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Nigeria – Dancing around the threshold of a real broadband take-off

Nigeria is poised to move decisively into a better bandwidth future. As Sub-Saharan Africa’s second data largest market and maybe one day its largest, what happens in Nigeria is crucial to the rest of the continent. It has the size of home market to make all sorts of things happen smaller countries do not. Russell Southwood takes a tape measure to the distance between dream and current reality.

It’s just over a year since I was last in Lagos and things change so fast. Things that looked as though they might be transformative a year ago are now dead and gone. But the relentless forward energy of Nigerians in the sector means that nobody waits around thinking about the next move.

At the wholesale level, international and national bandwidth prices continue to decline, the former more quickly than the latter. Cheap commodity bandwidth here means much the same as it does elsewhere. You either have to be a big “utility” player with network, selling volumes: or increasingly you will become a niche player who sells services that go over the bandwidth and the bandwidth sale is just a convenient add-on.

Frustrated by the slow pace at which national networks were carrying the colossal bandwidth capacity now available into the country, Main One has stepped up to the plate and is now providing routes into and across Lagos and other parts of the country.

The commodification of bandwidth has meant there have been casualties. Suburban Telecom is in receivership and I’m reliably informed that another ISP is on the brink of heading in the same direction. Kevin Maxwell’s CAPCOM deal, which would have created a “super group” out of MTS, Starcomms and Multi-Links, seems to be dead in the water. Once the funeral rites have been pronounced, then the spectrum assets (for LTE) and the extensive Multi-Links fibre network will come back into play again.

The starting gate has already opened for LTE in Nigeria. Spectranet and Swift are already in the market and Smile launched this week. Glo has tested LTE with Ceragon but has just lost out in a spectrum auction to a local consortium Bitflix. It will be interesting to see whether the latter makes its licence payment (US$23.251 m) on time, a problem Glo itself is familiar with from earlier times.

Again we took the mi-fi device we tested in Kampala last week and gave it an outing. The bandwidth is both impressive and mobile: you can sit in the back of your taxi as you speed across the bridges (or sit in the jam) and do emails on your iPad whilst on the move.

As you would expect with a city the scale of Lagos, there are holes in coverage but the speed will be a game-changer. I sat with one online content provider and let him run two HD video streams simultaneously on a smartphone and a large screen desktop computer. It ran seamlessly and demonstrated why people will buy it: several household members can watch whatever they want on their different devices.

Numbers are always big in Nigeria and never reliable but the heartland of Nigeria’s first battle in its campaign to succeed as a connected nation is Lagos. Operators will need to get cheap and reliable broadband to the 700,000-1,000,000 households that already afford something described as broadband (usually by wireless) at home.

Once this group starts using video and online services, you will see rapid growth in these areas. The first signs are already in the market. Online travel agent Wakanow says that 15% of its transactions are online using a mobile phone and it is projecting a turnover of US$100 million this year.

All over Lagos there young hopefuls bidding to be part of this new online services sector. ccHub continues to thrive as a co-working space encouraging social enterprises. Minister Omobola Johnson launched the IDEA programme for graduate entrepreneurs next door. Rocket has an incubator with a stable of fledgling companies and iROKO has its Spark incubator.  88Mph are opening one of their accelerators in the city.

From 30th to 31st  March 2014, about 100 investors and entrepreneurs from within and  outside Africa will come together to “do deals” in Lagos during the inaugural Angel Fair West Africa (AFWA) an event organized by the Angel Africa
List (AAL) in partnership with the Lagos Angel Network (LAN) and the African
Venture Capital Association (AVCA). For more details click here.

In people terms, Social Media Week Lagos, a vast programme of fascinating events this week,  demonstrated the energy and commitment that can be found at the crossroads between culture and technology. The old content providers were getting to grips with new online delivery methods and trying to bring their chaotic industries into a shape to do business in this new future.

