By Olayinka Oduwole
I was recently asked the above question by a superior colleague and friend who wanted to know if Africa would benefit from a leapfrog from 3G to 5G. This question was borne out of a previous discussion that had to do with Turkey leapfrogging from 3G to 5G. Simply put, Turkey arrived at the 4G party late and its president, Tayyip Erdogan, was of the stance that Turkey should not waste time deploying 4G technologies to avoid becoming a dumping ground for 4G technologies. The president, however, softened his stance, as 5G regulations and standards were yet to be developed. This led Turkey to instead leapfrog from 3G to 4.5G; 4.5G would then serve as a bridge to accelerating its 5G deployment. So, my friend wanted to know if Africa could replicate such model, knowing that 5G deployments would take longer, as highlighted in GSMA’s report and a previous article.
From my understanding, I think the answer is not in the affirmative. China and the US are some of the leading players within the 5G space. And operators in these countries seem to believe that the commercially viable option is to gradually transit from 4G to 5G. Even as these operators plan to begin rolling out 5G in 2020, they intend to achieve 5G deployment using non stand-alone sites, which involve the use of 5G New Radio (NR) in conjunction with existing 4G core. This is a cheaper and faster route towards the deployment of 5G. This would hopefully give them time to assess the success and failure, and hopefully recoup some investments. By 2023-2025, these operators would then start investing in the development of 5G new core, and then successfully transit to stand alone 5G sites, which requires huge investment.
Generally, in Africa, operators are in the process of transiting from 3G to 4G, and deepening their 4G capabilities within the region. Most 5G use cases (relevant to the continent) can still be operated efficiently using the existing 4G networks. Therefore, I think it makes good business case to invest in 4G networks in Africa, and assess the market readiness before deciding to transit to 5G. Most importantly, roll out of 5G networks can follow the same pattern as observed in other developed markets (China, US, etc.). This would help operators gradually invest, recoup their investments before delving fully into the development of new 5G networks. Furthermore, the demand for 5G use cases would have accelerated and hopefully help justify investment in 5G networks.
In Africa, 5G cannot be a natural progression to 4G, as pointed out in some quarters. Rather, it must be driven by demand, for operators to justify the huge investment in 5G networks. Presently, there is no demand for 5G on the continent, except in South Africa. I am however optimistic that the demand for 5G would gradually increase as the region witnesses an increase in the development of localized smart solutions for the region. Typical 5G use cases that have been pitched over and over again in other regions of the world may not apply here, and where they apply, they may need to be modified and adjusted to meet the region’s’ needs.
On a positive note, even though, Africa may be arriving late to the 5G party, it can benefit a lot by learning from the success stories and failures of those who are currently leading the 5G race.
Commenter: Good article Olayinka Oduwole. Yesterday, at GSMA’s M360 Africa in Kigali, GSMA released its Africa 5G report. Let me flag up a few highlights.
1. Africa has a demand problem and not a supply problem. 46% of pop is covered by 4G but only 9% 4G adoption.
2. Hence 5G will also be supply driven, and networks will be built even before users start using it.
3. While 5G is inevitable, it is not imminent. 2025 is a more realistic date for its mass market availability.
4. Globally, 5G rollout is not based on verifiable business case. Rather, it is dependent on market readiness. GSMA looked at 43 indicators of readiness for 160 countries and it is clear that African countries are not ready for 5G in 2019.
5. Leapfrogging is tantalising but unrealistic. Olayinka has flagged the NSA problem. See page 27 of the GSMA report for a full consideration of the technical, commercial and policy reasons why leapfrogging is unlikely https://www.gsmaintelligence.com/research/2019/07/5g-in-sub-saharan-africa-laying-the-foundations/785/
Author Response: Thank you Mr Emeka for sharing the insightful article produced by GSMA. I am not sure I believe 5G will be supply driven in Africa because 5G in Africa will be more focused on enterprise applications, iot, machine Communications etc. rather than the emBB use case. Now, these use cases can still run efficiently using 4G networks and previous generations and I believe when telcos see a huge number in smart devices, enterprises etc. they would be more than willing to invest. Besides, the NSA option also will help them assess the market readiness before leaping further into developing 5G new core. Chinese and US operators think they would need around 220 -250 billions of dollars for investment in 5G networks. That’s a lot of money for African telcos and I do sincerely think demand can be the only driver for such huge investment.
Commenter: Fair points Olayinka Oduwole. But the reality is a lot more nuanced. If it is based on demand, then there is probably no telco anywhere in the world who should be launching 5G today. I understand your concern about cost. But you need to distinguish between recurrent capex and incremental capex. For most operators, recurrent capex is predetermined based on the capex to revenue ratio. Thus, the CTO gets a chunk of money and decides what to spend it on. Today, she spends it on 4G. By 2025, she will spend it on 5G. There is little appetite, from all of our research, of telcos who want to push for incremental capex for 5G.