Nigeria - Operators estimates N598 billion benefits for the economy from mobile broadband

[business day] Indications are that Nigeria’s wireless broadband market will have a direct revenue impact of N598 billion by 2015, the Global System for Mobile Association (GSMA), a global body representing the interests of mobile operators, predicted yesterday.

A new report made available to BusinessDay revealed that mobile broadband can potentially contribute over 1 percent of GDP (Gross Domestic Product) and 1.7 percent of non-oil GDP in 2015, supporting diversification of the Nigerian economy.

Such economic gain, the GSMA however maintained, would depend on a positive environment created by all stakeholders with regard to infrastructural development, frequency spectrum management, and access to internet for women and rural citizens. The report further asserts that if positive policy actions are effectively taken by the federal government to remove barriers to mobile broadband adoption and delivery in the country, the benefits to GDP in 2015 will be an additional N190 billion.

However, according to the GSMA, in bringing this projection to fruition, government support could take the form of harmonisation of tax and levies, as well as proper management of national frequency spectrum.

“The federal government must reduce the 35 percent tax level faced by Nigerian mobile operators, a tax which is double the global average. The federal government must also implement harmonised levies or taxes and environmental approvals processes at state and local levels of government”, Ross Bateson, spokesperson for GSMA told BusinessDay in an interview.

According to the study, only 6 percent of all Nigerians currently have access to broadband services, and 74 percent of those do so through mobile broadband. There is little fixed broadband connectivity outside Lagos, and even in cities, most cyber cafes now connect to the internet using wireless services. Bateson said Nigeria’s poor management of national spectrum could slow down foreign direct investment in the telecoms sector, thus reducing the uptake and growth of mobile broadband.

“The 2.3 GHz award process has been mired in controversy for over a year. More than 2 years have passed since 2.5 GHz was proposed to be offered by NCC, and negotiations over its use are yet to be concluded. There is a lack of clarity over when the vital Digital Dividend spectrum will be passed to the NCC for use by operators, which could dramatically increase mobile broadband coverage”. The GSMA spokesman called on the Nigerian Communications Commission (NCC) to ensure that spectrum is made available quickly and with maximum transparency, using international harmonised band plans.

Bateson also pointed out that the federal government must, as a matter of expediency, implement e-government initiative, including online transactions, for license and levy payment, and support the development of web content and applications as well as commit to publishing state-owned datasets (e.g. population, geography and financial), so that entrepreneurs can easily leverage their benefits.

The report also forecast that wireless broadband will create N410 billion of indirect value through 2015 in various sectors of the economy, namely: Manufacturing, services, and agriculture; diversifying outside the oil and gas industry. This, the report noted, was because industrial productivity increases as workers increasingly use e-mail and electronic file exchange, thus providing quicker access to businesses’ critical information and faster access to more distant customers and suppliers.

Another core benefit the Demoreport alludes to is that improved broadband would increase the attractiveness of Nigeria to foreign investors. Over 30 million Nigerians accessed the internet in 2009, increasingly choosing personal subscription over cybercafé access, the report disclosed. In addition, only 66 percent of users accessed the internet from a cybercafé in 2009. This represents a drop from 82 percent the year before as workplace, home and mobile usage increased.

Key metrics confirming the direct impact of wireless broadband penetration on the Nigerian economy shows that the number of users will increase from 1.3 million in 2010 to 13.9 million in 2015. This figure could grow further with the enormous bandwidth capacity emanating from two submarine cables. Conversely, the GSMA has called on the federal government to adopt best practices spectrum policy, with spectrum resources managed by one entity in order to improve penetration.

However, the GSMA fingered power supply as a key barrier to widening broadband usage in Nigeria. “In Nigeria, where generators work for up to 22 hours a day, two generators (costing in total $40,000) are typically used to power a base station. In more energy reliable markets such as Ghana, Kenya and Tanzania, the cost is about half. “Benchmarks show that OPEX (Operating Expenditure) spend on power per telecom tower in Nigeria is as high as $2, 000 compared to $429 in India”, the report stated.

Broadband to generate N598 billion for Nigeria’s economy by 2015, says GSMA