Two independent data centres have arrived: Rack and one shortly to be opened by Main One. The market is readying itself for the greater volume of cloud services that increased smartphone use will bring.

A quick anecdote: As I waited to get my local SIM at the beginning of the week, an elderly gentleman came in and started examining the cheap Chinese feature and smartphones. Lovingly holding one, he asked:”Does it do the same as Apple and Blackberry?”

Much hangs on whether the supply and pricing can be got right. In what sounded like a desk-clearing move, MTN signed a managed services contract with Ericsson to look after 75% of its network in Lagos, Abuja, Port Harcourt, Enugu and Asaba. It wants to concentrate on “value-added services to its customers”.

A key stumbling block is the power supply. Wherever you are in Lagos, there is a familiar cycle. The lights go out, you listen for the generator to kick in and then watch the network come back up. Nigeria has done all the right things in terms of power reform. But as with the telecoms liberalisation, it will take at least 5 years for the new owners of the power assets to get a control of people owing money and to start renewing the infrastructure.

On a bad day, Lagos as a city looks like a stand-in for the set from Ridley Scott’s Blade Runner. The smoke drifting over the slums in the lagoon, the psychotic driving on the bridges, the decaying high rises in what still feels like a low-rise city and the sprawl of teeming Nigerians all looking to make their daily crust on the mainland. Almost every structure looks as though it was bodged and corners were cut. Power lines erupt like spaghetti from the most unlikely places.

There has undoubtedly been progress but it always feels like three steps forward and one step back. The old Nigeria of arrogance, political patronage, privilege and staggering levels of greed is never far away. So the key question is whether the kind of progress needed to deliver fast, cheap bandwidth in Lagos can outrun the drag exerted by these older attitudes. However, if anyone can do it, a Nigerian can.

Digital Content Africa: Balancing Act’s web TV channel Smart Monkey TV has launched a new e-letter called Digital Content Africa. On a fortnightly basis, it will cover online film, music, publishing and services and applications. We have already produced 8 pilot issues and these can be viewed on this link:  Essential reading for those in mobile VAS to anyone just interested in what African and relevant international content they can now get online. If you would like to subscribe, just send an email to info@balancingact-africa.com with Digital Content Africa in the title line.

Some examples of past issues below:

Digital Content Africa Z-5 Two new African Mobile Music and Video Content Bundles with a handset attached

Digital Content Africa Z-4 South Africa: The women who tracks mobile music sales and physical sales of film and TV CDs in shops

Issue No.Z-3 Nigerian VoD content platform Dobox TV offers simultaneous online premiere of cinema releases

New videos this week

GamersNights: Multiplayer computer gamers in Uganda, spreading out across Africa

John Luberenga, access.mobile on a coffee company app and a health app for clinic data collection

Brian Ndyaguma on hiveCOLAB and the Ugandan start-ups it supports

Kenneth Oyalla on how Nokia's new range of handsets have increased Internet use in Africa
Gaurav Singh, Chief Digital Officer, Scan Group on when brands will spend more on digital in Africa
Joris Komen on the Library Pi, a low cost, solar powered device to deliver education resources
Byron Moorgas on mapping online rural areas of Africa and how UNICEF is using mapping data

Jeremy Gordon and Caine Kamau on Flashcast, a location aware ad tool for Nairobi's matatus
Indra de Lanerolle on what a 12 country survey says about Africa's new Internet users
Simbarashe Mabashe on South African online film platform Wabona.com and its expansion plans, including an alliance with a Fibre To The Home provider in Zimbabwe
Chike Maduegbuna, Afrinolly on its deal with MTN to distribute this mobile content platform
Francis Mugane and Peter Gakure-Mwangi on the low cost mobile money payment system Kopo Kopo
George Kimani on his new online film and TV platform Afriflix with low prices to beat pirates
Martin Nielsen on Mdundo, a mobile music platform for Kenya and East Africa

For breaking news, follow us on Twitter: @BalancingActAfr

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