Telcos poor utilisation of 3G spectrum slows broadband growth

Ben Uzor Jr

After four years of commercial rollout of 3G (Third Generation) services in Nigeria’s telecommunications market, Mobile Network Operators (MNOs) have failed to efficiently utilise the 3G spectrum resource to drive ubiquitous broadband availability across the entire country. Estimates reveal that Nigeria had little above 6 million 3G subscribers as at the end of 2011. This figure, according to industry analysts, weekend is equivalent to about 6.4 percent of the total mobile subscriber base and also indicative of operators’ defective strategies in terms of proficiently driving up utilisation of the 3G spectrum thereby enabling more Nigerians especially those in the rural communities have access to reasonably priced broadband internet services .

The total number of active telephone subscriptions in Nigeria has reached 99.14 million as at March 2012, according to data from the Nigerian Communications Commission (NCC).  A report by Business Monitor International (BMI) assessed by Business Day at the weekend revealed that Nigeria had about 3.2 million mobile customers with 3G-enabled handsets by the end of 2010.Interestingly, this sound like a fairly large amount but, according to analyst at BMI, it was equivalent to just 3.7 percent of the total mobile users. According to the report entitled: ‘Nigeria Telecommunications Report Q2 2012’, the number of 3G subscribers grew by 113 percent from approximately 1.5 million at the end of 2009 and 950, 000 at the end of 2008.

The commission awarded 3G licenses to MTN Nigeria, Airtel, Globacom and Alheri Mobile Services in March 2007. By December 2010, Etisalat Nigeria acquired a license to provide 3G services by buying start-up Alheri, a wholly owned subsidiary of conglomerate Dangote Group. Globacom launched commercial 3G services during December 2007 in Lagos, Abuja and PortHarcourt. In recent times, the federal government and the NCC have received heavy knocks from operators and stakeholders in the telecoms industry over poor spectrum management. Besides, telecoms operators say the unavailability of requisite frequency spectrum is slowing down broadband internet network expansion plans, especially in the rural communities.

Eugene Juwah, executive vice chairman, NCC said in an interview, “If you check frequencies in 2.1 GHz (3G), Nigeria has offered more frequencies than any other country in the world with very little impact in terms of broadband penetration.” Nigeria has one of the lowest broadband penetration rates in the world at a meagre 3 percent. Juwah said, “Operators have not done much with these scarce frequency resources. I have said it before if the commission has more spectrum, we will give it out. The only spectrum NCC has is in the 2.3GHz band and we are going to auction it this year. We have decided at the National Frequency Management Council (NFMC) that the 2.6GHz which is the spectrum telecoms providers need will be planned properly with the broadcast industry, re-farmed and we decide how to allocate them to telcos.

“However, these frequencies will become free in 2015. Re-echoing the view of Juwah as it relates to efficient use of 3G spectrum, Kazeem Oladipo, general counsel for MainOne Cable Company told Business Day in an interview that telecoms operators have not done much. “Anytime, I hear a clamour for more frequency spectrum allocation, the next thing that comes to mind is what telecoms operators have done with the bands allocated to them. Look at the 3G spectrum, operators in Nigeria have not done much with it from a broadband penetration standpoint. They have not made the most efficient use of these spectrum frequencies to even justify further allocation. In all honesty, they are not utilising the 3G spectrum efficiently”.

Though, the NCC publishes detailed data on the mobile market, it does not comment on 3G customer numbers. In its YE11 results, MTN reported 1.7 million data active smartphones and 330, 000 dongles on its network. This, according to analysts at BMI implies that MTN accounted for around a third of Nigeria’s 3G subscriber base in 2011. According to the industry analysts, increasing availability of low-cost smartphones and lower data tariffs because of cost effective international bandwidth from the growing number of submarine cables systems on the shores are major factors driving uptake of 3G services in Nigeria. BMI expects that the number of 3G customers to rise to about 9.2 million by the end of 2012, and 24.386 million by the end of 2016. At this point, the 3G market will account for nearly 19 percent of all mobile subscriptions.