TBT: Three Years of GSM in Nigeria...




By Emeka Oparah

(This article was first published in 2004) 

Three years ago, August 6, 2001, to be precise, Econet Wireless Nigeria, as it was then called (now Vmobile) made history when it became the first company to launch Commercial GSM service in Nigeria. I recall with nostalgia, the pangs of excitement I went through as I browsed the internet in a friend’s apartment in London, searching for Nigerian newspapers to read the story of the launch. So, last Friday, August 6, 2004, as Vmobile rolled out its new services, Vcorporate Solutions, at a media launch held in Eko Hotels & Suites, Lagos, I took a trip down memory lane, thinking as I travelled, so to say, how far we have all come-as operators, subscribers, regulators, Nigeria (as a country), the Government, the banks and other financial institutions, marketing communications companies, petroleum marketers, equipment suppliers, etc. 

The statistics are quite impressive and Nigeria has left the infamous company of Afghanistan and Mongolia as one of the countries with the lowest teledensity (telephone lines per 1000 population) in the world. The ITU standard is 1%, which translates to one telephone line per 100 people. With 6 million telephone lines, up from less than half a million before the advent of GSM (which was lamentably 100 years after the first telephone call was made in Nigeria), the telecommunications sector has really performed creditably. Many thanks to the GSM Operators, which now have a combined subscriber base of some 5 million lines, Nigerians have cause to celebrate a third anniversary, in spite of criticisms from certain quarters. 

One of the more important implications of the GSM revolution, if you like, is the obvious changes in people’s lifestyle. Suddenly, Nigerians have realised that a mobile phone is neither a status symbol nor fashion statement (though some people still make it seem so), but a powerful tool for business, relationships, security, entertainment and fun. Transactions, which otherwise took a whole week to conclude, now get sorted out over the phone and within minutes. People no longer have to make avoidable trips from one part of the town to the other (for instance, a trip from Ikeja to Victoria Island could take more than four hours on a good day!) to keep appointments with clients or prospects, who would have left the office just 15 minutes earlier. In fact, with mobile phone one can actually keep track of the proceedings of a business meeting. For the technology savvy, meetings can now be held with partners via conference calls with more sophisticated handsets-something that existed only in realm of imagination a few years back. 

It has become easier to control visit by friends and relatives, as they are not likely to barge in on one another unannounced because of access to phones. At least, you get forewarned these days, and you now have the option of opting out of the “hosting rights” or pleading “out of town”, in the case of stubborn acquaintances, when you really do not wish to be disturbed. I have friends, though, who still get to my gate before calling me, after the Maiguard has told them “sorry, oga has travelled” and I am truly out of town! For some of us, who have relatives spread across the country, things could not have been better with GSM. Personally, I hold a tele-meeting with my “Local Government”, which includes my mother in Mbaise, one of my siblings in the University of Ibadan, two others in the University of Nigeria, Nsukka, another in the University of Port Harcourt, our Reverend brother in Enugu and my younger sister in Iju, Lagos. For those who have close-knit families, the feeling is simply awesome, when you have everyone on the line and discussing domestic issues and exchanging hilarious banters. Anyway, for now, lets defer the debate about the likely effect on such long calls on our purse.

If you have not received assistance from the Vmobile 199 (what used to be known as Econet Crisis Centre) or never had a breakdown on Third Mainland Bridge in Lagos, you probably may not appreciate the import of the mobile phone as an essential security gadget. Many lives have been saved by a mere phone call from either people in distress or those around them. I personally recall calling the Crisis Centre (Vmobile 199) two years ago, when armed robbers stormed our estate in Ikeja. My call was promptly transferred to the Police, who promptly arrived at the scene and saved us from serious trouble. And such stories abound, including accident victims who have been rescued or fire incidents that have been arrested due to quick intervention occasioned by the use of mobile phones. 

As for entertainment and fun, there seems to be no limit to what people can do with their phones nowadays, and phone manufacturers are outdoing each other in the race to offer to better ring tones and other accessories like multimedia, camera, video recorders/players, hi-fi audio players, etc. Nigerians are doing a lot of things, so to say, with ring tones and phone cameras. Love notes, motivational messages and even “killer numbers” or “satanic numbers” are circulated via SMS. 

Undoubtedly, mobile phones have changed the way we live, for good, and at times for bad, given the growing trend of scam calls and other crimes committed via mobile networks. In other words, while GSM has had positive impact on Nigerians, it has also had deleterious implications. One of such areas is the area of safety and security, where it has saved so many lives, yet caused so many deaths. Many road accidents have been caused by “driving and phoning”, a menace that has become so deeply engrained in our driving culture so quickly. Also, many a robbery has been co-ordinated via mobile phones, further highlighting the dark side of the “life saving device”.

