Mobile growth dims Nigeria's landline future

By SEGUN ORUAME

Would wire or land line ever define Nigeria's telephony market? Not likely. Operators and the country's regulator are increasingly convinced that the market belongs to mobile lines.

To them, the competitive advantage that mobile networks have come to have over landline operators in Nigeria may never be erased. This potentially signifies a terminal end for landline operators such as Nitel, 21st Century Technologies limited and Victoria Garden City Communications (VGCC) limited, which has been bought over by mobile operator MTN. VGC's bought over by MTN points to the direction of things, said Lagos based telecom analyst Titi Omo-Ettu. Mobile operators would dictate the pace of growth and acquisition in the market.

Nitel offers a classic case of the retard in the growth of landline. From over 450, 000 landlines eight years ago, it has shrunk to less than 50, 000 landlines within the same period that three GSM operators expanded their combined subscription from below 50, 000 to over 38 million. Within the same period, CDMA operator Starcomms grew subscription from below 50, 000 to over one million to make Nigeria a strong mobile market. Over 98% of the investment made in telecoms in the last five years in excess of $10 billion has gone into mobile networks to underscore the stagnation in the landline sub-sector.

"We have missed the train; we have missed several chances of ever having extensive and robust landline networks as is the case in Europe and the US," said Executive Vice Chairman of the Nigeria Communications Commission (NCC) Ernest Ndukwe adding that mobile networks have evolved over time to close in on the advantages that landline used to have. "Mobile has practically improved to be able to offer those advantages that landlines used to have particularly in terms of speed."

Before its acquisition by MTN, VGCC had about 10,000 landlines in Lagos and over 1000 in Port Harcourt. In Lagos, where competition is stiffer 21st Century Technologies limited and Disc Communications among others had less than 50, 000 active phones on their wire lines infrastructures.

Disc Communications is already working on a new wireless architecture that may see it completely abandoning landline to deliver phone services in Lagos. This environment is hostile to landline operators, said CEO of Disc Communications Bayo Banjo in Lagos. While landline operators do not have to provide diesel generators to keep any base station running 24/7, they routinely contend with vandals hunting for copper and also have to go through the tedious task of fulfilling the obligations for 'right of way' before they lay cables across roads in cities such as Lagos. "The maintenance cost is and frightening even though on paper, landline ought to be cheaper to maintain overtime," said Banjo.

For operators such as Starcomms and Multilinks, service delivery has nicely been tied to CDMA wireless platforms. As unified operators, both are building fibre rings across Nigeria for easy nation wide connectivity but their last mile service is tied to wireless links. Ndukwe thinks the industry would move this way. Backbone connectivity across disperse locations would rely on landline but last mile services that hook up directly with subscribers would be wireless, said the regulator in an interview in Abuja.

But former general manager of VGCC limited, Gbenga Adebayo argues that landline would never be able to replace landline. "All over the world wireless service is never a replacement for wire line service. Wireless will continue to remain wireless. The strength and benefit of wire line in spite of modernisation and rapid changes in technology have remained intact and no one has come with the solution that makes wireless a replacement for wire line.

"I will tell you why. We require high-speed access on the Internet. Today, there is still a limitation as to what speed you can deliver on the Internet via wireless access. We require stability in service on wire line or in communication, today, there is still a limit to the strength of stability that you have on the wireless network and this can still be guaranteed only on wire line today. The wireless is susceptible to a lot of variables, which the wire line is not susceptible to."

But in the last few years rapid advancement made in wireless technologies have allowed the high limitations on speed to be removed and higher degree of stability in service as could be found on wire line to be achieved on wireless. Particularly, remarkable changes in the wireless industry have altered the logic expressed by Adebayo since he first expressed his views in 2006.

Applications and services riding on the back of wire lines in the developed economies are increasingly being made to run on wireless backbones in green territories inside Asia and Africa such as high quality voice, high-speed data and high-speed video. New meetings points and transactions such as cash-points (ATMS) facilitated by e-commerce on landline infrastructure in Europe is increasingly becoming wireless driven in other parts of the world. Last mile optical fibre infrastructure is giving way to wireless infrastructure for end-of-line service.

Many policy makers and experts believe Nigeria ands other developing countries have higher chances of leapfrogging their economy on wireless architecture than landline with its attendant aches. But Adebayo thinks the future of the industry would ultimately be in landline. "Given the unavailability of infrastructure in the developing African countries, the wireless seems to be a suitable solution but tomorrow, I mean the immediate future when you have the infrastructure in place, the wireless will become a secondary solution. Because Union bank will have a branch in Nnewi for instance, you have an account hosted in Nnewi, you don't have to go to Nnewi, you want to access the Nnewi bank right from here, if that platform will depend on wireless. First, cost of business will be very high and secondly speed will not be the same. So I am saying given the unavailability of telecom infrastructure in developing African countries and given the issues of landmass, which is very wide, particularly in a place like Nigeria the wireless looks like a right way to go but it is just a short time solution."

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