviaTxt, SaveMyContacts, Textnigeria, Entegration Solutions, Cellulant, CellTrust, 3G Reality Centre, and A3&O, among others. Big telcos such as Globacom, Airtel, MTN and Etisalat, all work with many of these mobile VAS companies. Benuzorreports learnt that some telcos are even considering expanding the scope of partnerships with them.

 “As voice-based average revenue per user declines, operators are increasingly using VAS to profitably increase data revenues by delivering targeted content to their subscribers", said, Kofi Dadzie, chief executive officer of Rancard, a VAS firm, said at a recent conference. "With the MNP regime, we can deepen the delivery range and quality of services to subscribers.  "We are resolved to further work with telcos to deliver compelling offerings that will meet the expectation of the subscribers", Aderinlola said.

 “I think that the VAS landscape is growing and the potential is there. My take is that it is worth over $500m every year. It may actually be moving towards $1 billion in the next three years,” Goke Akinboro, managing director, Cellulant Nigeria Limited. Analysts say issues such as revenue sharing formula between telcos and VAS providers, access to requisite technology and content platforms, cost and time to market, as well as monetisation of content, have all contributed in slowing down the growth of the sub-sector in Nigeria.

Is MNP a panacea to poor service quality in telecoms?

Ben Uzor Jr & Justice Godfrey

With the launch of the much anticipated Mobile Number Portability (MNP) scheme going into its third month now, some doubt has been cast upon the impact of this regulatory intervention in relation to improving service quality levels in Nigeria's telecommunications industry. Number portability, according to many analysts, is not a panacea to the prevalence of abysmal service quality in Nigeria's highly competitive telecoms industry. Prior to the launch of the scheme, the regulator had inundated the industry with claims that number portability would be a definitive solution to poor quality of service (QoS). 

How much of an impact the scheme would have on service quality is still yet to be seen? With the scheme, holders of Nigeria’s 116 million mobile lines can switch networks while retaining existing phone numbers. It is also expected to deepen competition amongst operators. Interestingly, many experts do not see a correlation between MNP and improvements in service quality. "MNP will not remove the problems associated or leading to low QoS because there is no element of operation in MNP", Gbenga Adebayo, chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON) told Benuzorreports. 

Adebayo believes that the initiative would only increase competition amongst network operators and not address poor QoS. The most obvious QoS issues are drop calls, undelivered SMS and incoherent voice transmission. "The problems leading to poor QoS is not under the control of mobile network operators. Operators have no momentum to stop the government from closing sites. Multiple taxation, delays in site deployment approvals, issues associated with vandalism of telecoms infrastructure, as some of the challenges that hinders operators from addressing poor quality of service", Adebayo added. 

Over the years, telecoms operators in Nigeria have mortgaged service quality for subscriber acquisition. This trend, according to analysts, is likely to continue with the introduction of MNP as telcos will be compelled to further drop prices as a strong incentive to lure and retain customers on their respective networks. The struggle to acquire more subscribers, analyst say often lead to further deterioration of service quality levels by over-burdening telcos already fragile networks with promos which creates additional demand. Fundamental to the QoS debacle is the infrastructure deficit in Nigeria. 

As telecoms operators in the country line up big budgets to improve QoS, Nigeria's poor operating environment constitutes a major drawback to investment required for network expansion initiatives across Nigeria. Lending his own view, Lanre Ajayi, president, Association of Telecommunications Companies of Nigeria (ATCON), said the problem of poor  service is beyond operators' control. "MNP will only lure subscribers to other network and not solving poor quality. Operators need certain things which are beyond their reach such as permit from government to install fibers and expand networks. 

"If these permits are not being given to operators by the government, poor QoS will persist", he stated. For Bill Best, former, chief technical officer for GSMA, competition is the driving force for better QoS, new products, wider distribution and – crucially – more affordable price plans.“Mobile number portability will provide consumers with the option of choosing their network at any time while retaining their number."It will give rise to healthy competition in the industry, enhance QoS and improve customer service delivery to the consumers", according to Eugene Juwah, executive vice chairman, Nigerian Communications Commission (NCC), said at a recent industry event.

Phone makers jostle to expand $1bn mobile app market

Ben Uzor Jr

               

Foreign phone manufacturers are looking to step up engagement with the local applications development community in the New Year to harness Nigeria’s pool of talent in order to create relevant apps and content that would expand their respective market share, analysts have said. The Nigerian mobile app market, according to them, is valued at about $1 billion. Phone manufacturers are interested in establishing direct ties with local application developers as competition in Nigeria’s smartphone market heats up, analysts told Benuzorreports. “This year, Samsung will have greater engagement with local apps developers. “We will further strengthen our engagement with Co-Creation HUB (CCHUB).

“We will hold quarterly app developers forum. We will also have apps contest and provide SDK tool kits for developers”, Emmanouil Revmatas, business head (hand held), Samsung Electronics West Africa, told Benuzorreports. Samsung’s partnership with CCHUB, BusinessDay gathered is already bearing fruits as a new mobile app called ‘Efiko’ which helps students prepare for JAMB is expected to be launched this quarter. Other phone makers such as Nokia, Apple, Blackberry, Huawei, Google, Microsoft will all be engaging in similar activities in 2013. These, according to industry analysts, are all geared towards galvanising local talent to innovate and create content in order to meet the growing demands of smartphone users.