May be, another down side of GSM, which one must not fail to mention is the disruptive and, at times, destructive impact it has had, unfortunately, on some marriages and such “heart-to-heart” relationships. Almost on a monthly basis since the coming of GSM, Nigerians are regaled by the salacious tales of the collapse (or imminent collapse) of one high profile marriage or the other on account of lascivious text messages or picture messages or even calls to either of the couples. Some wives have turned CIA Agents overnight, as they have practically taken full time employment to keep watch over their husbands’ every move. Some husbands too, who probably hold their spouses in less than high moral esteem have devised various ways of monitoring their calls and text messages, with deleterious consequences for any infractions, if you get the drift. The one I have yet to come to terms with is that of divorce by sms, where a husband could legally divorce his wife by sending the message “I divorce you” thrice! Anyway…!

More seriously, it is important to point out that many industries, particularly Advertising and Media, as well as Construction, have been major beneficiaries of the GSM revolution. The GSM companies have probably the biggest marketing budgets in the country, with radio, press, television and outdoor advertisements valued at over N6 billion in the past three years. This is aside huge investments in sports, events and entertainment sponsorships. One way or the other, the GSM operators have given a relatively new impetus to personality endorsements compared to the period preceding the commencement of their activities. Musicians, footballers and other athletes as well as literary personalities have been used in the marketing campaigns of the companies, which are jostling for share of mind, share of voice and what a professional colleague calls share of pocket. 

For the construction industry, there couldn’t have been a better time. Hundreds of base stations and shops (sales outlets) have been constructed (hundreds more are being constructed and thousands more will be constructed) by the GSM operators around the country. As a matter of fact, the license provides for an average of 4,000 base stations per operator pan-Nigeria, which means more business for the construction industry. And with this comes employment opportunities. Aside the Engineers and artisans being engaged on a daily basis by the construction firms building cell sites, the GSM operators have directly employed over 3,500 people. If you add to this the over 25,000 people indirectly employed by the companies (dealers, distributors, franchise dealers, card hawkers, road-side phone operators and business centres, etc), then you can appreciate why the Federal Government perceives GSM as a critical component of its “democracy dividends”. At the launch of Vcorporate Solutions, last week, the CEO of Vmobile, Mr. Willem Swart, told the audience that the company has completed the appointment of 50 Nigerian Executive Heads of Divisions, in the company’s quest to broaden the scope of its human resources and empower Nigerians to achieve their best potentials. 

Perhaps, another industry that has benefited from the GSM revolution is the banking industry. In addition to existing sales relationships between banks and Operators, some banks have been very active in providing funds for the mobile companies to expand their networks. At the last count, over N25 billion has been raised through local banks to finance the operations of the GSM companies, a feat that was hitherto the exclusive preserve of very big banks and foreign financial institutions. 

Rosy as the picture above is, there are still some acute impediments to the development of GSM in Nigeria. These impediments are directly or indirectly proportional to the satisfaction customers are deriving (and will derive) from GSM services. They affect quality of service (network and customer service quality) as much as they affect coverage, which are the critical success factors and the least common denominators of GSM operation anywhere in the world. 

Power generation is one of the major challenges GSM operators are facing in Nigeria. It is indeed a debilitating challenge. I did highlight sometime ago in a write-up entitled “GSM and the issue of power generation” the etymology, scope, implications and complications (if you will) of the power generation problem. Not only does the public power supply system function spasmodically, if at all, the alternative sources are also suffering from high cost and scarcity of fuel. Typically, the architecture of a GSM base station in Nigeria is such that each one of them comes with two intelligent generators, battery, UPS and a minimum of 5,000-litre tank for holding diesel. In this case, the public power supply is literally on stand-by. This is contrary to what is obtainable in most parts of the world, where the system is down to just UPS and probably battery, for the extra sensitive. 

If each operator installs an average of 4,000 base stations, as the license stipulates, to achieve pan-Nigeria coverage, it translates to a whopping 32,000 generators across the country, which would be quite a handful! Just imagine the logistics of fuelling and maintaining such a huge number of generators! Then, imagine the costs! At the current (and potential) cost of diesel, GSM operators will certainly be spending quite a bit of their operating costs on that commodity alone. Earlier in the year, Vmobile, while announcing its half-year result for July-December, 2003, stated that it used over 2 million litres of diesel, which ran into several billions of naira pump price, transportation and other costs considered. Regrettably, some people still compare the GSM industry in Nigeria and those of European and even other African countries, where the issue of power generation does not even arise. 

