Leveraging Technology To Realize The Potential Of A Data-centric Market

By Christoph Fitih
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The connectivity and wireless networks have forever changed the way Nigerians live and work. Mobile money is now part of everyday life and connectivity is opening up new opportunities for people across the continent.In 2015 mobile technologies and services generated 6.7% of GDP in Africa and this is further likely to increase to $210 billion by 2020 as mobile services lead to an increase in productivity, says GSMA Mobile Economy Africa Report 2016 .

At the same time, it is only right to acknowledge that this transformation and expansion of connectivity would have been much faster if the problems faced by the service providers were effectively addressed.

Telcos in Nigeria face some very different and unique challenges. Persistent power shortage and outages is a case in point. Lack of a reliable power service hampers the service providers from providing seamless coverage and services. The telcos are forced to use generators on a daily basis. This leads to a significant and an avoidable increase in their operational expenditure.

Besides the power issue, the Average Revenue Per User (ARPU) is quiet low in Nigeria, when compared with other regions. Low ARPU is tough for telcos to sustain when the cost of setting up and maintaining the networks is typically very high. Low paying capacity of the subscribers in the region means that the service providers cannot increase the tariff beyond a point. It is a chicken-and-egg situation for telcos. Unless and until they spend on expansion they miss out on new subscribers and new revenue streams and if they don’t the uptake remains limited.

As if low ARPU was not a big enough problem, the telcos now also have to deal with competition from Over-The-Top players, who are much more innovative than telcos and threaten to eat into their profits even as they use telco networks. Increasing use of applications such as WhatsApp and Facebook Messenger is also leading to a significant loss of revenue for the Nigerian service providers.

Innovative solutions to the rescue

These challenges mean that telcos need to think of innovative means to address the growing connectivity demands of their customers, while they continue to remain profitable. The traditional network strategies that are successful in developed countries don’t meet the requirements of a developing country. The approach needs to be profoundly different to address the various challenges of the Nigerian market.

The service providers need to leverage the technological solutions to offer best-possible services at price points in sync with the paying capacity of their subscribers. Fortunately, technologies such as automation and cloud allow the telcos to bring down the cost of network deployment and management significantly. Small form-factor solutions, which are also easy-to-install can further bring the cost down for the service providers. Form factors that support many technologies in the same structure can also help the African service providers to bring the cost down.

The power problem can be addressed by using the alternate power of energy like solar and wind to run the telecom network. It is heartening to see that some service providers have already started using solar-powered base stations in the continent.

Is 2G still relevant?

Telcos tend to replicate the network strategy implemented by the service providers in the developed countries. However, this might not be the right strategy to address the problems and challenges of developing regions.

Our solutions have been deployed or in production trial in more than 30 networks and we believe that in keeping with the low paying capability of the region, the telcos stand to gain by using 2G technology until the time the subscribers are ready to move to the 4G network. We are also conducting trials in Africa and 2G solution is going to be relevant for a long time here. A 2G solution, which leverages the advantages offered by Network Functions Virtualization (NFV) and Software Defined Networking (SDN) to provide a better quality of services to the subscribers cost-effectively will be of immense benefit to the telcos. It will lead to faster expansion of services in the rural areas.

The 2G technology continues to be relevant in developing countries and will play a critical role in bridging the digital divide. More than 60% of the subscribers are on 2G network on the continent, and 43% of the subscribers will be using the 2G network even by 2020, according to GSMA report. A modern 2G solution will not only help in bringing down capital expenditure of the telcos but will further allow them to connect the unconnected for a genuinely inclusive growth. Besides, it ensures a smooth migration to 4G without any additional investment.

Better connectivity opens up a plethora of opportunities for everybody, and the service providers would do well to use innovative and cost-effective technological solutions to address the connectivity demands of people from all sections of the society. 2G combined with the benefits of virtualization offer an effective solution to the challenges faced by the telcos in the region.

Christoph Fitih is Sales Director – Africa, Parallel Wireless

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