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.