Besides, the Federal Government also sees the potential of software applications development as a viable platform for wealth creation. The Ministry of Communications Technology has already set up a $15 million Information Technology (IT) innovation fund to encourage local IT business ventures and content developers. Benuzorreports had earlier reported that the Nigerian private sector was showing keen interest in the venture fund. But more importantly, the launch of new mobile Operating Systems (OS) such as the Windows 8 platform which Nokia’s range of Lumia devices is riding on and the much anticipated Blackberry 10 is throwing up fresh opportunities for local app developers to create locally relevant content for the Nigerian market.

Chinese phone maker, Huawei and Microsoft, on Tuesday launched a new Windows Phone for the African continent, called ‘Huawei 4Afrika’. Gustavo Fuchs, director, Mobility Windows Phone, Microsoft Middle East & Africa, told Benuzorreports in Lagos that the mobile device comes with custom applications designed by local African developers for Africa. He said Microsoft believes that will make people switch from cheap feature phones. “We will continue our engagement with the local apps development community to create solutions that add value to the lives of Nigerians”, he said.

With the launch of the BlackBerry 10 platform, Blackberry is looking to claw back its way to the top of the smartphone market. One of the strategies of achieving this goal, according to market watchers, will be through mobile apps. Last year, the Canadian phone maker organised a Blackberry 10 developers conference to assist developers build businesses on the new platform.

“Blackberry 10 offers new opportunities for developers”, Martin Ficke, senior product lead, Africa for Blackberry, told Benuzorreports at a demo session. With applications developers earning 50 percent to 70 percent of the retail price via the app-store platforms of Apple, Google, Nokia, Blackberry, Windows, incubating innovations of young developers could have significant multiplier effect domestically.

“Nigeria has a thriving and growing mobile software start-up scene with a lot of potential for growth”, Teemu Kiijarvi, head of ecosystem and development experience at Nokia Corporation, said.

Infrastructure hinders N900bn investment in data centres

Ben Uzor Jr

There is a N900 billion investment honey pot in data centre deployment, a critical infrastructure needed to provide faster and cheaper internet connectivity, waiting to be tapped, if only the Federal Government can resolve the power and broadband infrastructure short comings, analysts have said.The Ministry of Communication Technology has estimated that approximately 300 data centres will be required in the coming years, to support affordable internet services and software applications in Nigeria. A world class data warehouse is estimated to cost between $20 million and $30 million. This means that Nigeria requires an investment of approximately N900 billion for its planned 300 data centres.

Foreign Information Technology (IT) companies, such as Google Incorporated, Microsoft Corporation and Oracle, have at various fora, said they would be willing to invest in this area. The companies however expressed concern that two years after the landing of fibre-optic submarine cables on Nigeria’s shores, the country has been unable to speed up the pace of wholesale fibre access, due to the absence of a broadband policy that promotes infrastructure sharing and competition. “Technology firms such as Google Inc. are interested in investing hugely in data centres, if Nigeria can address the power challenge and speedily tackle the issue of lastmile connectivity and distribution capacity, so as to spread available bandwidth capacity across the entire country”, Taiwo Kola-Ogunlade, communications manager, Anglophone West Africa, for Google, told Benuzorreports.

“Yes, broadband infrastructure is important but power is even more critical. Today, Nigeria is still struggling with unstable power supply. Importantly, data centres consume a lot of electricity”, Taofeek Okoya, director, business and strategy, for Kits Technologies, a data centre infrastructure provider, told Benuzorreports. “Nigeria is indeed a huge market and the potentials here are enormous for local and foreign IT companies,” he said, adding that “As I speak, there are lots of data centre initiatives on-going in the country. A lot of banks and government agencies are building data centres.”

Okoya further said there was great necessity for data centre owners to build competent human capacity to manage their high cost infrastructure. Data centre deployment, according to analysts and market watchers, is a big business, capable of creating wealth and job opportunities. Benuzorreports gathered that a large data centre might have from 100 to as many as 300 on-site employees. But interestingly, data centres give impetus to Nigeria’s online business community to provide innovative services cost-effectively. A senior executive at Microsoft West Africa, who pleaded anonymity because he was not authorised to speak, said massive investments would be ploughed into data centre deployment over the next few years.

“Hopefully, when we get power and broadband right, then technology firms like Microsoft can concentrate on bridging Nigeria’s and indeed Africa’s digital divide. Data centres will also create a lot of employment for Nigerians directly and indirectly,” he added. The rise in the availability of international bandwidth connectivity from underwater fibre-optic cable systems has attracted a lot of foreign ICT companies into the country. Data centre deployment is one area expected to witness a boom in coming years. But the absence of last mile broadband connectivity, technical know-how and expertise, continue to slow down progress in data centre deployment.

