Why Africa Needs “Affordability” More Than 5G

Why Africa Needs “Affordability” More Than 5G

The positioning has started: every telecom operator is bragging about the wonders of 5G. From Barcelona to Bauchi, the message is the same: 5G is going to change the world, offering faster connectivity. Sure, the technology would do just that. But in my beautiful Nigeria, is that really the issue? In my opinion, the most important challenge before telcos in Nigeria and most parts of Africa is not 5G but affordability of the services.

Yes, if going 5G increases the cost of services, telcos would lose more customers. In other words, even if they improve speed and other auxiliary features, without reducing cost, through 5G, they would not see a lot of traction in their businesses. I have a case ready: when 9Mobile (yes, Etisalat Nigeria) was at its peak, it had the best network quality. But that did not bring many users because it had the most expensive service in the nation.

So, 9Mobile was the “4.5G network” [ahead of the lower level networks in the country] but that did not help it because few could afford the services. If we follow the same analogy, investing in 5G while necessary should not be expected to reverse market issues anchored on the limited purchasing power of the consumers.

5G Technology is driven by 8 sepcification requirements (source: gemalto)

The world has about 3.5 billion people which are yet to get online. Africa hosts about 20% of those global citizens. To get online in Africa, the path is largely via smartphone. But instead of the penetration rate of smartphone increasing, it is dropping: in 2017, market share of feature phones [the cheap Nokia old phones] moved from 55.4% to 61% while smartphone dropped from 44.6% to 39% when compared to 2016 numbers. In other words, people dropped their smartphones and went back to feature phones. With feature phones, you do not need 5G networks, you just need a network (2G would do) to do sms and make calls. Our situation is different from what they have in places like U.S. where smartphone business is going through a maturity phase.

The retail apocalypse hit Best Buy’s line of small mobile phone stores. The retailer said it would close all 250 of its tiny outlets. “The mobile phone business has matured, margins have compressed and the cost of operations in our mobile standalone stores is higher than in our big box stores,” CEO Hubert Joly wrote to employees. (Fortune newsletter)

My point is that our major problem is affordability since that is what would drive our march to immersive connectivity. 5G would be a waste and a distraction to most Africans if the hype does not bring down cost. Most cannot even afford 4G; the 5G would be pointless. The key thing is to find ways to make services affordable. And that includes reducing taxes, providing electricity, and other enabling infrastructure. Possibly with those, services will become more affordable.

 


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