Why 5G Services In Nigeria May Remain Elusive For Now

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Apathy among operators, stemming from a lack of confidence in the sluggish economy, is seen as a significant barrier preventing licensees for fifth-generation (5G) telecommunications services from offering robust services at present. Despite substantial investments in ‘Project 5G’, the government’s mishandling of spectrum, a critical national asset, has compounded the challenges hindering the rollout of 5G.

Spectrum, crucial for telecommunications and broadcasting services, is managed by the government, and its management plays a pivotal role in the success or failure of such services. In 2001, under the leadership of Ernest Ndukwe, the Nigerian Communications Commission (NCC) embraced technology neutrality, leading to the digital mobile license (DML) auction, securing spectrum for this purpose. With approval from the board, led by technocrat Ahmed Joda, the NCC obtained spectrum and allocated it to potential bidders for the DML.

The auction, hailed for its transparency, surpassed expectations, establishing a benchmark for global DMLs. However, a setback occurred when Communication Investment Limited (CIL), led by Mike Adenuga, suffered a significant loss due to encumbered spectrum. Despite outbidding competitors like MTN and Econet Wireless Nigeria, CIL faced challenges as its spectrum was entangled.

Previously, during the era of the “old school” NCC, licenses were distributed to acquaintances, associates, and family members, but Ndukwe’s administration abolished such practices. Motophone Limited, a beneficiary of GSM licenses during this period, contested the NCC’s decision to reassign Spectrum, leading to legal battles.

As the deadline for license payment approached, CIL sought reassurance from the NCC but received none, resulting in the loss of both the license and a $20 million deposit. This setback became a burden for the NCC, despite adherence to regulations. Legal luminaries Aare Afe Babalola (SAN) and Paul Usoro (SAN), representing President Olusegun Obasanjo and the NCC respectively, found themselves unable to intervene due to the clarity of government objectives.

The NCC, bound by regulations, couldn’t deviate without jeopardising the transparency of the process. Though the legal minds involved were esteemed, they couldn’t alter the predetermined course. Had the NCC bent the rules for partisan reasons, it would have compromised the integrity of the auction. Thus, despite the challenges faced, adherence to regulations remained paramount to preserve the fairness and transparency of the process.

Ndukwe and his team held their ground and saved the country from imminent embarrassment. This was the eminent role Spectrum played at the time and the rules were supposed to be adhered to until 2021. However, in a desperate move to impose 5G on Nigerians and generate revenue for the government, a minister who knew next to nothing about 5G and an embattled Chief Regulator went ahead to conduct an auction and assigned spectrum by special arrangements. MTN and Mafab Communications, the pioneer 5G licensees – and later Airtel Nigeria – are yet to justify the acquisition of the scarce national resource, the spectrum.

Spectrum is a radio frequency for telecommunications and broadcasting services and because of its scarcity, it does not come cheap. Operators are aware of this, which explains why 5G remains elusive despite their efforts. Apart from the financial outlays and the crisis of the economy, operators are plagued by a myriad of problems, including the spectrum they were assigned.

The higher portion of spectrum deployment requires more infrastructure investment to provide the same coverage as the lower one. In a rough perspective, one can say 2-3 times the amount spent in 2001 is required today to fully put 5G on equivalent coverage. But the resources are not readily available. For instance, regulators of spectrum around the world know this well. Operators are wooed into using higher spectrum because of the economic benefit derivable, but with the government relaxing the revenue or not collecting it at all. This will allow the operators to divert the fund to roll out in lieu of revenue to the government. Win-win for operators and citizens. It is not clear whether there are incentives and rules of thumb for the execution of 5G services, or if the operators are simply waiting for the right time, tying investments down without any thought for returns.

“The last 5G auction was revenue-focused, not an economic benefit to Nigeria. The revenue has been collected, and the benefit has not been felt by Nigerians for almost three years post-auction period. Nigerians may not see any meaningful 5G deployment in the nearest future,” according to a spectrum analyst who wants to remain anonymous. “For instance, the economics of spectrum dictate that there must be demand for it before it is assigned to an operator to put into use. It is a national resource, and its assignment must be judiciously done to facilitate national economic growth.”

Its positive impact cuts across other sectors as well. “Remember the GSM auction of 2001 that revolutionised the telecommunications sector in Nigeria and continues to impact how we conduct our lives today.”

MTN Nigeria and Mafab Communications emerged as winners of the 5G auction in December 2021, with Airtel Africa to follow in January 2023. By implication, MTN and Airtel, which already had substantial investment in 2G, 3G, and 4G, and corresponding physical infrastructure on the ground, the deployment of 5G would come as a network overlay and could be seamlessly realised, but that didn’t happen.

“Advancement in wireless technologies is synonymous with the quest for a higher range of the spectrum. Such is the trend for the deployment of 1G, 2G, 3G, 4G and 5G. Currently, 6G technology is on trial in several administrations around the world. By the rule of thumb in spectrum management, putting higher spectrum into use requires more investment and additional infrastructure in telecommunications operations. What will take a new entrant in our present stage of telecommunications to roll out a 5G network can only be best imagined,” the anonymous analyst explained.

As another analyst put it, “MAFAB’s emergence as the winner of one of the 5G slots in the auction exercise raised concerns about the possibility of putting the spectrum into use as MAFAB had no existing network to lay on. It is joining the network game when the other players have spent years building generations of technologies.

“For MAFAB, it is equivalent to rolling out a network from scratch with the expectation to compete with already established networks. This remains a daunting task from whichever perspective it is viewed.”

Another expert believes that the consequence is a national resource lying dormant, instead of being utilised for the benefit of citizens and national economic growth. A new entrant into the market faces insurmountable challenges in rolling out 5G due to lack of infrastructure, hindering competition. Consequently, MAFAB can only speculate and wait until an operator willing to invest in infrastructure emerges.

The individuals who initiated and orchestrated the auction were in the prime position to elucidate the rationale and timing behind it. However, no officially commissioned study indicated a necessity for the 5G auction at that juncture. Essentially, there was no discernible demand for the auction. Many industry observers opined that the auction wasn’t geared towards sector growth but rather towards generating revenue for the government, for motives known solely to the officials involved. The participation of MAFAB, a relatively unknown player without existing infrastructure and its subsequent success in acquiring a slot amidst competitors with over two decades of continuous investment and rollout, raises eyebrows.

Additionally, it was noted within the industry that only MTN and Airtel among the major players participated in the auction, with 9Mobile and Glo abstaining, even in subsequent cycles. The prevalent belief was that these operators had minimal interest in 5G spectrum due to ongoing focus on consolidating 4G networks, competition, high operational costs and challenging business environments. MTN and Airtel’s acquisition of spectrum was characterised by uncertainty about the future, rather than immediate benefits, as evidenced by their reluctance to prioritise 5G rollout.

The scarcity of reliable statistics demonstrating 5G performance further underscores the lack of ubiquitous 5G services. The absence of urgency from key players like MTN and Airtel, coupled with MAFAB’s incapacity and disinterest from 9Mobile and Glo, casts doubt on the success of the 5G spectrum auction.

A common principle governing spectrum utilisation in the telecommunications industry posits that when spectrum value doubles, infrastructure investment doubles as well. Whether there exist incentives or guidelines for 5G service execution remains unclear. Operators might be withholding investments until opportune moments, without regard for potential returns.

As the wait for 5G services continues, sympathy is extended towards the operators, who have already paid license fees while the government has moved on.

Sonny Aragba-Akpore
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