Giving her perspective on what needs to be done to address Nigeria’s internet access problem, Funke Opeke, chief executive officer of MainOne Cable Company, who was quoted in a recent industry report, said “We really need to agree to a commercially viable framework for infrastructure sharing with incentives for the incumbent operators to share their proprietary networks”.

Global data centre operators have flocked to the Nigerian market, particularly since 2011, with the likes of Google’s cloud platform aggressively marketing their services to corporations. United States software giant, Microsoft, launched its global Office 365 cloud solution in Nigeria in June 2012. Dell’s global CEO visited Nigeria in July 2012 in a bid to promote Dell servers or local data warehousing initiatives.

Mobile network operators have not been left out of the party, as MTN Nigeria in 2012 introduced a wide variety of enterprise cloud-based services, supported by its state-of-the-art data centre. Also, Gateway Communications, a pan-African service provider with the largest Multi-protocol Label Switching cloud in Africa, bought by Vodacom in December 2008, introduced its cloud services to the Nigerian market in 2011. Besides, indigenous firms are increasingly looking at partnering with global vendors with experience in cloud system and data centre development.

According to a report, Internet Solutions West Africa invested N1.65bn ($10.5m) over a two year period (2009 to 2011) in building two data centres in Lagos, covering a combined space of 125 sq metres. It further invested N225m in upgrades and expansion of its Victoria Island, Lagos, location, in 2011. Resourcery Nigeria, another local IT firm, established its own Cisco Unified Computing System in January 2012, targeting telecoms companies and banks. In addition, TTC Technologies is partnering with the Obafemi Awolowo University, Ile-Ife, to build private clouds for corporate customers.

N61.65bn market awaits Nigeria virtual mobile operators

Ben Uzor Jr

An idle capacity valued at over N61.65 billion in Nigeria’s mobile telecoms market is waiting to be tapped by virtual mobile operators, Benuxorreports has gathered. With 56 percent utilisation of total installed capacity of GSM operations, according to TNSRMS in its latest research report, mobile virtual network operators (MVNOs) have a huge prospect in the Nigerian telecoms market. The MVNOs are expected to take up the 44 percent which is not utilised, says the report. A mobile virtual network operator is a mobile operator that does not have its own spectrum and also does not have its own network infrastructure but usually has business arrangements with traditional mobile operators to buy minutes of use for sale to its own customers.

Though the average mobile phone user in Nigeria owns 2.39 SIM cards, according to a 2012 study by research firm, Informa, telephone penetration is still only 61 percent. As at November last year, Nigeria had 150.7 million connected lines. The total installed capacity on all networks was calculated at 211.7 million. This means only about 56 percent capacity is utilised.  The value of the remaining is arrived at by multiplying 60.98mn by monthly ARPU of N1.011 to give N61.65 billion. The TNS research which looked at how the telecom market would change in 2013 said that despite current quality of service problems experienced in the country, the MVNO is a possibility. When this happens, it would disrupt the competitive landscape of the Nigerian Telecom market, the research said.

Seyi Adeoye, a director at the TNSRMS, said there is huge opportunity for MVNOs in the Nigerian market. “It is a fantastic way to effectively utilise the idle capacity,” he said, adding that in other markets, there are MVNOs because of the profitable nature of the business. Wale Goodluck, corporate services executive, MTN Nigeria, told Benuzorreports in a phone interview, “I think it is a natural growth direction in the industry. But the reason why we have not seen MVNOs in a country like Nigeria is that there is not enough capacity in the system. Perhaps when there is sufficient capacity, we will be willing to sell wholesale capacity to any company who wants to sell retail telecoms services under another brand name”.

Speaking in the same vein, Guy Zubi of Pyramid Research pointed out that the main challenge prospective emerging market MVNOs will face is not necessarily low Average Revenue Per User (ARPU), but network capacity and the extension of the addressable market. He advised, “A MVNO business model established in an emerging market will rely on the same basic principles that apply to a developed market MVNO. “However, emerging Market MVNOs must be more cost-efficient than their developed market counterparts. They must also be more cost-efficient than emerging market operators, most of whom are already fairly creative in keeping costs down”, he said.

According to the research, mobile number portability (MNP) which is currently being experimented would further increase the level of competitiveness among the current operators, with direct impact on products and service pricing. The NCC commenced testing of proposed MNP initiative last December, with eyes on April 2013 for likely roll out and further engagement with the Nigerian Mobile Operators.

Competition within the Nigerian Telecom market is aggressive: Penetration of Telecom services in Nigeria is well over 70 percent, the market is still growing but at a significantly reduced tempo and prices are declining. The research therefore said the immediate priority for network operators is the need to accelerate diversification of revenue streams. This would also help reduce churn rates and increase Average Revenue Per User (ARPU).

With about 80 percent of the Nigerian Telecom market revenue within the middle and high value telecom segments, the research advised that there is a need to develop a unique engagement model for this class of Nigerians, especially enhancing personalisation of mobile products/services and context based marketing. The Nigerian middle class is expanding and fuelling growth in Africa’s most populous nation. For the middle class it is all about lifestyle and the growing sophistication of the class is coming with new services such as fertility treatments, online retail stores, auto workshops and funeral homes…to them; it’s all about lifestyle.