Inside 2 Decades of Mobile Telecommunications in Nigeria
Inside 2 Decades of Mobile Telecommunications in Nigeria
Halima is a thirty-year-old street vendor who is inexperienced and untrained. On a busy street in Ikeja — a popular commercial hub in Lagos, Nigeria's economic capital — she sells roasted corn, yam, sweet potato, or plantain, depending on the season.
Typically, she displays her wares in front of one of the area's lock-up shops occupied by a laptop salesperson. She sits on a stool in the walkway, leaving only a few inches for pedestrians and customers.
Halima eventually rummages through her waist purse and pulls out her phone. She contacts someone who informs her of the current price of the plantain and the anticipated delivery date. Although basic, technology has provided her with timely information, among other benefits. It has undoubtedly made life easier for her, as it has for many other Nigerians.
Over two decades have passed since the Nigerian Communications Commission (NCC) held its GSM auction, but that milestone appears to have passed unnoticed. Perhaps this was due to the recently lifted embargo on SIM registration, which effectively halted an industry that was expected to account for 12.45 percent of GDP in Q4 2020.
Nonetheless, a tweet was sufficient to remind people how long the country has benefited from mobile telecommunications and how it has transformed virtually every other economic sector.
If anything, the industry has evolved steadily to enable innovations and aid the country's technological competitiveness on a global scale. Additionally, mobile devices have become more accessible and affordable over time.
Beyond that, there are the quantifiable trends that the country has documented throughout the process.
Steady increase in the number of Internet subscribers and cellular subscriptions
Since 2001, Nigeria has seen a steady increase in mobile phone users. According to Statista, the country's cellular subscriptions increased from 270,000 in 2001 to 185 million in 2019.
According to a different dataset, the country increased Internet subscribers by 55.7 per cent between 2015 and 2020, with a five-year projection indicating continued growth.
Interestingly, we cannot attribute this growth to Nigeria improving in lockstep with the rest of the continent. Compared to other countries that entered the mobile telephony market before Nigeria, these figures are quite impressive.
According to another report, Nigeria topped the list of Internet subscriptions in Africa in Q4 2020 by a significant margin. Egypt, Kenya, and South Africa came in second to fourth place, having introduced mobile telephony in 1996, 1999, and 1994, respectively.
Although Nigerian telcos lost several mobile subscribers during the four-month SIM registration blackout, data indicate steady improvement.
Launch of The first Submarine Cables
SAT3/WASC cable that connected Portugal to South Africa via West Africa. Telkom Group, France Telecom (now Orange), NITEL, TCI — an AT&T Inc. subsidiary — and VSNL were all major investors in the project.
If you're curious, submarine cables are laid along the seabed and carry communications signals between stations located across multiple countries and continents. They transmitted approximately 95% of all international data between continents and islands, according to a 2012 Seapower Australia report.
The first cable to land in Nigeria was the SAT3/WASC cable, which proved invaluable. In Nigeria and several other African countries, a minor disturbance or disruption resulted in Internet outages.
MainOne changed the game in 2010 when it launched Africa's first private submarine cable off West Africa. While the previous cable had a capacity of 800 gigabits, MainOne's cable has a capacity of 10 terabits.
We've extensively documented the cable's impact on Internet connectivity in West Africa, and you can feast on our insightful interview with Funke Opeke, CEO of MainOne, on the company's tenth anniversary.
Nigeria has since been served by the GLO-1 cable, the ACE cable, and the WACS cable, owned by Glo, Dolphin Telecom, and MTN.
These cables have a combined capacity of 40 terabits, but according to Opeke, Nigeria uses less than 10% of this capacity. MainOne's arrival was a significant victory; Facebook and Google's impending cable arrivals will be equally significant, but much more work remains.
Local Ownership of Telecom Companies
Econet (now Airtel) and MTN, Nigeria's first two telecom companies, arrived from Zimbabwe and South Africa, respectively, to capitalize on a neglected market. Two years later, in 2003, Nigerian entrepreneur Mike Adenuga founded Globacom (now Glo).