Another factor is multiple taxations, by the various tiers of government. I suppose this is not peculiar to GSM operators or telecommunications companies, for that matter. The Manufacturers Association of Nigeria, MAN, has been shouting itself hoarse for as long as one can remember over the issue of multiplicity of taxes charged by the Federal, States and Local Governments. In the past, companies have had their facilities shut down by government officials under the guise of unpaid taxes and levies. With the perceived huge profits being made by GSM operators, they are the worst hit. For example, operators are made to pay certain amounts per meter of their masts located in various parts of the country. At times, such payments are made to the local government, where it is located, as well as the state and federal revenue authorities too. 

In addition to this, is security (read insecurity). There have been cases in the past in the more volatile parts of the country, where operators have been asked to pay certain fees to assuage the feelings of some spurious god (or deity), before the construction of a base station commences. There was a case of an operator, that had its equipment thrown into deep waters, because the “oracle of the people declared that the equipment would interfere with the health of pregnant women in the community and their unborn babies”. That may be a slightly hyperbolic anecdote, but it graphically illustrates the hassles operators go through in rolling out their network. One operator was said to have directed its Site Acquisition Staff to adopt what they called “the Jesus Model”, which states that “anywhere you go and the community shows the least resistance, dust off your sandals and go away with your equipment”. For security reasons, this will work, but it sure would not work for the development of an effective cellular network-as base stations would end up where they are not supposed to, based on site surveys. 

Corollary to this is the incidence of incessant and, sometimes, unreasonable demands by host communities. First, they make it seem like you are welcome. Once your facilities are in place, they then begin to inundate you with letters demanding such infrastructure as road, electricity, schools, hospitals, etc. Under normal circumstances, there is nothing wrong with companies putting back “something” in the communities they operate, but it has to be by consent and not by force. Unlike the oil producing companies, who are taking “something”, so to say, from the communities, GSM operators are actually bringing “something” to the areas. Already, we have seen one of the operators establish a Foundation for Corporate Social Responsibility initiatives. Other operators are at various stages of doing same, and are currently doing one thing or the other to support the Federal Government’s initiative of bringing development to and alleviating poverty from the local communities. 

Other challenges include the twin problem of high foreign exchange and high interest rates. Again, this is not peculiar to telecommunications companies, but given the volume of imported content of their operations, the impact is certainly more significant. This immediately takes one’s attention to the associated problem of import duty. As part of the pioneer status granted the operators, government had granted 25 per cent duty waiver on all import of core network materials. At present, only Globacom is enjoying this facility, having come in later than other operators. But the operators have made several presentations to both the Government and the National Assembly, with the kind support of the National Communications Commission (NCC) for an extension of the facility, which lasted just two years. The argument of those opposed to the waiver is that the operators are making huge profits. It is important to note that whatever real or paper profit posted by the operators at this stage is eaten up by capital investments in network expansion and infrastructure development. If this is considered against the backdrop of the government’s unfulfilled promise to provide stable electric power supply and national transmission infrastructure, you will agree that the operators need more than just the pat they are getting on their backs for successful three years of operation.

In addition to the role played by the Federal Government through the Ministry of Communications, two institutions have played very commendable roles in the realisation of the milestones achieved so far by the GSM operators: NCC and the media. While the NCC has been very patient and supportive of the operators in the implementation of the Digital Mobile License (DML), the media have lived up to their rating as watchdogs and purveyors of public opinion. Even when they have sometime tended to opt for the sensational, like in the recent case of “killer GSM numbers”, the media have mostly worked in the interest of all the stakeholders in the telecommunications industry. As someone would say, for the kind of revenues they are recording in terms of advertising support, they could not have performed any lower than they have. Yes, the ad revenue may be high and is still going round, but it is only a dedicated and conscientious media that would focus on informing and educating the people as well as creating awareness for the operators and their activities-as the Nigerian media have done these past three years. 

 

If one wanted to be epigrammatic in the assessment of the first three years of GSM in Nigeria, one can say without contradiction that “at last Nigerians are talking to themselves!” The next three years would be even the more challenging, with emphasis shifting to customer service, quality of service, distribution and coverage, as the CEO of Vmobile, Mr. Willem Swart has said. Customers are getting tired of excuses for dropped calls and such other network-related problems. They now want to start and conclude a discussion while driving from say Victoria Island to Ikeja or Lagos to Benin without a glitch and correctly billed. They want to be able to reach out every 500 meters and have access to recharge cards and within one kilometre get a connection (SIM card and handset). They also want to be able to contact an operator either via the customer care line or at any of its shops or sales/customer care outlets and have their problems promptly and satisfactorily resolved. Also, they want to stop carrying more than one phone at a time and travel the whole country without losing touch with family, business associates and friends. 

Those are the current challenges (in addition to the existing ones enumerated elsewhere) which Vmobile has identified as the basics of GSM and is currently focusing on. As I will always say, things can only get better in this industry, as experience has shown these past three years.

 

* Oparah, then PR Manager of Vmobile Nigeria, is now Vice President Communications of Airtel Nigeria.


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