Telecommunications operators in Nigeria are considering shelving their plans on investing in 5G infrastructure until current challenge of over the top (OTT) services is addressed. The operators, who are still counting their revenue losses to the encroaching OTTs said it would not make business sense to keep investing in infrastructure while some unlicensed players continue to ride on the facilities to deliver service at no cost.
OTT services such as WhatsApp, Skype, Wechat etc ride on the mobile networks to render text, voice and video call services. In addition to using the networks for generating revenue for themselves at no cost, the increase in use of the services by subscribers leads to continuousdecrease in voice revenue for the telcos.
Speaking on behalf of the telcos, the Chairman Association of Licensed Telecommunications Operators of Nigeria (ALTON) Engr. Gbenga Adebayo, said the activities of the OTTs that started few years ago have continued to eat deeper into the revenues of the telcos. According to him, the telcos had invested massively on the infrastructure with a view to getting returns through the services they render, but the OTT players are making money off them while depleting the revenue of those bearing the costs. “With this situation, you cannot expect the operators to keep investing in 5G infrastructure when current investments in 4G is still being threatened,” he said.
Corroborating this, the President of Association of Telecommunications Companies of Nigeria (ATCON) Mr Olusola Teniola, said the current challenge of OTTs will not encourage operators to invest further on infrastructure. “Some of these operators obtained bank loans to build 4G infrastructure and are yet to get returns on it, how would you expect them to start thinking of investing in 5G infrastructure?” he queried. He called for urgent regulatory action to save the telcos further losses due to activities of OTT players.
However, while the telcos continue to clamour for the regulation of the OTTs, the Nigerian Communications Commission (NCC) said it has no plan to do so as that would mean stifling innovations. The regulator had also noted that while the licensed network operators are losing voice revenue, they are gaining from increasing revenue from data subscriptions, since subscribers must have data to use OTT services.
Teniola, however, countered that noting that revenue from data has not been commensurate with the increase in the number of data subscribers. According to him, voice still remains the major source of revenue for the telcos and data has not been able to cover for what is being lost to the OTTS.
Meanwhile, aside the OTTs challenge, the global telecommunications body, International Telecommunications Union (ITU) had recently advised telecoms operators to be cautious in investing in 5G infrastructure as such venture comes with risks.
5G is the next generation of mobile standards and promises to deliver improved end-user experience by offering new applications and services through gigabit speeds, and significantly improved performance and reliability. In comparison with 4G, 5G offers 10Gbits/s download speed while 4G allows 1Gbits/s speed. 5G networks and services are forecast by independent economic studies to deliver very significant economic gains.
However, the ITU a report titled: ‘Setting the Scene for 5G: Opportunities & Challenges’, warned that while investment in 5G is capital intensive, its commercial gain remains uncertain. Besides, the telecoms body noted that deploying 5G would widen the existing gap between the urban and rural areas as it would not be commercially viable to deploy such service in less populated areas. “Despite the potential benefits, there is concern that 5G is premature and notes of caution are being sounded. There is scepticism about the commercial case given the high levels of investment needed to deploy 5G networks” ITU said in the report.
The report estimates the cost to deploy a small cell-ready 5G network – assuming fibre backhaul is commercially feasible – can range from USD 6.8 million for a small city to USD 55.5 million for a large, dense city. “A viable case for investment in 5G can be made for densely populated urban areas – always the most commercially attractive regions for operators. More challenging will be a commercial argument for investing in 5G networks outside such areas, especially in the early years of 5G deployment. As a result, rural and suburban areas are less likely to enjoy 5G investment, and this will potentially widen the digital divide” it stated.