Etisalat (Now 9mobile), which began operations in 2008, exited the market in 2017 due to mounting debt, as local investors acquired the country's fourth-largest telecom company.
MTN listed on the Nigerian Stock Exchange (NSE) in 2019, easily surpassing Dangote Cement as the country's most valuable company.
This increased local investor participation in the stock market. The introduction of apps such as Chaka and Trove facilitated this for a broader market.
Important Regulatory Landmarks
Without critical regulations, Nigeria's telecommunications sector would not be where it is today. These regulations aided in developing the GSM and the first submarine cable; at other times, they wreaked havoc on the industry.
The Nigerian Communications Commission (NCC) is established in accordance with Decree 75 of 1992. This contributed to the sector's deregulation, reduced reliance on NITEL's substandard services, and allowed for the entry of new players.
Econet Nigeria and MTN Nigeria obtained the first two licenses through the GSM Auction in January 2001.
National Broadband Plans were implemented to increase Internet penetration. This policy document covers critical areas such as right-of-way, InfraCo frameworks, and collocation.
SIM registrations were introduced in 2010: While this may appear to be a simple know-your-customer (KYC) exercise, it has had significant ramifications. Among them was MTN's 4 trillion ($5.2 billion at 2015 exchange rates) fine, which eventually resulted in the company's listing on the Nigerian Stock Exchange in 2019.
The 2015 do-not-disturb (DND) regulation, which destabilized the value-added services (VAS) industry. Take a look at our in-depth analysis of this.
The NCC is currently developing a policy for the development of Nigeria's 5G network. Once completed, it can have the same massive impact on the space as the GSM licensing in 2001 did.
The Proliferation of Internet Service Providers (ISPs)
A review of the entry and exit of mobile telecom operators (MTOs) in Nigeria since Econet and MTN obtained the country's first operating licenses in January 2001 (based on MTN's report) indicates that the country's telecoms industry has been more competitive.
Earlier articles discussed how and why this hadn't translated directly into affordable and accessible Internet services; apparently, a number of factors are at play.
Apart from the major four — MTN, Airtel, Glo, and 9mobile — there are also independent broadband providers known as Internet Service Providers (ISPs).
According to the NCC's website, 55 registered Internet service providers (ISPs) serve residents throughout the country.
Airtel and ipNX were named the fastest and most consistent mobile and broadband providers in a recent study released by Ookla (Speedtest.net). MTN, Glo, and KKONTech round out the list of ISPs.
Interestingly, KKONTech was not included on the NCC's list as of Q3 2020. What exactly does this imply? There are almost certainly additional ISPs that the Commission has not recognized.
This suggests that the country's ISPs may face less stringent entry requirements. The cost of deploying Internet infrastructure for last-mile broadband delivery across the country, on the other hand, may present a challenge.
This was confirmed by Gbolahan Awonuga, Secretary, Association of Licensed Telecommunications Operators of Nigeria (ALTON). He mentioned that some states have reduced the cost of Right of Way (RoW) and that Lagos State's 6,000-kilometer fibre cable project would alleviate some of these costs for MTOs and ISPs.
Financial Inclusion Drive
Initially, as established in this article, mobile phones appeared to be unavailable to the poor, a situation that has changed over time. A sizable portion of the population now owns a mobile phone.
According to a GeoPoll report on mobile phone penetration in Sub-Saharan Africa, 80 per cent of Nigeria's adult population owns a mobile phone — 32 per cent a smartphone and 48 per cent a non-smartphone.
While Nigeria is not as reliant on mobile money as Kenya, Ghana and some other African countries, mobile phones have significantly fueled fintech solutions based on apps and USSD. Most of Africa's web traffic is mobile-based; 71.5 per cent in Nigeria is a clear indicator.
From basic payment solutions to APIs, the Nigerian tech ecosystem has benefited from the country's high mobile phone penetration, while fintech solutions have facilitated financial inclusion. However, more work remains to be done.
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